Sustainability & Energy Efficiency

What Are The Benefits of Cogeneration?

4 min read

Cogeneration, also known as combined heat and power (CHP), merges the production of usable heat and electricity into a single process that can substantially reduce carbon emissions and energy costs.

It typically takes place at or near the point of consumption and uses heat that would normally be lost in the power-generation process.


Despite its numerous benefits, it’s still largely underutilized in the United States—a fact that has not escaped the Obama administration. According to, an Executive Order is in place to reach 40 gigawatts (GW) of new CHP (a 50 percent increase) by 2020.

If this goal is reached, energy users could collectively save up to $10 billion per year in utility expenses. Furthermore, the new energy would save an estimated 1 percent of total energy usage in the country, reduce our country’s annual carbon dioxide emissions by as much as 150 million metric tons (think emissions from over 25 million motor vehicles), and create $40 billion to $80 billion in new capital investments.

Benefits of Cogeneration

Cogeneration can significantly reduce carbon emissions and energy costs, as this EPA case study shows.


And while typical combustion systems have an efficiency of about 40-50 percent, cogeneration systems that combine the power and heat generation processes can be up to 80 percent efficient. In addition to reducing carbon emissions and contributing to sustainability goals, cogeneration offers many other benefits, including:

  • Enhancing operational efficiency to lower overhead costs
  • Reducing energy waste, thereby increasing energy efficiency
  • Offering greater energy independence by moving a portion of the load off the grid
  • Allowing companies to replace aging infrastructure

When combined with a renewable fuel supply, such as biomass or biogas, cogeneration is an environmentally responsible source of reliable, base load generation. These benefits have attracted the attention of many large-scale facilities.

Who Uses Cogeneration?

LA Sanitation recently announced the construction of a 25-megawatt biogas-fueled cogeneration plant that will supply 100 percent of the steam and electricity produced to power its Hyperion Water Reclamation Plant. The plant is expected to generate more than 173 million kilowatt-hours of electricity per year and supply up to 70,000 pounds per hour of steam, using the methane captured through Hyperion’s sewage treatment process as its fuel source.

Constellation is proud to work on this project, which will offer the wastewater treatment facility a cost-effective and sustainable source of energy while reducing methane and carbon dioxide emissions.

Constellation is working with Procter & Gamble to construct and operate a 50-megawatt $200 million biomass cogeneration plant to supply steam to its paper manufacturing facility in Albany, Georgia. The biomass plant will turn scrap wood into steam and electricity, providing 100% of the steam that P&G needs to make Bounty paper towels and Charmin toilet tissue at its Albany plant. What’s more, the incoming biomass will provide up to 70% of the overall energy needed by the site. When it opens in 2017, the biomass plant will significantly increase P&G’s use of renewable energy and move the company closer to its goal of obtaining 30% of its total energy from renewable sources by 2020.

Is Cogeneration Right For You?

The industrial sector holds the largest potential for successful CHP projects because it accounts for more than one-third of the United States’ total energy consumption. But smaller-scale, commercial applications are becoming increasingly popular as well.

Colleges—including the University of California, San Diego, and the University of Missouri—have adopted CHP systems. Hospitals, including Gundersen Health System in Wisconsin, have also taken advantage of the trend.

However, the cost of executing a CHP project is no small investment. If you are considering implementing a combined heat and power system, your first step is to determine whether your facility is a good match for the upgrade.

The ideal candidate for a combined heat and power project are those that:

  • Consume large amounts of electric and heat energy
  • Pay more than $0.06/kWh
  • Wish to benefit from state and utility incentives
  • Would be devastated by any length of downtime
  • Operate more than 3,000 hours per year
  • Operate using thermal loads
  • Are planning an expansion, new construction, retrofitting or upgrade to central plan equipment and facilities
  • Have access to local biomass resources (like landfills)

Cogeneration Options

Constellation offers a variety of options to help your business improve its energy efficiency, including combined heat and power projects. We have options that may require no up-front capital expenses and can be funded with savings that are achieved over time. That includes a long-term Energy Service Agreement with performance guarantees or a Power Purchase Agreement.

We can provide as much or as little support for your cogeneration project as needed, including design, implementation, commissioning, operations, maintenance and fuel procurement. You can manage your own cogeneration assets or outsource management to us.

To learn more, request a quote today.

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