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Combined Heat and Power

Combined heat and power (CHP), or cogeneration, is a clean energy solution that simultaneously generates two or more forms of energy from a single fuel source. By recycling valuable heat from the combustion process, CHP results in far greater efficiencies than centralized power generation. The recovered thermal energy may be used for industrial processes, space heating, and refrigeration or space cooling through an absorption chiller. CHP is considered the most viable and economical use of distributed generation (DG) when implemented at or near the point of use.

A CHP system is 75% efficient, while a traditional system is 45% efficient. A CHP system needs less fuel input than a traditional system to generate the same amount of energy.

CHP systems consist of one or more prime mover electricity-generating units (e.g., reciprocating engines or micro turbines). They may also include one or more thermally activated devices such as absorption chillers or Organic Rankine Cycle (ORC) generators.

CHP systems are typically operated as either electric priority or thermal priority. Electric priority systems maximize electricity production independent of recovered heat, and typically reject excess heat via a dump radiator or other heat rejection method. Electric priority operation results in moderate CHP efficiency levels, and is often used when there is a large disparity between electricity and natural gas costs at the host facility. Thermal priority systems vary electricity generation such that the generated heat from operation meets the required thermal load with little or no rejected heat. Thermal priority operation results in highly variable electrical output, but often very high overall CHP efficiency.

In addition, CHP systems may be characterized as topping cycle (producing electricity first, then recovering excess thermal energy for heating or cooling applications) or bottoming cycle (also known as waste heat to power, whereby waste heat from an existing process is used to produce electricity).

Topping cycle CHP involves a heat recovery unit extracting thermal energy from exhaust gases emitted from the prime mover and electricity from a generator.

Conventional CHP technologies such as reciprocating engines, microturbines, and fuel cells are examples of topping cycle applications.

Bottoming cycle CHP involves a heat recovery unit extracting thermal energy from existing plant processes, with electricity being generated from that thermal energy, and both electricity and thermal energy being passed to the facility.

Bottoming cycle applications include technologies such as backpressure steam turbines or organic rankine cycle systems, where heat from an existing thermal process is used to drive the device producing electricity.

  • Energy consumers choosing to adopt CHP receive many benefits:

    • Efficiently supplementing a facility’s use of grid-supplied power
    • Reducing energy costs
    • Providing resiliency in the event of a grid-based power outage
    • Reducing fuel use and the production of greenhouse gases
    • Reducing strain on the electric grid during peak demand periods
    • Allowing emergency “sheltering in place” for multi-family residential, hotel, and critical infrastructure facilities of refuge such as hospitals, nursing homes and police stations
  • CHP-compatible buildings typically have:

    • A year-round need for both electric and thermal energy (e.g., domestic hot water, laundry facilities, industrial processes)
    • Centralized hot water or steam heat distribution system
    • Utility natural gas service available, with sufficient capacity to support CHP system input requirements
  • CHP is more fuel efficient than centralized power generation because CHP produces power where it is used at the building, so power is not lost during transmission over large distances, and because heat recovery from CHP system operation displaces on-site fuel purchases. Because CHP systems operate every day, they are more reliable during grid outages than traditional emergency back-up generators. This resiliency makes them popular with hotels, multifamily buildings, hospitals, nursing homes, and industrial facilities.

    Increasing fuel efficiency also decreases emissions of environmental pollutants such as CO2, SOx, and NOx. These pollutants have been linked to global climate change, acid rain, and other forms of environmental damage. To maximize these benefits, CHP systems must be properly sized for the buildings they serve.

  • At the start of 2017, 4,395 commercial, industrial, healthcare, multi-family residential, and other energy use-intensive facilities in the United States had operational CHP systems, representing a combined electric generation capacity of 82,600 MW. 631 of these systems, totaling 5,500 MW, were in New York State.

    Click on the Map and Performance Data tabs to explore who is using this technology and to view performance data for dozens of systems installed in New York State.

NYSERDA’s Combined Heat and Power Program

NYSERDA’s Combined Heat and Power Program provides incentives for the installation of grid-connected CHP systems. The Program helps to ensure that customers acquire quality, durable, properly-sized CHP equipment through competent system vendors. Eligible facilities must pay the System Benefits Charge (SBC) on their electric bill, or anticipate doing so in the case of new construction. The Program is currently closed — please email NYSERDA with questions on a future solicitation.

  • NYSERDA’s CHP Program supports procurement through two paths:

    Catalog Approach

    The catalog approach is an expedited path for small systems totaling up to 1.3 MW in size.

    • Customers select a pre-approved vendor and one or more pre-approved CHP equipment modules from NYSERDA’s CHP Catalog, which may be updated frequently.
    • The pre-approved vendor submits the incentive application, acts as a single point of responsibility for the entire project, and provides a minimum 5-year maintenance/warranty agreement on the CHP system. For approved applications, NYSERDA will contract with and pay incentives solely to the customer-selected vendor.
    • CHP systems that fall within NYSERDA’s Conservative Sizing Guidelines will receive a more streamlined review process. These guidelines have been developed for common building types based on combinations of site characteristics and CHP System sizes that have been shown to perform well. The guidelines can be found in NYSERDA’s CHP Catalog.

    Custom Approach

    The custom program uses a traditional design-build approach for larger and more complex systems that are 1 MW or larger.

    • Customers select a vendor and the equipment of their choice.
    • Incentive applications can be submitted by site owners, CHP system owners, or any project team member that is willing and capable of taking responsibility for the proper design, integration, installation, commissioning and maintenance of the CHP system.
    • NYSERDA will vet the proposed vendor, equipment, and system size.
    • If the application is approved, NYSERDA will contract with and pay incentives solely to the applicant.
  • The N+1 Option

    Sites that desire increased resiliency can install a CHP system with additional, redundant generator unit(s) of the same size. These systems with redundancy are often referred to as N+1 configurations. NYSERDA encourages N+1 installations as they maximize system availability, and improve operating flexibility such as reducing demand charges and creating revenue when installed in a utility company-sponsored demand response program. As an example, a hotel suitable for a 500-kW system might have three 250 kW generators. Under normal operations, two of the generators would be used on a rotating basis to provide the required 500 kW capacity. When a utility company calls for demand response or during grid outages, all three of the generators could be used for an overall capacity of 750 kW. This configuration also extends the life of the CHP system prime movers by distributing run hours over multiple units.

    Under the NYSERDA program, additional funding for the N+1 option is available exclusively for black-start capable systems, which are capable of full operation during grid outages.

    Mitigating the Impact of Natural Disasters

    Optimizing CHP solutions may require addressing the impact of extreme weather conditions. The NYSERDA CHP program provides additional incentives for siting projects away from potential flooding. Information on flood zones can be found on our Resouce page.

  • At the time of application, a project should meet all application requirements and be ready to proceed within NYSERDA’s specified milestone schedule.

    • Applications for Catalog or Custom Approach CHP systems larger than those identified in NYSERDA’s Conservative Sizing Guidelines, or in building types not covered by the guidelines, must include a properly performed technical feasibility study.
    • NYSERDA will review each application, and in its sole discretion, assign the appropriate incentive.

  • Through ERS Inc., NYSERDA offers New York State facility representatives preliminary engineering analysis as well as general CHP project assistance at no cost to the customer. ERS’ representatives can assess CHP installation feasibility, potential sizing options, and project cost considerations. Their team can help identify potential obstacles and support a facility’s bidding and bid review process. Contact ERS at 212-789-8182 or

    The US Department of Energy CHP Technical Assistance PartnershipLink opens in new window - close new window to return to this page. can also provide site-specific information about CHP feasibility at no cost to the customer.

    Larger and more complex CHP projects may require a more detailed technical review. NYSERDA’s Flexible Technical Assistance Program offers a cost-sharing option for in-depth technical and financial CHP feasibility assessments and program application assistance. Projects that fall outside NYSERDA’s Conservative Sizing Guidelines may be especially well-suited for these services.