(70) Therefore, the risk of sulphuric acid dew point attack ... - DTI Home

quality. Where substantial modifications are required to the grid to allow
connection, the cost to the scheme developer may be prohibitive, especially
for smaller schemes. The cost and complexity of grid connection is currently a
barrier to the development of smaller CHP schemes.
Anecdotal evidence suggests that banks are not willing to invest in energy
projects at present due to the risk associated with price volatility and
uncertainties within energy markets. The market is in such a poor state that the
major CHP developers have disbanded their development teams. The only
projects that may go ahead currently are either ones where all of the power
will be consumed on site or that have another factor driving them, such as
avoided grid connection strengthening costs.
One UK consultee identified the diversity of European standards as being a
problem for companies trying to export to other EU countries. A common
European standard for shell boiler design is being introduced (EN12953), but
the consultee was concerned that oversees clients will continue to specify their
own national standards.
The current strength of sterling was also identified as a problem for UK HRSG
suppliers. There is strong competition in the market place and other European
suppliers can undercut UK companies, even in the UK despite their higher
transport costs.
6.4.4 Future Industrial CHP Market Potential in the UK and Mainland
Europe
The European Commission sponsored ‘Future Cogen’ study assessed the
potential for the expansion of CHP within EU member states and Central and
Eastern European (CEE) states. It modelled the growth of CHP under four
scenarios ranging from the pessimistic ‘deregulated liberalisation’ scenario to
the optimistic ‘post Kyoto’ scenario. In the ‘deregulated liberalisation’
scenario EU CHP capacity grew by only 16 GW from a base level of 65GW to
81GW in 2020. In contrast, under the ‘Post Kyoto’ scenario installed capacity
grew by 130GW to 195GW by 2020. Under the ‘Post Kyoto’ scenario, CHP in
the UK would grow from a base level of 3453GW to 27215GW in 2020. Not
all of this growth would come from CHP schemes involving steam generation
but it would represent a substantial opportunity for growth in the HRSG
industry [80] .
At present CHP opportunities in the UK are limited to those that have specific
driving factors other than just more efficient use of fuel. The UK government
has set a target of achieving an installed CHP capacity of 10GW by 2010,
compared to the current capacity of 4801MW (2001). Some policy measures
have been introduced to stimulate the CHP market. Fuels used in CHP are
exempted from the Climate Change Levy (CCL). In the April 2002 budget it
was announced that electricity exported from CHP schemes will also be
exempted from the CCL (subject to approval under EU state aid rules).
Enhanced capital allowances (ECAs) are allowed on some items of CHP
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