In short. CHP, or cogeneration, uses one engine to produce electricity and recover the heat a normal generator throws away through its radiator and exhaust. A gas engine CHP plant can turn 75 to 85 percent of its fuel into useful energy instead of 35 to 42 percent, but only when the site needs the heat at the same time as the electricity for most of the year. Size it to the base load, not the peak.
Where the heat goes in an engine
Of the fuel energy entering a reciprocating gas engine, roughly 35 to 42 percent leaves as electricity. The rest is heat: around a quarter to a third in the exhaust gas at 400 to 550 degrees Celsius, a similar share in the jacket water and lubricating oil cooling at around 80 to 95 degrees Celsius, some in the charge air cooler, and a few percent as radiation from the engine surface. In a conventional generator the jacket heat goes to the radiator and the exhaust heat to the atmosphere. CHP intercepts these streams with heat exchangers and puts them to work. The exact split is engine specific and is published in the manufacturer’s heat balance, which is the starting document for any CHP design. The general treatment of rejected heat is in heat rejection.
What the recovered heat can do
| Heat source | Typical temperature | Recovery equipment | Common uses |
|---|---|---|---|
| Jacket water and oil cooler | 80 to 95 °C | Plate heat exchanger in the engine cooling circuit | Hot water for process washing, kitchens, laundries, boiler feed preheat, digester heating |
| Exhaust gas | 400 to 550 °C before recovery | Exhaust gas heat exchanger or waste heat boiler | Low pressure steam, hot water at higher temperature, thermal oil, drying air |
| Charge air cooler, low temperature stage | 40 to 50 °C | Separate low temperature circuit | Space or pool heating, usually rejected in Indian climates |
| Combined jacket and exhaust | Hot water at up to about 110 °C, or steam | Integrated recovery module | Absorption chillers, which is the basis of trigeneration |
Temperature matters as much as quantity. A dairy that needs 80 degree water for cleaning can use the jacket heat directly. A textile or chemical plant needing steam at 8 bar can only use the exhaust share through a waste heat boiler, and will still need its own boiler for the balance. The heat demand must be described by temperature, quantity, hours and season before the recovery scheme is designed.
Efficiency and the value of the heat
η_total = (E_el + Q_useful) / E_fuel
E_el is the electrical energy produced, Q_useful is the heat actually used by the site, and E_fuel is the fuel energy input on a lower heating value basis, all over the same period. Worked example (illustrative): a 1 MW gas engine at 40 percent electrical efficiency burns 2.5 MW of fuel. The heat balance shows 0.5 MW recoverable from the jacket and 0.55 MW from the exhaust down to 120 degrees Celsius. If a hotel and laundry use 0.9 MW of that heat for 6,000 hours a year, the total efficiency during those hours is (1.0 + 0.9) / 2.5 = 76 percent. If the heat demand drops to 0.3 MW in the hot months, total efficiency falls to 52 percent and the radiator dumps the rest. The annual figure, not the brochure figure at full heat recovery, is what the business case rests on. Note that heat recovered but rejected through a dump radiator is not useful and does not count.
Matching CHP to the site
CHP works where substantial electricity demand and useful heat demand coincide hour by hour. Hospitals, hotels, pharmaceutical and food plants, dairies, textile finishing, paper and chemical sites in Telangana and Andhra Pradesh often have this profile. Matching is done from load data, not peak figures.
- Plot electrical demand and heat demand by hour for representative weekdays, weekends and seasons, using meter data and boiler fuel records.
- Choose an engine size that runs near full load for most hours with its heat absorbed, which usually means sizing to the base load rather than the peak.
- Keep the existing boiler and grid connection for peaks and for engine maintenance periods.
- Decide whether the plant follows heat demand or electrical demand, and what happens to surplus of either.
Plants sized for the rare peak of either demand spend much of the year at part load or dumping heat, and their economics suffer accordingly.
Electrical architecture
A CHP engine that runs for thousands of hours a year almost always operates in parallel with the DISCOM supply. That brings synchronising equipment, generator and interface protection, export or non-export control, energy metering, and the utility’s approval, all of which are covered in integrated power systems. Where the site also needs backup during grid failure, the CHP engine may be designed to island and pick up essential loads, but gas engines accept load steps more slowly than diesel sets, so a separate standby diesel set or a staged load restoration scheme is usual. The fuel side of the design is covered under natural gas generators, and on-site biological gases under landfill and sewage gas power.
The business case
A CHP case compares the cost of fuel for the engine against the value of the electricity it displaces at the site’s tariff plus the value of the heat at what it displaces, typically boiler fuel divided by boiler efficiency, minus engine maintenance, capital cost and the cost of providing backup when the engine is down. Because the engine now serves two systems, an unplanned stop affects both electricity and heat, and the maintenance contract and spares strategy deserve as much attention as the engine selection. Indian industrial gas tariffs, DISCOM demand charges and cross-subsidy surcharges all move the result, so the case should be built from current bills rather than general figures. Where cooling is the main thermal demand, look at trigeneration instead.
Common mistakes
- Sizing the engine to peak electrical demand. It runs at part load most of the time, electrical efficiency drops and the heat is not used.
- Quoting total efficiency from the brochure heat balance. The real annual figure is much lower when seasonal heat demand is accounted for.
- Ignoring heat temperature. Jacket water at 90 degrees cannot raise process steam, and the recovered energy has nowhere to go.
- Removing the existing boiler. When the engine is down for service the site has no heat at all.
- Overlooking the electrical interface approval. The engine is installed but cannot run in parallel until the DISCOM approves the protection scheme.
What to send us
Send twelve months of electricity bills or meter data, boiler fuel consumption records with steam or hot water temperatures and pressures, a description of daily and seasonal operating patterns, and the gas supply details. Photographs of the boiler house, generator room and the electrical main switchboard help us judge where a CHP unit would sit. Use the application engineering enquiry and we will screen whether your heat and power profiles justify a detailed study.
Questions engineers ask
What is the difference between CHP and cogeneration?
They are the same thing. Combined heat and power and cogeneration both describe producing electricity and useful heat from one fuel input in one plant. Trigeneration adds a third output, cooling, usually from an absorption chiller driven by the recovered heat.
Can a diesel generator be used for CHP?
Technically yes, and the heat balance of a diesel engine is similar. In practice diesel CHP is rare in India because diesel fuel is expensive for long-hour operation and emissions limits are stricter for continuous use. Gas engines are the usual choice for CHP, with diesel retained for standby.
How many running hours does CHP need to pay back?
There is no fixed threshold, but CHP plants are generally evaluated on 4,000 or more hours per year with the heat used. Below that, the capital cost and maintenance are spread over too little energy. The actual figure depends on the spark spread between gas price and electricity tariff and on the value of the heat.
Does a CHP plant need permission from the DISCOM?
If it runs in parallel with the grid, yes. The DISCOM will require a protection scheme with loss of mains and reverse power functions, metering, and documentation in line with CEA connectivity regulations. Export, if any, needs a separate arrangement under state regulations.
Technical content reviewed by Srinivas Reddy, Managing Partner, Reddy Generators. Last updated 19 October 2026.