What is CHP or Combined Heat and Power?
- 4 days ago
- 3 min read
A Complete Guide for UK Factories
If you operate a factory in the UK, energy is likely one of your largest overheads. Rising electricity prices, carbon reporting requirements, and pressure to decarbonise are forcing manufacturers to rethink how they generate and use energy.
One proven solution is CHP – Combined Heat and Power.
In this guide, we explain what CHP is, how it works in UK factories, and why it can deliver sub-2 year payback — or even be installed with zero upfront capital.
What is CHP (Combined Heat and Power)?
Combined Heat and Power (CHP), also known as cogeneration, is a highly efficient process that generates electricity and useful heat at the same time from a single fuel source — typically natural gas.
Instead of:
Buying electricity from the grid (generated remotely at only 40–50% efficiency), and
Producing heat separately in gas boilers
A CHP system produces both on-site, achieving total efficiencies of 80–90%+.
How Does CHP Work in a Factory?
In a typical UK factory:
A gas engine drives a generator to produce electricity.
The engine produces heat as a by-product.
That heat is captured and used for:
Process heating
Steam generation
Hot water
Space heating
Drying or washing systems
Nothing is wasted.
This is particularly effective for factories with:
Continuous operations
High electricity demand
Constant heat loads
Steam requirements
Food, beverage, chemical, or heavy manufacturing processes
Why CHP Makes Sense for UK Manufacturing
Massive Efficiency Gains vs Grid Electricity
Most UK grid electricity is generated at large, remote gas power stations (30% of grid). Even modern Combined Cycle Gas Turbine (CCGT) plants only convert around 50–60% of fuel energy into electricity. The rest is lost as heat — and even more is lost in transmission.
With on-site CHP:
No transmission losses
Heat is fully utilised
Total system efficiency can exceed 85–90%
That’s a dramatic improvement, bringing significant carbon savings.
Lower Carbon Emissions vs Remote Gas Generation
Although CHP commonly uses natural gas, it reduces overall carbon emissions compared to grid electricity plus separate boilers.
Why?
Because:
Remote power stations reject all the heat to atmosphere.
Factories still burn gas in boilers for heating.
CHP replaces both systems with one high-efficiency process.
It also:
Qualifies for CCL discounts on the gas fuel.
3. < 2 Year Payback is Common
One of the most attractive features of CHP is its rapid return on investment.
For energy-intensive factories, savings come from:
Avoided grid electricity costs
Reduced boiler gas usage
CCL Discounts
Potential grid services revenue
In the right application, simple payback is often:
✔ 18–24 months✔ Sometimes even faster
After payback, the savings go straight to your bottom line.
Zero Capex CHP Solutions Available
Not every factory wants to deploy capital. That’s why fully funded CHP solutions are now widely available in the UK.
Under these models:
A third party funds, installs, and maintains the CHP plant
You purchase electricity and heat at a discounted rate
Or a savings split, guaranteeing savings
Contracts as short as 3 years, no long-term commitment
No upfront capital required
No maintenance responsibility
Immediate savings from day one
This removes risk and protects cash flow.
Example Factory Applications
CHP is particularly suited to:
Food & Beverage
Continuous cooking processes
Steam demand
Hot water washdown
Chemical & Pharmaceutical
Process heat
Clean steam
Stable power demand
Paper & Packaging
Drying systems
24/7 energy usage
Large Commercial Laundries
High hot water and steam demand
If your site runs 6,000+ hours per year and uses both heat and electricity continuously, CHP is likely viable.
Is CHP Compatible with Net Zero?
Yes — and increasingly so.
Modern CHP systems can:
Run on biomethane
Be hydrogen-ready (future fuel switching)
Integrate with solar PV
Work alongside heat pumps
CHP can act as a transitional decarbonisation strategy while maintaining resilience and energy security.
Why Work With Eco Generation?
At Eco Generation, we specialise in connecting UK energy-intensive businesses with turnkey and fully funded CHP providers.
We:
Conduct feasibility assessments
Model carbon savings
Identify <2 year ROI opportunities
Structure zero-capex agreements
Manage suppliers
Oversee implementation
We are technology impartial and focused purely on delivering the best commercial outcome for your site.
Key Benefits of CHP for UK Factories
✔ Reduce electricity costs✔ Cut carbon emissions✔ Improve energy resilience✔ Achieve <2 year payback✔ Access zero-capex funded solutions✔ Improve ESG reporting✔ Hedge against rising grid prices
Is CHP Right for Your Factory?
If your annual energy spend exceeds £500,000, there is a strong chance CHP could unlock substantial savings.
The best way to know is through a free detailed feasibility study.
Speak to Eco Generation Today
If you would like a free initial assessment of your site’s CHP potential, contact Eco Generation today.
We’ll show you:
Projected savings
Carbon reduction impact
Funding options
Payback period
Implementation roadmap
CHP isn’t new technology. It’s proven, reliable, and delivering significant savings to UK manufacturers right now.
If you generate heat and use electricity — you should be evaluating CHP.
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