Evaluation of capital-expenditure appraisal techniques for combined heat and power projects

The characteristics and benefits of combined heat and power (CHP) are well documented as are the methods for the appraisal of capital projects. The work reported here has examined the investment appraisal techniques actually used by companies in the UK for considering investments in CHP. A postal survey revealed that, in general, there are differences between the approach used by those organizations which use CHP and those which have not. Those which have chosen to use CHP appear to be more flexible in application of investment appraisal criteria and consider a greater range of strategic options.