MSU Extension Agricultural Bioenergy and Energy Conservation

Combined heat and power (CHP) is the simultaneous production of heat and electricity, from a single fuel. Traditionally, a steam turbine is used to produce electricity, although a wood gasification/internal combustion unit can also be a cogeneration unit. Several factors affect the economic feasibility of a CHP unit including wood waste disposal problems, high electricity costs, and year-round steam use.  

CHP is considered to be much more efficient because it captures energy that is normally lost from the process of heating, cooling or generating electricity. Collecting and utilizing the heat reduces the carbon footprint by reducing the amount of fossil fuels burned to generate the heat. Many coal-fired generation plants release the excess heat up the smoke stacks. It makes sense to collect the heat and channel to nearby businesses to use in place of traditional heating energy (e.g. natural gas). This also reduces the carbon footprint of the community.