High-efficiency cogeneration (CAR): from requirements to benefits

Cogeneration is a process that allows the simultaneous production of electrical and thermal energy. This saves both fuel and money, as the technology uses the heat that would otherwise be lost during the production process. If you intend to invest in a cogeneration system, you should know that you can benefit from various incentives if a plant obtains the CAR qualification, “high-efficiency cogeneration”. But what does this mean? And what are the relevant regulations?

What is CAR high-efficiency cogeneration?

A cogeneration system has a number of advantages: the new Ministerial Decree of 21 May 2021, which has just been published, talks about reducing the minimum threshold for access to virtual TEEs from the 30% minimum requirement to 20% of primary energy consumption, the lower number of harmful emissions released into the atmosphere, the reduction of risks linked to the interruption of power supply due to grid problems, and energy savings. They are particularly present in the industrial sector; however, in recent years, an increase in use has also been noted in the tertiary and residential sectors. There is also the aspect of incentives to consider: in Italy, for example, through the GSE (Gestore Servizi Energetici), it is possible to obtain White Certificates (TEE) after obtaining the CAR qualification in accordance with European Directive 2004/8/EC, implemented in Italy by Legislative Decree 20/07 and as amended by Ministerial Decree 4/8/2011 and 5/9/2011.

The publication of the Ministerial Decree of 21 May 2021 opens up the possibility of a relaunch for white certificates (TEE). The new decree introduces several positive elements, in principle greater collaboration between institutions and operators, hopefully keeping the percentage of rejected projects below the 10% threshold reached in recent years.
One barrier is the definition of the TEE limits recognised in the three-year period 2021-2024; the new definition confirms the downward revision of these limits in 2021 compared to previous years, with increases in 2022, 2023 and 2024.

The new national and EU regulatory framework related to High Yield Cogeneration includes the legislation that came into force from 2012 to the present. In particular, the following should be noted: the Delegated Regulation (EU) 2015/2402 of the Commission of 12 October 2015, which updates the harmonised yields for the separate production of electricity and heat contained in the Ministerial Decree of 4 August 2011, the Ministerial Decree of 4 August 2016, on the greater valorisation of energy from High Yield Cogeneration obtained following the conversion of existing sustainable bioliquid plants that supply industrial or artisan sites, and the Ministerial Decree of 16 March 2017, which contains simplifications within the scope of the construction, connection and operation of microcogeneration plants.

When an installation meets the High Efficiency requirements

According to the European Directive, a cogeneration plant can be defined as a CHP plant in which the efficiency exceeds a certain threshold (the latter established by the same legislation) which varies according to the power class of the cogeneration unit. This means that the primary energy saving (also known as PES, “Primary Energy Saving”) must be at least 10% higher than the limits for electricity and heat production for medium and large cogeneration units (Pot. > 1 MWe), while for micro (maximum capacity less than 50 kWe) and small cogeneration units (installed capacity less than 1 MWe), the PES must be >0. The PES is calculated with reference to the entire energy production associated with the fuel consumed during the year of interest for which the report is being prepared.

Benefits under CAR legislation

The GSE is in charge of verifying CAR requirements and assigning TEEs (White Certificates) on an annual basis, both for cogeneration units already in operation and for those not yet in operation. White Certificates (which have a variable duration) ensure energy savings due to efficiency increases through cogeneration plants. But what are the benefits provided by the legislation for CAR?

  • Priority for dispatching electricity from cogeneration over conventional sources;
  • Tax relief on excise duty on methane gas used for cogeneration;
  • Access to the on-site exchange service for electricity produced by CAR plants with a nominal power of up to 200 kW;
  • Simplified technical and economic conditions for connection to the electricity grid;
  • A series of tariff concessions for plants powered by Renewable Energy Sources;
  • The incentive opportunity for electricity produced in High Yield Cogeneration, net and fed into the grid from biomethane-fuelled plants;
  • The possibility for a thermoelectric plant not fuelled by a renewable source, present within a simple system of production and consumption, to be considered in a high-efficiency cogeneration set-up for year “n” provided that the energy cogenerated by the unit is, for year “n-1”, greater than 50% of the total gross electricity production of the plant to which that unit belongs.