Co-generation or combined heat and power (CHP) is an effective energy saving system to simultaneously produce two or more forms of useful energy, e.g. electricity, and steam, hot or chilled water from a single energy source. The type fuels normally used in co-generation includes natural gas, diesel fuel oil, propane, waste liquids or gases from chemical process plants and etc. Co-generation improves energy efficiency from 30% energy captured to almost 90% and it reduces carbon emission.
For example the heat obtained from the combustion of fuel is converted into electric or mechanical energy, while the exhaust heat is utilized as an energy source to produce steam for air-conditioning, drying, etc.