CHPQA proposed temporary easements due to COVID-19: summary of responses and government response
Updated 11 March 2021
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The Combined Heat and Power Quality Assurance (CHPQA) programme has been the primary mechanism for supporting Good Quality[footnote 1] CHP since 2000. Certification of Good Quality CHP enables operators to be eligible to claim a variety of benefits including tax exemptions. The methodology, thresholds, and criteria for Good Quality certification is outlined in the CHPQA Standard. There are two key parameters used in the CHPQA assessment process: Quality Index (QI) and Power Efficiency. The QI calculation is based on the amount of useful heat, electricity output and fuel input. The Power Efficiency is based on total annual power output divided by the total annual fuel energy input.
Due to the COVID-19 nationwide lockdowns, participating CHP Schemes in a variety of sectors may have been forced to either partially or fully shut down their plants or change the way they operate. Changes to the operation of a CHP Scheme could reduce the QI or Power Efficiency values meaning some CHP operators would not qualify for their usual level of financial benefits. CHP Schemes can either achieve full certification if they pass the thresholds or partial certification with benefits deducted proportionally to the overall QI and Power Efficiency values.
The government has provided extensive financial support for businesses and industries impacted by COVID-19, in a multitude of sectors. To reduce the financial impact of COVID-19 in 2021 and to ensure continuity of support for businesses and industry with Combined Heat and Power plant, the Government consulted on a temporary amendment to the CHPQA Standard. The Temporary COVID-19 Easement would allow CHP Schemes to use 2019 operational data to certify as Good Quality for 2021 instead of the impacted 2020 data where sufficient evidence can be provided to prove the CHP’s operation has been impacted due to the COVID-19 lockdowns.
Questions with response summaries
A total of 15 responses to the consultation were received covering 159 sites across the UK.
Summaries of the points made from the comments received are listed below each question.
1. Should there be support through the CHPQA Scheme for CHP operators impacted by COVID-19 and associated lockdowns? Please explain why.
All respondents agreed that support through the CHPQA scheme should be provided for CHP operators impacted by COVID-19 lockdowns and restrictions.
Reasons for why CHPs have been impacted by COVID-19 lockdowns and restrictions included reduction in revenue and qualified staff to run the CHPs effectively or at all, and the need for many CHPs to change run hours, and either partially or fully shut down for extended periods of time. Some sites have had reductions in heat and/or electricity demand from customers. Renewable fuelled CHP operators also reported feedstock supply and quality issues impacting operation of the CHPs.
Reasons for why support should be considered included that it would support organisations invested in an efficient technology that provides additional environmental, economic and social benefits and show support for low carbon technologies in line with wider Government targets on net zero. Responses noted that support would be consistent with other areas receiving COVID-19 related support. One response suggested it would prevent increased energy costs being passed on to customers.
2. Is allowing CHP operators to use their 2019 performance data (or a similar solution for CHPs commissioned during 2019) a sufficient support mechanism as long as they were partially or fully certified in 2020 and can justify COVID-19 and associated lockdowns as the primary reason for not matching or exceeding their 2020 QI or Power Efficiency values for 2021 certification? Please explain why.
All respondents agreed that allowing CHP operators to use their 2019 performance data was a sufficient, simple and fair support mechanism as long as they can justify COVID-19 and associated lockdowns as the primary reason for not matching or exceeding their 2020 QI or Power Efficiency values for 2021 certification.
One respondent suggested that CHPs commissioned during 2020 should be provided with the same solution as those CHPs commissioned during 2019 where they won’t have a full year of operational data to refer to.
Several respondents agreed that sites commissioned in 2019 and 2020 should be allowed to continue using their design data as the data for the easement. See the Government response section.
One respondent agreed with the use of 2019 operational data but suggested for CHP schemes in operation for a number of years, an average of the previous 3 years could be used as a better reflection of the scheme’s typical performance. See the Government response section.
One respondent noted that the justification of the impact COVID-19’s associated lockdowns has had on sites may differ dependent on the operator therefore a prescriptive approach to acceptable evidence may not be practical. See the Government response section.
3. In addition to what is being proposed, do you feel any further support is needed for CHP operators in relation to COVID-19 impacts?
Six respondents noted that this easement should continue to be under review dependent on the extend of further COVID-19 lockdowns and restrictions in 2021. See the Next steps section.
One respondent noted that some sites that turned their CHP off due to lack of money may struggle to provide sufficient evidence. See the Government response section.
4. What restrictions do you think should be in place for this proposed temporary amendment?
Most respondents noted they had no further suggestions on restrictions on top of the requirement to evidence the impact of COVID-19 on the organisation applying for the easement.
Two respondents noted that we should consider that the temporary easement should be in place for as long as COVID-19 restrictions are enforced. See the Next steps section.
One respondent suggested there should be no restrictions on the easement.
5. What benefits or adverse impacts would there be from implementing this proposed temporary amendment?
Six respondents noted that this support would provide continuity of certification therefore providing financial benefits and ensuring lost revenue is not exacerbated further.
One respondent noted that the support would prevent losses being passed to customers through increased energy pricing.
One respondent suggested this support may benefit small CHP schemes more as larger, commercial organisations may struggle to prove the direct impact on COVID-19 restrictions and CHP use.
Two respondents noted that this would support organisations that had chosen to install efficient, lower carbon technologies.
Two respondents suggested that this support would prevent CHP operators from shutting down their CHPS and avoid a reduction in CHP provision and use in 2021 therefore it would provide continuity of environmental benefits from CHPs across the UK.
Equality Act 2010
We also asked to hear from respondents if they felt this policy may impact people or groups with protected characteristics under the Equality Act 2010. No concerns were raised by respondents.
Government response
Most respondents were in agreement with the proposed temporary easement, and the government therefore intends to proceed with this; however a few suggestions were made which are responded to below.
CHPs without operational data from 2019 will be able to apply for the Easement and if approved be certified on the basis of their F3 design data. CHPs that became operational in 2021 will not be eligible for the easement.
BEIS and the CHPQA Administrators have considered the option of using an average of the last 3 years of performance data. However, due to the way previous years of CHPQA data is held, this would be burdensome and likely cause delays to delivering the easement. We also consider that it is best to use the data from the most recent full year, as the CHP project may have changed significantly since 2017.
BEIS and the CHPQA Administrators accept that different sectors may provide evidence in different formats and each site will be assessed by the CHPQA Administrator’s team of experts on a case-by-case basis. The chosen approach provides a consistent framework that reduces administrative burdens and can be applied to all operators.
Next steps
The CHPQA Standard has been updated to reflect the Temporary COVID-19 Easement for 2021 certifications. The CHPQA Standard Issue 8 was published on 10 March 2020. An accompanying Guidance Note 60 was also published containing additional information on applying for the Temporary COVID-19 Easement.
Legislation referencing the CHPQA Standard will be updated via Parliamentary processes to reflect the amendment for 2021 certification only. BEIS will lay 2 Statutory Instruments amending the Renewables Obligation Order 2015, the Emissions Performance Standard Regulations 2015 and the Renewable Heat Incentive Scheme Regulations 2018. We expect other Departments and the Devolved Administrations to lay similar Instruments shortly.
Responsible Persons[footnote 2] (RPs) will be able to notify the CHPQA Administrators that they believe the operation of their CHP Scheme on 2020 was adversely affected by lockdown or other restrictions caused by the COVID-19 pandemic through the CHPQA Portal. Further instructions will be communicated to all RPs.
There are currently no plans to extend the Temporary COVID-19 Easement for 2022 certification. Whilst there have been additional nationwide lockdowns in early 2021, the restrictions in 2020 were unprecedented with limited opportunity for CHP operators to plan effective use of the CHP plant. CHP operators have now had time to review and plan for restrictions. It is also expected that there will be sufficient time in 2021 to allow CHP operators to effectively use their plant to improve their Quality Index and Power Efficiency values.