Energy Decision #19: Combined Heat and Power Explained: When Onsite Power Actually Pays

Combined Heat and Power (CHP) and Cogeneration let facilities produce electricity and useful heat from the same fuel input, right at the plant. For the right sites, that can mean double‑digit energy cost reductions and a big boost in resilience during grid outages. For the wrong sites, it can turn into an expensive, under‑used asset. This episode walks through how to tell the difference. This is Energy Decision #19 in the complete C&I energy management series from Tactical Energy Group. 100 decisions. Every one that matters. In this episode, Daniel Burke covers: What Combined Heat and Power (CHP) and cogeneration actually are and how they recover waste heat How total system efficiency can reach 60–80% versus roughly 50% for separate grid power and boilers Prime mover options: reciprocating engines, combustion turbines, steam turbines, microturbines, and fuel cells Why load matching between electric and thermal demand is the single biggest determinant of CHP success Core financial metrics: spark spread, heat rate, capacity factor, thermal‑to‑electric ratio, and payback period Capital cost ranges, regulatory hurdles, and stranded‑asset risk operators need to see up front A worked 5 MW university campus scenario with about a 3.3‑year payback and major resilience value A practical decision path for industrial manufacturers, hospitals, universities, data centers, and wastewater plants Who this is for: plant managers, facility leaders, CFOs, and energy managers at industrial facilities, hospitals, universities, data centers, and wastewater treatment plants asking, “Should we invest in CHP to cut energy cost and improve uptime, or is this a distraction for our site?” If you’re trying to decide whether to invest in a CHP system to reduce energy costs and enhance operational resilience, this episode is built for you.