Combined Heat and Power (CHP) involves on-site generation of electricity and use of the available heat.

The basic energy efficiency targets for the Master Bakers Climate Change Levy Discount Scheme shown in Information Sheet 3 DO NOT make any allowance for CHP opportunities. The agreed targets are based on reductions in use of "delivered" energy.

Whilst CHP can be an efficient means of saving energy, the economic returns are highly sensitive to site specific circumstances. DEFRA agreed with NAMB/SAMB that it was not possible to set industry-wide targets for CHP. What has been agreed is:

• For shops, CHP need not be evaluated.
• For bakeries, that by the 1^st milestone (April 2003) each Participant will be expected to have evaluated the potential for CHP at their site, using an agreed evaluation procedure. If this does not identify a cost effective CHP opportunity, your target will be left unchanged. If a cost effective CHP opportunity exists, then your target will be increased to take this into account. Similarly, if you have already implemented CHP since the Base Year (1999), your energy efficiency target will be increased to take this into account.

If you already have CHP or you find a cost effective opportunity for CHP, you should note that the fuel used for CHP will be fully exempt from the Climate Change Levy. However, to get this exemption the CHP plant will need to meet certain performance thresholds. The CHP QA (quality assurance) process and other CHP issues are described in Information Sheet 11.