Cogeneration or Combined Heat and Power (CHP) is a highly efficient and environmentally attractive means of generating heat and electric power at the same time. Cogeneration is achieved when a generating plant is constructed in conjunction with an industrial facility (host) that has needs for both the power and heat energy that is produced.
Low pressure steam is provided to the host after it is used for power generation
Some hosts consume high pressure steam from the cogen, while others supply surplus high pressure steam where it’s used to generate power instead of being vented
Host waste gases generate power rather than being burnt in flare stacks
Power is provided to the host to avoid transmission losses
Sharing process products such as cooling water, compressed air, water treatment and feed water improve efficiency and costs
The actual efficiency of a CHP plant depends on how well it supplies the heat it produces. Since the heat is generally carried as hot water, the efficiency is greatest when the power plant is closest to the buildings it's serving. In other words, CHP works best as a decentralized form of energy supply with more and smaller power plants built very close to local communities. Cutting the distance between power plants and consumers also makes the electricity supply more efficient: since the electrical power has to travel down shorter lengths of wire, less energy is lost due to resistance. Taking decentralization to its logical conclusion, it can even work out efficient for offices, schools, hotels, and apartment buildings to have their own mini or micro CHP power plant producing their electricity and hot water where it is consumed and sending any unwanted electricity to the power grid for other people to use.