Most fossil fuel-fired industrial combustion applications produce thermal energy (heat) only. This accounts for 30 percent of our fossil fuel consumption. In addition, one-fifth of our electricity is produced by the combustion of fossil fuel in a steam-based power plant optimized for the production of electricity only. In such plants most of the energy in the fuel is rejected as waste heat to the atmosphere or to cooling water. These single energy product systems, producing either thermal energy only or electricity only, represent a substantial waste of energy.

Combined Heat and Power (CHP) facilities, using gas turbines, reciprocating engines, industrial boilers or fuel cells can provide significant improvements in energy efficiency by producing multiple energy products from the same fuel and the same combustion process. These energy products can include electricity, shaft horsepower, process steam, hot water and cooling. The benefits can include 30-40 percent fuel savings, similar reductions in emissions associated with smog and climate change, and reductions in releases of ozone depleting chlorofluorocarbons (CFCs) from air conditioning units. CHP facilities can also contribute to more distributed electricity generation, with resultant benefits in security of electricity supply and reduced transmission losses.

The further development of CHP systems can be facilitated by greater awareness of opportunities, improved access to electricity grids, proper balancing between thermal energy and electrical energy supply and demand, improved corporate taxation incentives, full fuel cycle analysis and the assessment of all environmental and economic benefits when considering energy infrastructure investments.

Combined Heat and Power systems are not new, as they date back to the 19th century in Europe and North America. However, regulated electric utility systems in North America have invested primarily in large centralized electricity generating plants located far from thermal load centers. This has resulted in reduced opportunities for Combined Heat and Power development. The first Canadian gas turbine cogeneration plants were built along the DEW line in the Arctic in the early 1960s. Over the last 30 years, about 150 large and small CHP plants have been built or are under construction across Canada for various applications.