Cogeneration involves reusing the waste heat from electricity generation, thus consuming less fuel than would be needed to produce the electricity and heat separately.

Small, natural gas powered electricity generators in industrial or residential areas can supply heat for use by factories, office buildings, and household clusters.

The heat can be used for space heating, hot water, and to run absorption chillers for refrigeration and air-conditioning. It can be used in industry for chemical and biological processes.

Local Heat

Heat is best transported over short distances (<500m), so the cogeneration plant should be located close to where the heat will be used.

Gas and liquid fuels are good for cogeneration because they can be piped onto a site easily, and create less pollution (smoke) than wood or coal.

Wood and coal cogeneration plants should be located close to the fuel source because of the difficulty in transporting the fuel.

A small, compact country town with an adjacent fuelwood patch could be heated and powered by a cogeneration plant located in between the town and the patch.

Local Electricity

Cogeneration is often small scale, and therefore suitable for local generation - generating electricity close to consumers, thus reducing transmission losses.



Cogeneration - Combined Heat and Power (Electricity) Generation. Michael Roarty. Australian Parliamentary Library. 1999

Cogeneration or CHP (combined heat and power) is the simultaneous production of electricity and heat using a single fuel such as natural gas, although a variety of fuels can be used. The heat produced from the electricity generating process (for example from the exhaust systems of a gas turbine) is captured and utilised to produce high and low level steam. The steam can be used as a heat source for both industrial and domestic purposes and can be used in steam turbines to generate additional electricity (combined cycle power).

Cogeneration for on-site power and heat is well established overseas, especially in Scandinavian countries. Its use is gradually increasing in Australia, although optimistic forecasts of rapid implementation and growth in the last couple of years have yet to be realised.

Cogeneration in Residential Buildings

Inquiry into Energy Consumption in Residential Buildings. NSW Parliament. 2004



Cogeneration is a high-efficiency energy system that produces both electricity (or mechanical power) and valuable heat from a single fuel source. Sometimes known as "combined heat and power", or CHP. It offers major economic and environmental benefits because it turns otherwise wasted heat into a useful energy source.

This greater efficiency means carbon dioxide emissions are cut by up to two thirds when compared with conventional coal-fired power stations. Local air quality benefits can also be achieved through the replacement of older coal-fired boilers. In addition to reducing operating costs, cogeneration also increases resource utilisation.

SEDA research indicates that the potential for small-scale, gas-fired cogeneration in NSW is well over 200 MW. There is also significant potential for cogeneration plants fired by other fuels, including biomass (for example, plant waste from sugar or cotton harvesting), or biogas (for example, methane produced by sewage works or piggeries). Some 200 MW of gas-fired cogeneration alone could reduce the State's energy bill by $50 million per year and reduce greenhouse gas emissions by 800,000 tonnes per year.


Cogeneration. Sustainability. Victoria

Cogeneration is a means of supplying a sites power and thermal energy needs from the combustion of a single fuel and as such is significantly more fuel efficient than conventional technologies (that is power in the form of electricity and/or shaft power from one plant, and thermal energy in the form of heat and/or cooling from a separate plant).

Cogeneration technologies include: reciprocating gas or diesel engines, gas turbines, steam turbines, and fuel cells [the latter still emerging].

For sites where cooling is required (such as building air-conditioning or for process cooling), the steam or hot water generated by a cogeneration plant can be used to generate chilled water using an absorption chiller rather than electrically driven refrigeration (trigeneration).

Cogeneration will usually provide an overall energy conversion efficiency somewhere in the range of 70–75%, if all useable heat is recovered. This compares to the 25–30% conversion efficiency of a typical single-cycle centralised power station. Figure 1 presents a schematic which compares the relative energy efficiency of conventional generation and cogeneration.

Typical applications include: hospitals, large manufacturing facilities, and leisure centres. The primary fuel used in these facilities is natural gas, however there are also applications which use coal, process by-products, wastewater and landfill gas.


Reciprocating engines: is $1000 to $1500 per kW electrical output (up to 3 MW).

Gas turbines: $1000 to $2000 per kW electrical output (2 to 10 MW range)


Can have a local air quality impact (nitrogen oxide emissions are of particular concern).

Significant up-front capital cost (so not viable for many sites).

Some cogeneration units are not amenable to rapid thermal load changes (therefore conventional equipment may still be required to meet short-term changes in load).

Cogeneration in Large Buildings

University Delivers an Australian First (PDF). Energy Smart

The University of Newcastle has [installed a] 30kW natural gas-powered microturbine at the heart of the Medical Sciences building cogeneration unit. Capital Cost: About $150,000.

Manufactured in the United States, the microturbine generator can operate on a variety of gases and liquid fuels. Apart from being used in a cogeneration application, it can also serve to generate primary, emergency backup or standby power.

Unlike traditional gas-fired engines, the microturbine is a plug-and-play solution. It has an onboard control unit which controls the connection to the grid, eliminating the need for other equipment.

The microturbine has only one moving part, a rotor which runs on air bearings and so doesn’t require lubrication [or] significant maintenance. The spark plug used to initially ignite the microturbine only requires replacement every two years.

The Medical Sciences building uses about 1500MWh of electricity and 1.65 TJ of natural gas every year. The plant currently operates from 7am until 11pm, Monday to Friday. The microturbine generates about 23kW of electricity daily [average].

The microturbine will help the University reduce its greenhouse gas emissions by about 100 tonnes per annum while delivering a $5,000 saving on electricity annually.


Australian Business Council for Sustainable Energy - Represents the broader sustainable energy industry, covering renewables, waste-to-energy, gas-fired generation and energy efficiency.