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Government Incentives For Companies Investing In CHP Generators

Fiscal Incentives Driving CHP Generator Investments

In the pursuit of a greener and more sustainable energy landscape, the UK Government has paved the way for businesses to embrace Combined Heat and Power (CHP) generators through a series of strategic incentives.

These fiscal and financial support mechanisms are meticulously designed to enhance the economic viability of developing and operating CHP plants, especially those certified as “Good Quality” by the CHPQA programme.

Climate Change Levy Exemption

The Climate Change Levy, introduced in 2001, imposes charges on most non-domestic energy supplies. However, CHP schemes certified as “Good Quality” under CHPQA, equipped with a Secretary of State (CHP) Exemption Certificate, enjoy exemptions from CCL on both the fuel they utilize and the direct or self-supplies of the generated power output. This exemption underscores the government’s commitment to incentivizing high-efficiency CHP deployments.

 Carbon Price Support Tax Exemption

With the advent of the Carbon Price Floor (CPF) in 2013, CHP schemes initially faced liability for Carbon Price Support (CPS) rates on fossil fuels used for electricity generation. Fortunately, the government introduced an exemption from CPF in 2015 for fuels used in CHPs to generate “Good Quality” electricity for self-supply or on-site use. This exemption reinforces the alignment between CHP initiatives and the broader sustainability goals.

Business Rating Exemption

The Business Rating Exemption targets specified plant and machinery within CHP schemes certified as “Good Quality CHP” by CHPQA, extending even to associated accessories. While some items may be rateable elsewhere, the exemption prioritizes components related to power generation, offering financial relief for businesses committed to adopting high-quality CHP solutions.

Renewable Heat Incentive

Introduced in 2011, the Renewable Heat Incentive (RHI) aims to support renewable heat technologies. Solid biomass CHP installations certified under CHPQA are eligible for the solid biomass CHP tariff, provided they meet specific criteria. While not mandatory for the RHI tariff, having a CHPQA certificate ensures the scheme aligns with recognized quality standards.


These incentives, including Contracts for Difference, Feed-in Tariff, and Hydrocarbon Oil Duty Relief, collectively form a robust framework encouraging businesses to integrate CHP generators into their energy strategies. As the UK moves towards a more sustainable future, these incentives empower businesses to not only contribute to environmental goals but also benefit from financial advantages, creating a win-win scenario for both industry players and the planet.

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