CHP is an energy-efficient technology that generates electricity and captures the heat that would otherwise be wasted to provide useful thermal energy—such as steam or hot water—that can be used for space heating, cooling, domestic hot water, and industrial processes. CHP can be located at an individual facility or building, or be district energy or utility resource. CHP is typically located at facilities where there is a need for both electricity and thermal energy.

Nearly two-thirds of the energy used by conventional electricity generation is wasted in the form of heat discharged to the atmosphere. Additional energy is wasted during the distribution of electricity to end-users. By capturing and using heat that would otherwise be wasted, and by avoiding distribution losses, CHP can achieve efficiencies of over 80 percent, compared to 50 percent for typical technologies (i.e., conventional electricity generation and an on-site boiler).