Combined Heat and Power (CHP) systems powered by natural gas can deliver significant advantages including lower energy costs, improved efficiency and valuable tax reliefs.

However, simply having a CHP in place does not automatically guarantee these benefits.

In practice, many organisations operating CHP systems are not maximising their potential and, in some cases, may also be exposed to incorrect or non-compliant tax treatment.

What are the benefits of CHP?

1. Lower energy costs

By optimising CHP operation, organisations can significantly reduce energy costs. Savings come not only from on-site electricity generation and lower effective gas prices, but also from running the plant at times when electricity export prices are highest.

2. 100% Climate Change Levy (CCL) relief

If you participate in the CHP Quality Assurance (CHPQA) scheme and meet its efficiency targets, natural gas used in CHP generation can qualify for 100% CCL relief.

Sites that fully utilise the heat output will benefit the most. However, even where heat use is limited, there may still be substantial savings available through correct CHPQA participation and reporting.

3. Electricity export opportunities

With the right modelling and operational strategy, CHP systems can be run to balance on-site demand with export opportunities, helping to keep energy costs low while maximising revenue from exported electricity.

4. Reduced tariff charges

If you are consuming electricity generated on-site, why pay full third-party supply tariffs? By “sleeving” CHP-generated electricity to yourself, you can reduce exposure to additional network and supplier charges commonly found in standard energy contracts.

Already operating a CHP? It’s time for a review

If you already own or operate a CHP unit, it’s worth asking:

• Is the system running at optimal efficiency?
• Are all eligible CCL exemptions being correctly claimed?
• Is CHPQA certification in place and up to date?
• Are CCA and CCL treatments accurate and compliant?
• Have changes in energy prices or legislation altered the system’s value?

Regular, independent reviews can uncover missed savings, reduce compliance risk, and ensure your CHP continues to deliver both technical and financial value.

Independent CHP advice from NFU Energy

NFU Energy provides independent, end-to-end support for both existing CHP operators and organisations considering CHP for the first time.

Our services include:

• CHP feasibility and viability assessments
• Support with CHPQA, CCL and CCA compliance
• Ongoing performance review and optimisation
• Operational modelling to maximise savings and export revenue
• Reducing standing and tariff charges by buying your own electricity or supplying partners
• Support with Carbon Price Support taxation for sites above 2MWe capacity

If you already operate a CHP system or are considering CHP for the first time, talk to our experts about performance, compliance and value.