Cogeneration (CHP)

What Is Cogeneration?

Cogeneration (cogen/combined heat and power/CHP) is the production of electricity and heat from a single fuel source, which is typically natural gas. These systems are primarily installed in a facility in order to reduce, or at least optimize, energy costs.  Cogeneration systems work by offsetting the energy supplied by any existing sources (like utility electric supply) and in-house systems (like boilers) that a facility uses to meet heat and power demands (SHP – separate heat and power).  Cogeneration units can also be used to completely replace any of these existing systems, although this isn’t as common.

SHP systems make it necessary for a facility to purchase electricity from their local utility and burn purchased fuel in a boiler or furnace to produce needed heat (or cooling). Cogeneration gives a facility both energy outputs, while only needing one fuel input.

*All images provided by respective cogeneration unit manufacturers

Cogeneration Benefits

Cogeneration is all about doing two things for the price of one – offsetting the requirements from two existing SHP sources with the CHP. This “two for the price of one” applies to facility energy costs and overall energy efficiency of the facility.  It also applies to the emissions footprint of the facility on the local area and community compared to its emissions footprint from its SHP systems.  CHP can also enhance the reliability and resiliency of the facility by providing standby power when the utility power is out.

Cogeneration will make sense if it can achieve its primary goal of optimizing energy costs (ideally it will reduce costs but at minimum must optimize them).  A cogeneration system is a lot like a utility power plant; it uses fuel to generate electricity and will produce a lot of heat generating this electricity.  Both with only convert about 30 percent of the fuel into electrical power.  What changes with a cogeneration system the ability to convert the waste heat into usable heat for the facility.  A utility power plant can’t give it’s waste heat to your building – it has to be thrown away.   The cogeneration system gives the facility a total utilization of the fuel of around 80 percent, compared to less than 40 percent for the power plant. That’s a lot of potential cost optimization and “two for the price of one” opportunity.

The utility power plant can make nice clouds out of its cooling towers and warm up the fish in the nearby river – not much help to the facility unless you really like pictures of plumes.

If you have been reading these sections on cogeneration,  you already read about how cogeneration uses one fuel to provide two energy sources, instead of conventional separate heat and power systems (if you didn’t read the it, we said it again here just for good measure). A typical facility will require electricity from the grid, as well as some form of fuel for thermal demands (separate heat and power – SHP).  While the thermal side of a separate system can very often achieve over 80% efficiency, the electrical utility portion will only yield around a 30-33% efficiency after losses, resulting in a net efficiency of 50%.

Cogeneration eliminates the losses associated with power traveling from power plants to your building, and if most of the recovered waste heat gets put to good use replacing fuel use, the cogeneration system can reach 80% total efficiency – a big jump over the overall SHP efficiency.

CHP Efficiency
Source: US EPA, “CHP Benefits” 2015

Cogeneration systems can be installed to act as standby power generators.  When the electrical utility grid is not operational, cogeneration units can still provide heat and power to essential building systems like elevators, exit lighting,  water pumps,  and, most importantly for your tenants, a cell phone charging station (got to keep those tweets and social media pages about surviving a power outage up to date).  Having this capability greatly improves facility resiliency in a variety of situations, from grid overload during peak summer hours to extreme weather events, such as Superstorm Sandy and Winter Storm Jonas (that storm January 23, 2016, was named Jonas – who knew?).

While the use of cogeneration at a facility will not necessarily decrease the emissions generated by that particular facility, it will reduce the overall emissions in the community.   Remember that the emission directly from the facility do not include the emissions resulting from utility power for the facility unless the power consumed is converted to “back to source” emissions.  So the facility only directly sees its existing SHP equipment such as boiler emissions.

Most cogeneration units will consume natural gas, the cleanest burning fossil fuel, offsetting the burning of fossil fuels in utility plants to generate electricity.  In some cases the utility may be using a renewable source such as a hydropower plant as part of its supply,  but it is almost certainly going to be using fossil-fueled plants as well.   With the operation of a cogeneration system,  the facility gets to ride the “two for one” wagon again with regard to its true emissions footprint.  Reduced fuel consumption at the utility, combined with reduced fuel use in the building for thermal needs, means that emissions overall will decrease. This is particularly true during peak demand hours, when less efficient, higher emission generators may be used by the utility to meet electrical need.

Source: US EPA, “CHP Benefits” 2015

Cogeneration Technology

Cogeneration is a very broad term that encompasses a wide variety of technologies, ranging from larger units capable of producing seveal megawatts down to single kilowatt units small enough to place in a closet (we don’t recommend closet cogeneration). What most strongly differentiates CHP technologies is the prime mover in the unit; a prime mover is the component inside the cogeneration unit that converts fuel into useful energy. The prime mover determines how a cogeneration unit will be configured within a system, as well as what application that unit will provide the most benefit to.

Out of the variety of technologies available, five kinds of prime movers are identified as the most commonly used and commercially available. Be warned, we get technical here!  We do have to meet our techno-babble quota or the other engineering websites will make fun of us.

Overall Efficiency: 70-80%

Fuel Conversion Process: Combustion

Capacity: 10 kW to 18+ MW

Applications: Residential, Commercial, Institutional, Municipal, Light Industrial

All reciprocating engines, be it in a car or a CHP unit, work on the same principal; if a fuel source, like natural gas, is ignited in a small space, large amounts of energy are released in the form of expanding gases. When this energy is harnessed, it can be translated into useful work, like driving the crankshaft of an electrical generator. This is how reciprocating engine cogeneration units work. Combustion (burning of fuel) is used to drive the generator, and excess heat from the combustion process can be recovered and used within the facility.

Reciprocating engine units are best suited for facilities whose thermal demand requires hot water (250°F or less) or low pressure steam (15 psig or less). This makes these units well suited for commercial, residential, and educational applications, as well as relatively low temperature industrial/processing applications.

For more information about reciprocating engine cogeneration, see here.

Overall Efficiency: 65-70%

Fuel Conversion Process: Combustion

Capacity: 500 kW to 300+ MW

Applications: Heavy Industrial/Manufacturing, Distributed and Utility Generation

Like reciprocating engine cogeneration, gas turbine cogeneration relies on combustion to generate electricity, but the process is different. A compressor is used to heat and compress air, which is mixed with fuel in the combustion chamber to heat the air further. After combustion, the hot air and combustion gas mixture drives the turbine, which produces enough energy to power the generator. Excess heat can be converted to steam for facility use, or to drive other industrial processes.

Due to the high temperatures of exhaust from gas turbines, these units are best suited for applications requiring high thermal output. High pressure steam can be generated at up to 900°F and 1,200 psig, making gas turbines very useful for distributed heating and cooling (such as on a college campus). Raw exhaust temperatures range from 800°F to 1,100°F, allowing for the exhaust to be used directly an industrial process (like heating and drying).

For more information about gas turbine cogeneration, see here.

Overall Efficiency: 60-70%

Fuel Conversion Process: Combustion

Capacity: 30 kW to 330 kW (modular packages can provide up to 1,000 kW)

Applications: Residential, Commercial, Institutional, Municipal, Light Industrial

Microturbine cogeneration units are the smaller, faster cousins of gas turbine units; like gas turbines, microturbines compress air, heat it through combustion and use the gases to drive a generator, just on a much smaller scale. Aside from size differences, microturbine units generally have lower compression rates, and operate at much lower combustion temperatures than gas turbines. Microturbines also operate at much higher rotational speeds of up to 60,000 rpm, more than triple that of a gas turbine.

Microturbines are suited for applications similar to that of reciprocating engine units; with exhaust temperatures in the range of 500°F to 600°F, they can easily meet the thermal of facilities requiring hot water or low pressure steam, such as nursing homes or government buildings. They also work well in light industrial processes, especially those that require water washing processes, such as food processing.

For more information about microturbine cogeneration, see here.

Overall Efficiency: 50-80%

Fuel Conversion Process: Electrochemical

Capacity: 0.25 kW to 2,800 kW

Applications: Residential, Commercial, Institutional, Municipal, Industrial

Fuel cell cogeneration differs dramatically from microturbine and reciprocating engine cogeneration because it does not rely on combustion to generate power. Fuel cells operate based on electrochemical reactions, like a battery, and although there are many different types of fuel cells, all operate on the same principles. Fuel cells rely on hydrogen as their input fuel, which can be derived from a carbon based fuel, like natural gas. The unit converts the chemical energy of hydrogen into water and electricity, which is then processed into alternating current or regulated direct current for use within the facility. Like most chemical reactions, this process produces heat, which can be used within the facility.

The thermal capacity and electrical efficiency of a fuel cell unit depends very heavily upon the chemical composition of the fuel cell itself; operating temperatures range from near-ambient to 1,800°F, so the chosen application will vary depending on each specific unit. The heat recovered from low temperature fuel cells such as proton exchange membrane fuel cell (PEMFC) and a direct methanol fuel cell (DMFC) will be in the form of hot water or low-pressure steam.  Low temperature fuel cells are appropriate for thermal needs of commercial and residential facilities. Higher temperature fuel cells include phosphoric acid fuel cells (PAFC) and solid oxide fuel cells (SOFC).  These can produce medium pressure steam (up to 150 psig), allowing for use in industrial processes and distributed power generation.

For more information about fuel cell cogeneration, see here.

Overall Efficiency: 80%

Fuel Conversion Process: Waste Heat to Power (no direct fuel conversion)

Capacity: 100 kW to 250+ MW

Applications: Heavy Industrial, Large Scale Institutional/Residential

Unlike combustion and fuel cell cogeneration, steam turbine cogeneration relies on a separate heat source to function and does not directly convert fuel into electricity.  Steam turbines driven by steam from boilers and nuclear reactors have been the backbone of powerplant generation systems for decades.  To be considered cogeneration,  the steam turbine needs to  be part of an installation that needs thermal input from the steam as well – either upstream or downstream of the turbine.   An example of a steam cogeneration system could be a petroleum refinery where the steam first drives the steam turbine generator then at lower pressures is used in the refinery process.  This would be in place of a boiler simply producing the steam needed for the refinery.

Steam turbine cogeneration systems are used primarily in industrial applications, where a steady supply of waste heat is available for steam production, such as paper mills, chemical refineries, and plant-based oil mills. Low-pressure steam extracted from the turbine can be used directly to provide heating to university campuses or campus-style communities, or can be converted to provide district hot water.

For more information about steam turbine cogeneration, see here.

Cogeneration System Configurations

All cogeneration applications produce heat and electricity, the fundamental difference between cogeneration technologies lies in how the energy is produced and used. Most cogeneration systems will generate electricity and heat simultaneously and independently of other processes, like those used in residential buildings and hotels; this is how combustion and fuel cell cogeneration units provide a facility with energy.

In some applications, like chemical plants, it is more cost effective for the facility to harvest the large amounts of waste heat available from other facility processes (which are independent of the cogeneration unit) to generate electricity. This is how steam turbine cogeneration works.

Combustion cogeneration units, including microturbines and reciprocating engines,  burn fuel directly to drive the prime mover and generate electricity.  Waste heat from the engine cooling systems (oil, engine block) and from the combustion exhaust gases is captured and used in other facility thermal loads. There is a direct correlation between electrical production and thermal production (though not thermal utilization, that’s another discussion tied to Finding the Fit).

Combustion based systems are very versatile and can be used in a variety of facilities, ranging from residential buildings and universities to agricultural greenhouses, depending on the specific cogeneration unit.


Fuel cell cogeneration is a lot like reciprocating engine and microturbine cogeneration in it’s applications, but does not rely on combustion to generate energy. Fuel cell cogeneration relies on electrochemical reactions to generate an electrical power. Similar to the combustion based cogeneration, heat from the fuel cell reaction and other operations is captured and can be used in the facility in the same ways that heat from combustion based cogeneration is used.


Steam turbine cogeneration is a very different kind of cogeneration, in that fuel is not directly consumed by the turbine. Instead, these units rely on the heat generated by (or for) other processes to drive the turbine and generate electricity. Steam turbines in cogeneration systems are not designed to function independently of the other facility loads; instead of the cogeneration system being primarily encompassing just the cogeneration unit(s), a steam turbine cogeneration system encompasses other facility processes as well.

The steam turbine may be the first load on the steam (referred to as a topping turbine) and it’s exhaust provides the steam for the other processes the facility may need. A bottoming cycle steam turbine, like the one shown in the diagram below, will be the last in line to get steam, after the other processes have used the steam.

Keep in mind that these steam turbine cogeneration systems are necessarily very large and would not be the systems DSMEA typically applies to our client facilities.


Incentives for cogeneration are available in a wide variety of forms, including grants and special energy loans. Reduced gas delivery costs for efficient technologies, like cogeneration, are often available from the providing utility. Utility suppliers may also provide project cost support, as well as energy development agencies such as NYSERDA.

For us at DSMEA, identifying available incentives is a key part of assessing a potential CHP project. The ever-changing field of incentives may make a project that would have cost prohibitive few months ago, suddenly highly economical to the facility.

For a comprehensive list of what incentives apply to you, see:
EPA dCHPP Database