Combined heat and power advantages and disadvantages need to be considered together before deciding whether CHP, also known as cogeneration, is the right energy solution for a site.
The main advantage of combined heat and power (CHP) is straightforward: electricity is generated on-site while heat that would otherwise be wasted is recovered for a useful purpose. Where there is a consistent demand for both electricity and heat, this can achieve high overall energy efficiency and reduce energy costs.
The main disadvantage is equally important: CHP only delivers its full benefit when the recovered heat can actually be used. A CHP installation with little demand for its heat may perform well mechanically while delivering disappointing economic and environmental benefits.
This distinction is especially important at anaerobic digestion (AD) plants. Biogas provides a renewable fuel for CHP, and some recovered heat can normally be used to maintain digester temperature. However, the amount of surplus heat that can be beneficially used varies greatly between sites.
This article explains the principal advantages and disadvantages of CHP, with particular attention to biogas CHP systems used at anaerobic digestion plants.
Key Takeaways: CHP Advantages and Disadvantages
- CHP generates electricity and useful heat from the same fuel. By recovering heat from electricity generation, a well-designed system can achieve overall efficiencies above 80%.
- The biggest CHP advantage is improved fuel utilisation. Less primary energy may be required than when equivalent electricity and heat are generated separately.
- The biggest CHP limitation is the need for useful heat demand. Heat that is recovered but then rejected because nobody needs it provides little or no useful energy benefit.
- CHP can reduce energy costs, but savings are site-specific. Fuel prices, electricity values, maintenance costs, operating hours and the value of useful heat all affect the economics.
- CHP requires capital investment and regular maintenance. Gas engines in particular require planned servicing and periodic major overhaul.
- Biogas CHP has additional considerations. Hydrogen sulphide, moisture, siloxanes and other contaminants may require removal to protect the engine and exhaust-treatment equipment.
- CHP combustion produces emissions. NOx, carbon monoxide and other pollutants must be considered, and some installations require exhaust after-treatment such as Selective Catalytic Reduction (SCR).
- CHP is not automatically the best use of biogas. For some AD plants, upgrading biogas to biomethane may offer a better long-term use of the gas.
What Is Combined Heat and Power?
Combined heat and power, usually abbreviated to CHP and also known as cogeneration, is the simultaneous production of electrical or mechanical power and useful thermal energy from the same fuel.
A conventional electricity-generating engine converts only part of the fuel energy into electrical power. Much of the remaining energy appears as heat in the engine cooling system and exhaust gases.
Without heat recovery, this thermal energy is normally discharged to the environment through radiators, cooling towers or exhaust gases.
A CHP installation recovers some of this heat and supplies it to a useful heat demand.
Depending on the installation, recovered heat may be used for:
- hot-water production;
- industrial process heating;
- space heating;
- district or community heating;
- drying processes;
- pasteurisation;
- greenhouse heating; or
- maintaining anaerobic digesters at their required operating temperature.
UK government guidance describes CHP as a highly efficient process because it captures and uses heat produced as a by-product of electricity generation. It states that CHP typically achieves overall efficiencies above 80% where the heat is supplied to an appropriately matched demand.
That final qualification – appropriately matched heat demand – is fundamental to understanding both the advantages and disadvantages of CHP.
Combined Heat and Power Advantages and Disadvantages at a Glance
| Advantages of CHP | Disadvantages of CHP |
|---|---|
| High overall energy efficiency when heat is used | High initial capital cost |
| Recovers energy that might otherwise be wasted | Requires a suitable and sustained heat demand |
| Can reduce purchased electricity | Regular engine maintenance and overhaul required |
| Can reduce total fuel consumption compared with separate generation | Economics depend strongly on fuel and electricity prices |
| On-site generation reduces transmission losses | Heat distribution infrastructure can be expensive |
| Can improve energy resilience | Combustion produces regulated air emissions |
| Well suited to renewable biogas | Biogas may require substantial gas cleaning |
| Recovered heat can support the AD process itself | Surplus heat may have little value without a nearby user |
Advantages of Combined Heat and Power
1. CHP Can Achieve High Overall Energy Efficiency
The principal advantage of CHP is better utilisation of the energy contained in the fuel.
When an engine generates electricity, considerable thermal energy is produced at the same time. Recovering useful heat from the engine cooling circuit and exhaust gases allows a much greater proportion of the original fuel energy to provide a useful output.
UK government guidance states that CHP typically achieves efficiency above 80%.
However, this figure needs to be understood correctly. It generally represents the combination of electrical output and useful thermal output.
If recovered heat is not needed and is subsequently rejected to atmosphere, it should not be regarded as providing the same practical benefit as heat that replaces another energy source.
2. CHP Makes Use of Heat That Would Otherwise Be Wasted
A conventional reciprocating engine must be cooled whether its heat is useful or not.
CHP turns part of this cooling requirement into an energy resource.
Heat may be recovered from:
- engine jacket cooling water;
- lubricating oil cooling;
- charge-air cooling; and
- hot exhaust gases.
The temperatures and quantities available differ between engine designs, so not all recovered heat is equally useful for every application.
This is why heat demand should be considered during CHP selection rather than after the generator has been ordered.
3. CHP Can Reduce Energy Costs
Where a site would otherwise purchase electricity from the grid and separately buy fuel to produce heat, CHP can reduce total energy expenditure.
The financial benefit comes from several sources:
- displacement of purchased electricity;
- displacement of boiler fuel or another source of heat;
- possible export of surplus electricity;
- reduced exposure to some network charges; and
- more effective use of an on-site fuel such as biogas.
However, claims that CHP automatically saves a particular percentage should be treated cautiously.
The economic result depends on the individual site.
A proper assessment should include fuel value, electricity prices, heat value, operating hours, engine efficiency, parasitic electricity demand, maintenance costs, overhaul costs, finance and the proportion of recovered heat that can genuinely be used.
4. On-Site Electricity Generation Avoids Some Network Losses
Electricity generated at or close to the point of use avoids some of the transmission and distribution losses associated with moving electricity over the wider grid.
For industrial facilities, wastewater treatment works, farms and AD plants with substantial continuous electrical loads, using CHP electricity on-site can therefore be particularly attractive.
Exporting electricity may also be possible, but the value and practical implications of export depend on the grid connection and commercial arrangements.
5. CHP Can Reduce Carbon Emissions – Under the Right Conditions
CHP can reduce carbon emissions compared with producing the same useful electricity and heat separately because less fuel may be required overall.
UK government guidance states that CHP can reduce carbon emissions compared with conventional separate generation.
But the carbon benefit is not automatic.
It depends upon the fuel, electrical efficiency, amount of heat genuinely used, what form of electricity is displaced and what fuel or technology would otherwise have supplied the heat.
As electricity grids become progressively lower-carbon, these comparisons can also change over the operating life of a CHP plant.
For biogas CHP, the assessment is different again because the fuel originates from anaerobic digestion and alternative uses of that biogas may include upgrading it to biomethane.
6. CHP Can Improve Energy Resilience
On-site generation can reduce dependence on imported electricity and may contribute to site energy resilience.
This can be valuable for facilities with continuous process loads.
However, a CHP unit should not automatically be assumed to provide emergency power during a grid outage. Island operation requires suitable electrical design, protection, controls and operating arrangements.
7. Biogas CHP Can Use a Fuel Produced on Site
Anaerobic digestion plants have a particularly strong reason to consider CHP: they produce their own gaseous fuel.
Raw biogas containing methane can be cleaned to the quality required by a suitable gas engine and converted directly into electricity and heat without first being upgraded to grid-quality biomethane.
This can make CHP comparatively straightforward at sites where there is a good use for both energy outputs.
For a detailed explanation of this application, see our guide to biogas CHP systems and efficient energy utilisation.
8. Recovered CHP Heat Can Support Anaerobic Digestion
A particularly useful feature of CHP at an AD plant is that some recovered heat normally has an immediate on-site use.
Most digesters need heat to maintain their required biological operating temperature. Heat may also be required for feedstock warming, pasteurisation or other processes.
This provides a relatively reliable base heat demand.
But it does not necessarily provide a use for all the heat available from the CHP engine.
That leads directly to one of the most important disadvantages.
Disadvantages of Combined Heat and Power
1. CHP Needs a Genuine Demand for the Heat
This is arguably the most important limitation of CHP and one that is sometimes obscured by headline efficiency figures.
There is an important difference between:
heat that can theoretically be recovered
and
heat that can actually be put to a useful purpose.
An engine may produce substantial recoverable thermal energy, but if there is no demand for it, the heat ultimately still has to be rejected.
The UK Combined Heat and Power Quality Assurance (CHPQA) programme reflects this principle by requiring qualifying useful heat outputs to be quantified and justified.
For an AD plant, digester heating may consume only part of the available thermal output, particularly during warmer weather.
A good CHP feasibility study therefore asks not merely:
“How much heat will the engine produce?”
but:
“Who will use this heat, at what temperature, for how many hours each year, and what energy source will it genuinely replace?”
2. CHP Has a Significant Initial Capital Cost
A CHP installation requires considerably more than an engine and generator.
Depending on the project, capital expenditure may include:
- the CHP engine-generator package;
- gas treatment;
- heat exchangers;
- pumps and insulated pipework;
- electrical switchgear;
- transformers and grid connection;
- controls and monitoring;
- exhaust system and stack;
- emissions-control equipment;
- acoustic treatment;
- buildings or containers; and
- civil engineering works.
A long heat-main connection to an external customer can materially alter the economics.
3. CHP Engines Require Regular Maintenance
A reciprocating gas engine is a substantial piece of mechanical plant operating for many thousands of hours each year.
It requires routine servicing and periodic replacement or overhaul of major components.
Maintenance may include oil and filter changes, spark plugs, valve adjustment, ignition components, turbocharger work and ultimately major engine overhaul.
Maintenance downtime also needs to be allowed for when estimating annual electricity and heat production.
This is particularly important at AD plants where biogas production continues while a CHP engine is unavailable.
Designers may need to consider gas storage, standby CHP capacity, boilers, flaring or another means of managing the gas during outages.
4. CHP Economics Depend on Operating Hours
CHP equipment is generally most attractive when it operates for long periods at an efficient load.
An oversized unit that frequently stops, starts or operates at low load may produce disappointing financial performance.
The relationship between biogas production and engine capacity is therefore important.
For an AD plant, CHP sizing should be based on a realistic assessment of expected gas production throughout the year rather than simply the highest theoretical biogas yield.
Our separate article on combined heat and power system design considerations discusses the engineering issues involved in CHP selection and sizing.
5. Heat and Electricity Demand Do Not Always Coincide
Another disadvantage is that the demand for heat and electricity may follow different patterns.
A building may need substantial heat in winter but little in summer. An industrial process may operate only during certain shifts. An AD plant may have a relatively continuous electrical demand but a varying requirement for surplus thermal energy.
CHP sizing therefore requires consideration of daily and seasonal load profiles.
Thermal storage can sometimes help match heat production to demand, but storage adds cost, takes up space and cannot solve every mismatch.
6. Transporting Heat Can Be Expensive
Electricity is comparatively easy to transmit.
Low-temperature heat is not.
Supplying an external heat customer may require insulated flow and return pipework, pumps, heat exchangers, metering and controls.
Heat is also lost from the distribution system.
The greater the distance between the CHP plant and heat user, the harder the project economics can become.
This is why proximity to a reliable heat user can be a decisive factor when assessing CHP opportunities.
7. Biogas CHP Requires Fuel-Gas Treatment
Biogas is not equivalent to clean pipeline natural gas.
Depending on the feedstock and AD process, it can contain hydrogen sulphide, water vapour, siloxanes and other contaminants.
These can cause corrosion, deposits, lubricant deterioration, engine wear and problems with downstream exhaust equipment.
Gas treatment therefore needs to be designed to meet the CHP manufacturer's fuel specification.
Better gas cleaning increases capital and operating costs, but inadequate treatment can be much more expensive if it shortens engine or catalyst life.
8. CHP Produces Air Emissions
CHP improves energy utilisation, but combustion remains combustion.
A gas engine can emit nitrogen oxides (NOx), carbon monoxide (CO), residual hydrocarbons and other pollutants.
Environmental permitting and emissions limits therefore need to be considered during design.
Where primary engine controls cannot achieve the required NOx concentration, Selective Catalytic Reduction may be required.
For a detailed explanation, see our specialist guide to biogas CHP emissions and SCR systems for NOx control.
cc-by-sa/2.0 – © David Wright – geograph.org.uk/p/155043
9. Noise Can Be Significant
Large reciprocating engines generate mechanical and exhaust noise.
Acoustic enclosures, silencers, building design and site layout may therefore be necessary, particularly where there are nearby homes or other noise-sensitive receptors.
Cooling fans can also contribute significantly to site noise.
10. CHP Is Not Necessarily the Best Use of Biogas
This point has become increasingly important for anaerobic digestion developers.
Biogas does not have to be burned in a CHP engine.
It can alternatively be upgraded by removing carbon dioxide, hydrogen sulphide, moisture and other contaminants to produce biomethane.
Depending on the project, biomethane may be injected into a gas network or used as a transport or industrial fuel.
The decision between CHP and biomethane upgrading should therefore be based on the economics and circumstances of the individual plant rather than an assumption that CHP is automatically the normal destination for biogas.
When Does CHP Work Best?
Combined heat and power is most attractive where there is a reasonably continuous demand for both electricity and useful heat.
Potentially favourable sites include:
- anaerobic digestion plants;
- wastewater treatment works;
- food and drink processing facilities;
- industrial manufacturing plants;
- hospitals;
- universities;
- leisure centres;
- hotels;
- district-heating schemes; and
- other facilities with substantial year-round thermal demand.
The ideal site has a predictable electrical base load and a substantial heat demand located close to the CHP unit.
When Is CHP a Poor Choice?
CHP deserves more careful scrutiny where:
- there is little useful heat demand;
- heat demand is strongly seasonal;
- the heat user is a long distance from the generating plant;
- electricity demand is low or highly intermittent;
- the CHP unit would frequently operate at low load;
- grid connection costs are excessive;
- fuel supply is unreliable;
- maintenance support is difficult to obtain; or
- a competing technology provides greater economic or carbon benefits.
For biogas projects, the final point means that CHP should increasingly be compared with biomethane upgrading rather than evaluated in isolation.
The Most Important CHP Calculation: Useful Heat
One of the easiest mistakes when evaluating CHP is to take the manufacturer's electrical efficiency and thermal efficiency figures, add them together and assume that the resulting overall efficiency will be achieved by the project.
That demonstrates the potential energy recovery of the CHP unit.
It does not demonstrate that the site can use all that energy.
For example, assume a CHP installation produces:
- 40 units of useful electricity; and
- 45 units of recoverable heat
from every 100 units of fuel energy.
It might reasonably be described as having the potential for 85% combined energy efficiency.
But if the site can beneficially use only 20 of those 45 heat units, the practical energy-utilisation picture is very different.
The remaining heat still needs to be rejected.
This is why a CHP feasibility assessment should develop a realistic heat balance, ideally over the year, rather than simply quoting the CHP manufacturer's maximum thermal output.
Why “Useful Heat” Really Does Need to Be Useful
The requirement to distinguish between heat that is merely produced and heat that is genuinely useful is not bureaucratic wordplay. UK renewable-energy policy has provided some striking examples of what can happen when financial incentives reward heat production without adequately testing whether that heat is actually needed.
The best-known example was Northern Ireland's Non-Domestic Renewable Heat Incentive (RHI), launched in 2012. A flaw in the original tariff structure meant that, for some biomass installations, the subsidy available for generating heat could exceed the cost of the fuel used to produce it. The more heat an eligible installation generated, the more money its operator could potentially make.
This created what the Northern Ireland Audit Office subsequently described as a “perverse incentive” to generate excessive heat. The controversy became widely known as the “Cash for Ash” scandal, with allegations and evidence concerning buildings being heated despite having little or no genuine requirement for that heat.
It would, however, be misleading to suggest that deliberately creating artificial heat demand was exclusively a Northern Ireland problem. Evidence subsequently submitted to the UK Parliament's Public Accounts Committee concerning the Renewable Heat Incentive in Great Britain also identified known examples of unnecessary heat production, including heating empty buildings and leaving doors and windows open.
The episode illustrates an important principle for CHP assessment: producing heat is not the same as making useful use of heat.
A CHP installation should not receive full credit for thermal energy simply because a heat exchanger can recover it. The relevant question is whether there is a legitimate demand for that heat and whether using the recovered CHP heat displaces heat that would otherwise have had to be supplied from another source.
That principle is particularly relevant to anaerobic digestion. Heat genuinely required for digester temperature control, pasteurisation or another necessary process has a demonstrable use. Heating an unnecessary load simply to improve a theoretical utilisation figure plainly does not.
Combined Heat and Power for Anaerobic Digestion Plants
CHP and anaerobic digestion have historically been a natural combination.
The digester produces methane-rich biogas. A CHP engine burns that gas and produces electricity. Heat recovered from the engine can then be returned to the AD process.
This creates an attractive energy loop:
organic feedstock → anaerobic digestion → biogas → CHP → electricity + recovered heat → heat returned to the AD process.
But the economics should be based on the complete system.
Questions worth asking include:
- How much biogas will actually be produced throughout the year?
- What methane concentration is expected?
- How much electricity will the site itself consume?
- What will exported electricity be worth?
- How much heat does the digester genuinely require?
- Is there another reliable use for surplus heat?
- What gas cleaning will the engine require?
- What will routine maintenance and major overhaul cost?
- What happens to the biogas when the CHP unit is unavailable?
- What emissions-control equipment will be required?
- Would biomethane upgrading provide a better alternative?
These questions are more useful than simply asking whether CHP is “efficient”.
CHP Advantages and Disadvantages: The Engineering Verdict
Combined heat and power is a mature and potentially highly efficient energy technology, but it is not automatically efficient merely because heat-recovery equipment has been fitted to an electricity generator.
The strongest CHP projects have three characteristics:
- a reliable fuel supply;
- a substantial electrical demand or valuable electricity outlet; and
- a reliable, economically useful demand for the recovered heat.
When those conditions exist, CHP can make excellent use of fuel and provide substantial economic and environmental benefits.
When the third condition is absent, headline overall-efficiency figures can be misleading.
This is particularly important for anaerobic digestion plants. Digester heating provides a useful thermal base load, but developers should establish how much additional recovered heat can genuinely be used before assigning an economic or environmental value to it.
Frequently Asked Questions About CHP Advantages and Disadvantages
What is the main advantage of combined heat and power?
The main advantage is improved utilisation of fuel energy. CHP produces electricity while recovering heat that would otherwise often be rejected. Where that heat has a useful application, overall efficiency can exceed 80%.
What is the main disadvantage of combined heat and power?
The principal limitation is that CHP needs a suitable demand for the recovered heat. Without a heat user, much of the potential efficiency advantage disappears.
Is CHP cheaper than buying electricity from the grid?
It can be, but not in every case. The result depends on fuel cost, electricity prices, operating hours, electrical efficiency, heat utilisation, maintenance, capital expenditure and financing. A site-specific feasibility assessment is necessary.
Is CHP renewable energy?
CHP itself is an energy-conversion technique rather than an energy source. Whether its energy is renewable depends primarily on the fuel. CHP using natural gas uses a fossil fuel, whereas CHP using appropriately sourced biogas can produce renewable energy.
How efficient is combined heat and power?
Well-designed CHP systems can achieve overall efficiencies above 80% when both the electrical output and recovered heat are beneficially used. The useful heat demand is therefore crucial when interpreting quoted efficiency figures.
Why is CHP commonly used at anaerobic digestion plants?
Anaerobic digestion produces biogas containing methane that can fuel a gas engine. The resulting electricity can be used or exported, while recovered engine heat can help maintain digester temperature and supply other site heat requirements.
What are the disadvantages of biogas CHP?
In addition to the general disadvantages of CHP, biogas engines may require gas cleaning to remove hydrogen sulphide, moisture and siloxanes. They also require substantial planned maintenance, and combustion emissions such as NOx may need additional control.
Is CHP better than biomethane upgrading?
Neither option is universally better. CHP can be attractive where electricity and heat have good on-site values. Biomethane upgrading may be preferable where there is limited useful heat demand or where biomethane has a stronger market value. The alternatives should be compared for the individual AD project.
Further Reading About Biogas CHP (Combined Heat and Power Advantages and Disadvantages)
This article forms part of our combined heat and power information cluster. For more detailed information, see:
- Biogas Utilisation: Combining Heat and Power Units for Efficient Energy Conversion – our main guide to using biogas in CHP systems.
- Combined Heat and Power Systems – CHP Design Considerations – focusing on CHP sizing and engineering design.
- Biogas CHP Emissions: SCR Systems for NOx Control in Gas Engines – our specialist guide to NOx emissions, Selective Catalytic Reduction and biogas-engine exhaust treatment.
CHP performance and economics are site-specific. Efficiency, costs, emissions and regulatory requirements should be assessed using the proposed equipment, actual energy demands and applicable regulations rather than generic headline figures.
Featured Image illustrates: “Combined heat and power advantages and disadvantages”.
[Published 13 February 2022. Updated 24 April 2026. Rewritten August 2026.]
