Implications of electricity liberalization for combined heat and power (CHP) fuel cell systems (FCSs): a case study of the United Kingdom

Abstract Globally electricity markets are heading in the direction of the United Kingdom’s liberalized model, in which transactions are increasingly transparent such that prices more closely reflect their underlying costs. Increased transparency in the structure of electricity markets augurs to have both negative and positive effects for embedded generators such as combined heat and power (CHP) fuel cell systems (FCSs). Embedded generators are decentralized generators in close proximity to consumers that feed part of their electricity directly into a local low-voltage distribution network and, in some cases, part to a direct source of demand onsite. First, this article analyses the negative consequences that the UK’s liberalized model has had on current embedded generators. Second, it discusses the potential positive effects that the liberalizing trend could have on future embedded generators. Finally, based on these lessons, it draws conclusions about design strategies for CHP FCSs as future embedded generators.