Policymakers must ‘get real’ over untapped potential of CHP

There might be many fans of combined heat and power, but few of them seem to be fans of the European Commission, judging by the grumbles voiced at the recent annual meeting of Cogen Europe, the association which promotes CHP.

With the EU in the middle of major updates in energy and related environmental policies, many companies and users do not seem to believe that the European Commission recognises the value of cogeneration in its policies.

For example, the investment signals for cogeneration, in which a single unit uses a fuel typically in gas turbines to produce both electricity and heat at high efficiency, may be too weak, according to some observers.

At the annual conference of Cogen Europe in Brussels, MEP Tsvetelina Penkova said that reform of the EU's energy system, including expansion of electricity grids to support the growth in renewables, resilience and competitiveness, called for clear investment signals. However, she ruled out reliance on public funding alone.

But Penkova, vice-chair of the European Parliament's Committee on Industry, Research and Energy, said that political will and solidarity were needed for the commission's imminent European Grids Package — expected this week — to upgrade and expand grids to support rapid electrification and to speed up permitting for projects. "We do need to be moving together in the EU in industrial competitiveness."

MEP Borys Budka, chair of the European Parliament's Committee on Industry, Research and Energy, also backed cogeneration, partly for its role in energy security. "Cogeneration becomes a future energy asset, not a legacy one," he said. He also claimed that tools were needed to boost investment.

Sector lacks confidence

Yet cogeneration advocates still fear that the technologies are little appreciated, despite today supplying 11% of Europe's electricity and 15% of its heat, often for industrial processes but also for district heating.

"The grids package should formally recognise district heating and cooling as Europe's fourth energy grid, alongside electricity, gas, and hydrogen," the association Euroheat & Power told the Commission.

It added that the EU's energy infrastructure regulation Ten-E and the current 10-year energy network development plan "focus overwhelmingly on electricity and hydrogen transmission, with no recognition of thermal infrastructure. This fails to reflect the real needs of integrated energy systems."

Policymakers did not speak the same language as scientists and engineers, Radu Surdeanu, senior director of government affairs at Siemens Energy, told the Cogen meeting. He saw a need to explain to the Commission — "Get real."

Surdeanu echoed others in believing that the EU was trying to act too quickly. "One word that will stand the test of time is resilience", he said. That included continued reliance on burning gas in gas turbines for energy supply, before any moves to boost the efficiency of existing plants and then to add other technologies. 

Nick Bitsios, head of European affairs and regulatory advocacy at Metlen Energy & Metals, said that the EU was trying to achieve 100% decarbonisation by doing everything at once, but that the rest of the world was not playing ball. The EU had failed to change its approach to match reality, he said, including its phasing out of carbon credits for energy-intensive industries, just as other places are phasing them in.

Potential users wary

Cogeneration has already been adopted widely, however. Europe's sugar makers, for example, rely largely on gas-fired CHP to supply electricity and the heat needed during evaporation of water from sugar beet and pulp drying. Most factories are in rural sites, close to the crops but often far from high-voltage electricity grids.

Processing was also seasonal, requiring heat for only a few months each year, making CHP a good choice, according to Josh Gartland, deputy director general of the European Association of Sugar Manufacturers (CEFS). Companies basically processed everything that they received, with little ability to ramp production up or down, said Gartland. "Cogen is really useful."

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Yet, despite efficiency and other benefits claimed for cogeneration, potential users often remain doubtful about its value. Europe's chemicals sector, for example, faces high energy prices and competition from China and is reluctant to invest in what could be potentially an idle cogeneration plant, especially as the price of electricity bought from the grid is today often negative, said Nicola Rega, executive director for energy and climate at the EU chemical industry trade association Cefic.

"If the incentives and technology are not there, what are we supposed to do?" asked Rega about chemical firms' ambivalence over CHP. He also doubted that cogeneration could allow chemical firms to profit enough from providing services, such as balancing power, to electricity grids: "The price of the [chemical] product is the driver [of investments]."

Warming to heating

With 30% of energy consumption currently wasted, cogeneration's ability to produce economic heating and cooling could be an important feature of EU decarbonisation, said Margareta Djordjevic, head of the energy efficiency, policy and financing unit of the European Commission's climate action directorate.

In the first quarter of 2026, the Commission plans to release a heating and cooling strategy, in an attempt to make district heating and cooling the backbone of the EU's energy systems. "CHP has a role in the integration of energy systems," said Djordjevic, referring to the need to include sectors such as housing and transport.

"We see a lot of challenges," she warned, including a lack of a strategic approach. "And also the need for integrated and market planning." She accepted that there was a lack of clear market signals; the commission has delayed by a year until 2028 an update of the EU's Emission Trading System to allow the development of other market signals. She also pointed to the technical complexity of large-scale heat supply.

Janne Kerttula, the president of Euroheat and Power, said that decarbonising heating and cooling required large investments. And navigation of different conditions in different EU countries: "District heating in different member states is in different stages of evolution." In some countries, 50—70% of the heating market is based on renewables or waste, she said, in stark contrast to other countries' markets.

"Each country has its own regulatory environment," she added, pointing to price regulation in Eastern Europe, for example, but not in Nordic countries.

CHP might be "the technology of choice for many industries", according to Mihal David, president of Cogen Romania and an executive committee member of Cogen Europe. But he said that different national approaches and support mechanisms meant that an integrated EU market favouring CHP was unlikely any time soon.

Kerttula identified a major challenge: "Time. We need time."

Future of CHP in US is ‘unbelievably bright’

The time challenge, however, has meant that some European firms are now seeking to enter the American CHP market.

According to Thomas W Smith, president of both the Cogen World Coalition and the Combined Heat and Power Alliance, cogeneration has not been seen as a "green technology" in the US.

However, he said that the US market was expected to improve if recent legislation led to the assessment of the decarbonisation potential of CHP projects on a grid basis rather than on the current site basis.

He claimed that if the change happened as hoped early in 2026, CHP would look emissions-free in climate change terms: "Changing that methodology will be the key to our success." He told Enlit Media: "It would mean a huge incentive for our industry."

Overall in the US, the prospects for CHP were mixed, he added. Relative to renewables, CHP has had a challenging time, but the increased drilling for gas has increased the attractiveness of CHP, which typically uses gas turbines, he said.

However, a confident Smith predicted a doubling of CHP capacity by 2050: "The future looks unbelievably bright."

He said that US CHP firms were looking to the European market, even as European companies were sounding out the US potential: "We see a lot of European companies becoming more active."

Nuclear energy has also been roped in as a natural fit for cogeneration in the US and elsewhere. Smith cited a nuclear-based project in Utah state in the US expected to produce 1.5GW of electricity and 1.5GW of heat. And Sylvain Nizou, chief executive of nuclear company Hexana, claimed that heat from his firm's reactors and linked molten salt thermal storage systems would be a third of the cost of the electricity.