Cogeneration (also known as combined heat and power (CHP)) and district energy represent a proven and cost-effective series of technologies that deliver electricity, heating and cooling at high efficiency where it is needed - in industries, in towns & cities and in buildings of all sizes. 

Today, these technologies are increasingly being applied using renewable fuels, creating a critical bridge to a low-carbon future.

The economic and environmental benefits of cogeneration is such that these technologies meet 40-50% of total national electricity demand in some countries.  As a result, these countries are now enjoying significant, year-on-year reductions in fuel use, carbon emissions and energy costs, as well as enhanced energy security.  In this way, cogeneration and district energy are being used as a policy tool to meet broader environmental and energy security objectives.

Cogeneration can take many forms and encompasses a range of technologies, but will always be based upon an efficient, integrated system that combines electricity production and a heat recovery system.

By using the heat output from the electricity production for heating or industrial applications, cogeneration plants generally convert 75-80% of the fuel source into useful energy, while the most modern cogeneration plants reach efficiencies of 90% or more.  Cogeneration plants also reduce transmission and distribution losses as they are sited near the end user.

Cogeneration in Europe

Europe has actively incorporated cogeneration into its energy policy.  In September 2008 at a hearing of the European Parliament’s Urban Lodgement Intergroup, Energy Commissioner Andris Piebalgs is quoted as saying, “security of supply really starts with energy efficiency.”  Energy efficiency and cogeneration are recognized in the opening paragraphs of the European Union’s Cogeneration Directive 2004/08/EC.  This directive intends to support cogeneration and establish a method for calculating cogeneration abilities per country. The development of cogeneration has been very uneven over the years and has been dominated throughout the last decades by national circumstances.

As a whole, the European Union currently generates 11% of its electricity using cogeneration, saving Europe an estimated 35 Mtoe per annum.  However, there is large difference between Member States with variations of the share of cogeneration in electricity generation of between 2% and 60%.  Europe has the three countries with the world’s most intensive cogeneration economies: Denmark, the Netherlands and Finland.

Other European countries are also making great efforts to increase their efficiency.  Germany reported that at present, over 50% of the country’s total electricity demand could be provided through cogeneration. So far Germany has set the target to double its electricity cogeneration from 12.5% of the country’s electricity to 25% of the country’s electricity by 2020 and has passed supporting legislation accordingly in “Federal Ministry of Economics and Technology, (BMWi), Germany, August 2007.  The UK is also actively supporting combined heat and power.  In light of UK’s goal to achieve a 60% reduction in carbon dioxide emissions by 2050, the government has set the target to source at least 15% of its government electricity use from CHP by 2010.  Other UK measures to encourage CHP growth are financial incentives, grant support, a greater regulatory framework, and government leadership and partnership.

According to the IEA 2008 modelling of cogeneration expansion for the G8 countries, expansion of cogeneration in France, Germany, Italy and the UK alone would effectively double the existing primary fuel savings by 2030.  This would increase Europe’s savings from today’s155.69 TWh to 465 TWh in 2030.  It would also result in a 16% to 29% increase in each country’s total cogenerated electricity by 2030.

Cogeneration in the United States

The first use of cogeneration was done by Thomas Edison.  His 1882 Pearl Street Station, the world’s first commercial power plant, was a combined heat and power plant, producing both electricity and thermal energy while using waste heat to warm neighbouring buildings.

In 2001, the US CHPA, US EPA and US DOE developed a roadmap, which was the product of extensive research and a series of workshops to develop a profile of national needs and opportunities for this technology.  The roadmap has been updated annually and has made a significant contribution in the growth in installation of combined heat and power.  The initial goal was to double installed CHP capacity in the US by 2010 - from 46 GW to 92 GW and by 2008 the total installed CHP capacity had risen to 85 GW and 8% of US electricity generation at over 3 300 facilities.

The large-scale district energy systems are located in many major cities, and 330 university campuses use district energy systems as a low-carbon, decentralised energy solution. The large base of installed capacity in the US is the result of supportive federal policies in the 1970s and 80s, including PURPA, the Public Utilities Regulatory Policy Act, which required utilities to purchase electricity from CHP plants at a set rate.  A number of US States, including California, New York and other States in the Northeast, also provide incentives and recognition in environmental regulations for CHP, which has supported new development. However, the partial repeal of PURPA, as well as a wide diversity in state support, have resulted in a patchwork of CHP markets.

As a result, there are important barriers that must be addressed if the US is to realise the GHG and energy benefits associated with greater use of CHP and district energy in the future.