What is CHP?
Combined heat and power (CHP) systems (also known as cogeneration systems) generate electricity (and/or mechanical energy) and thermal energy in a single, integrated system. This contrasts with common practice in this country where electricity is generated at a central power plant, and on-site heating and cooling equipment is used to meet non-electric energy requirements. The thermal energy recovered in a CHP system can be used for heating or cooling in industry or buildings. Because CHP captures the heat that would be otherwise be rejected in traditional separate generation of electric or mechanical energy, the total efficiency of these integrated systems is much greater than from separate systems.

CHP is not a new technology, especially in large industrial applications, hospitals and university campuses, and district energy systems in urban areas. In fact, the nation's first commercial power plant, Thomas Edison's Pearl Street Station, which began operations in New York City in 1882, served lower Manhattan with both electricity for lighting and steam for local manufacturing. The Public Utilities Regulatory Policy Act of 1978 (PURPA) stimulated CHP capacity growth from approximately 12 GW in 1980 to 45 GW by 1995. Since 1995 the pace of CHP installations has stalled due to uncertainties of the changing electricity marketplace.

The potential benefits from increasing the use of CHP and accomplishing the CHP Challenge goal by 2010 are enormous. Doubling the amount of CHP capacity in the U.S. could annually produce:

• 46 GW of new, clean electric capacity
• $5 billion in energy cost savings
• 1.3 trillion Btus per year in reduced energy consumption
• 0.4 million tons reduction in NOx emissions
• 0.9 million tons reduction in SO2 emissions
• 35 million metric tons reduction in carbon equivalent emissions.