Combined Heat and Power (CHP)

What is Combined Heat and Power?

Combined heat and power (CHP), also called cogeneration, is the simultaneous production of electrical and thermal energy from a single fuel source. CHP systems are a group of distributed generation technologies capable of capturing heat that would otherwise be emitted into the atmosphere during the electric generation process and redirecting it for a useful purpose.

Traditionally, generation of electricity and heat has been a mutually exclusive process. However, by generating heat and power in a combined process, CHP systems are more cost effective, reduce greenhouse gas ( GHG) emissions and provide more efficient use of natural resources. The efficiency levels of CHP technologies vary depending on the size and type of system, with CHP technologies typically achieving efficiency levels of 60-80% (compared to ~45% for separate generation).

CHP systems offer many benefits for municipal, industrial, commercial, institutional and even residential facilities.


Benefits of CHP

  • Reduces utility costs and improves economic competitiveness
  • Increases power reliability and self-sufficiency
  • Reduces GHG emissions and other pollutants
  • Reduces demand for imported energy supplies
  • Capable of operating on renewable or nonrenewable resources
  • Suite of proven, commercially available technologies for various applications
  • Additional financial incentives through the feed-in-tariff, Self-Generation Incentive Program ( SGIP) and investment tax credits available for eligible customers

CHP in California

Even with more than 8,500 megawatts (MWs) of active CHP in California at more than 1,000 sites, mostly in the industrial sector, CHP is underutilized in California. There are significant opportunities for CHP systems for both existing and new facilities. The California Air Resources Board identified CHP as the state’s third most significant potential source for GHG emissions reductions, setting a reduction target of 6.7 million metric tons of CO2 from 4,000 MW of new CHP by the year 2020.

Types of CHP Systems

CHP systems are identified by the system’s prime mover, the device that powers the generator. CHP systems can be further characterized either as topping-cycle or bottoming-cycle generation.

Topping Cycle CHP

Topping-cycle systems produce electricity first, then recover the excess thermal energy for heating or cooling applications.

Bottoming Cycle CHP

By contrast, bottoming-cycle systems, also known as “waste heat to power,” are a process whereby waste heat from an existing process is used to produce electricity. Both topping- and bottoming-cycle systems are types of cogeneration.


Technologies Eligible for the SGIP

*Organic rankine cycle turbines and steam turbines may only be used in waste heat to power applications.

The fuel used to generate power in an internal combustion engine, microturbine, gas turbine or fuel cell may come from a variety of renewable and nonrenewable sources such as natural gas, propane, waste gas or biogas (gas derived from the breakdown of organic matter). CHP systems that utilize biogas are eligible for increased incentives through the SGIP.