City of London's combined heat and power plant

The City of London pipes heat from a natural gas-fuelled combined heat and power station to major public buildings, saving approximately 3,000 tonnes of CO2 each year.


The building where the CHP engines are housed.

The City of London's large-scale community energy system is made up of a central power station and a district energy network. The natural gas-fuelled power station is located near Smithfield Market and supplies heat and cooling to nine of the City's properties by an underground pipe network. The properties include Guildhall, Smithfield Market and the Barbican Centre. Private customers are also supplied, including a sheltered housing unit for the elderly.


The scheme is run as a public private partnership, with Citigen as the energy service company (ESCo). Citigen are responsible for the design, development, financing, and operation of the scheme. The City Corporation provided the initial heat loads, gives support and planning advice, and encourages private customers to consider CHP energy supplies. The financial burden - and by definition, the commercial risk - falls on the ESCo. It is estimated that around £70 million has been invested to date.

The Corporation's costs have been mainly made up of officer time, consultants and feasibility studies. This has been a very small investment. A number of small grants have also contributed, including support from the EU's Thermie fund which aims to improve energy security through R&D and demonstration projects.


The aim was to switch to greener, more efficient and cost-effective energy instead of spending a large amount of money simply replacing the old plant with the same equipment. The system also helps the Corporation achieve its environmental policy and community strategy objectives through a carbon savings of 3,000 tonnes a year.


This project was championed by an energy manager who believed in the project and worked hard to push it through. That meant making a clear case for why such a scheme was viable. The viability of the scheme benefitted from several nearby buildings that could act as anchor loads - using high amounts of heat and electricity at different times of the day and night.

Citigen took advantage of existing subways, basements and car parks to lay most of the network's 3.6km of pipes. This reduced the need to dig up public roads. Residents did not object to the development of the scheme.

Currently the scheme operates at a loss, which is covered by the ESCo and does not affect the Corporation. Profitability is heavily dependent on income from both electricity sales to the grid and the price of gas. In 2001 the New Electricity Trading Arrangements (NETA) drove down electricity prices in the wholesale market at a time when gas prices were rising steeply. This had an adverse effect on the business which is still being felt. Any organisation planning to set up a similar scheme would need to take full account of these factors in their analysis.

Lesson learned

Talk to the experts such as the CHPA for guidance, and take advantage of developers who provide equipment and finance options. Even large CHP systems are flexible and can adapt to changes in fuel prices and availability. The Corporation's system runs on natural gas and a small amount of oil, but could switch to biogas or other fuels if that becomes a more effective option.

A detailed understanding of building energy demands is necessary and a careful economic appraisal is vital at the outset.


The scheme saves about 3,000 tonnes of CO2 each year. The Corporation also benefits from discounted energy charges from the operator.
The London Plan allows boroughs to require new developments over a certain size to incorporate sustainable energy approaches - such as being designed to link in to a district energy network - before granting planning permission. The Corporation uses this to encourage developers to link up to the energy network.

The City has found that developers see the district energy scheme as being beneficial because they avoid:

  • installing traditional boilers and chillers
  • paying climate change levy charges
  • allocating space for flues and cooling towers.

Developers' maintenance costs are also reduced by connecting to the scheme. In this way, the network makes the City a more attractive area to investors.


Andrew Crafter
Principal Engineer
City of London


21 October 2014

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