Combined heat and Power (CHP) is the simultaneous on-site generation of usable heat and electricity. When electricity is generated in a CHP unit, the heat by-product is recovered rather than wasted, and can therefore be used to deliver space heating, to produce hot water, or to produce steam.
According to the European Commission for Energy and Transport, in some cases over 90% and often over 80% of the energy source is converted to a usable output with CHP. In contrast, even the most modern separate production systems for electricity have an overall efficiency of 35 – 40%. The heat can be recovered in the form of hot water or steam via a heat recovery steam generator connects to the exhaust.
Because it is possible to install CHP units close to the actual consumption point, distribution losses can be minimised. This makes CHP even more energy efficient and therefore helps to reduce both greenhouse-gas emissions and fuel costs.