The market position of CHP has experienced more pressure recently, compared to the first quarter of 2012. For the average company an investment in CHP won’t necessarily be a profitable one. The anticipated market will likely be better in 2016, but will remain strongly dependent on gas prices versus coal prices and the development of large-scale production capacity at home and abroad.
In spite of 2016 prospects being slightly better, the overall market performance is poor, mostly because of lower forward prices and a decreased spark spread. High gas prices combined with the commissioning of new coal plants are putting pressure on the market. Many gas-based power plants already shut down and CHP in the horticultural sector is yielding minimal margins, making extensive use of the technology largely unprofitable.
The prognosis for 2019 shows no real surprises apart from the further deterioration of the best-case-scenario. The average prognosis usually includes two extreme opposites. The best-case-scenario for the 2019 CHP sector entails the high export of electricity, determining the price during regular hours by gas powered power plants. As can be expected, the worst-case-scenario involves the lack of export and the need for additional import. In the latter case, CHPs won’t be able to make a profit.
The distance between the two scenarios is vast, making the prognosis vulnerable to conjecture. It is expected that the electricity market in the coming years will react to persistently low prices and the predicted growth of renewable electricity with wind and sun. The market seems to be subject to a classical pork cycle making is possible for prices to recuperate in the long run. In the meantime however, a dwindling CHP market will affect even to most cheerful scenario.
Source: Productschap Tuinbouw, Energy Matters
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