The basic principle of a well designed CHP system is that a single primary fuel is used to generate both electricity and heat (or cooling) more efficiently than if those needs were generated separately. Although gas is the most commonly used fuel in the UK, others such oil, ethanol, biomass, hydrogen, LPG, can all be used.
The technology is well proven. The primary fuel is converted by an engine (or turbine, if very large scale) into motion and heat. The motion is transformed by a generator into electricity whilst the "waste" heat is recovered and put to use. Systems based on various forms of biomass are growing rapidly due to the cost benefits and, importantly, that this is a "carbon neutral" fuel.
The applications of CHP range from "Large" scale (power station size) electricity generation, right down to "Micro" systems for use in, eg sheltered housing or care homes. In between these two extremes there are "Mini" and "Small" scale systems suitable for use in, for example:

Assuming the appropriate system specification, key to the financial justification of this technology is an assessment of the avoided cost of purchasing electricity from the grid, together with a separate boiler for heat production over the life of the system, typically 10 years. The profile of electricity and heat (or cooling) requirement over a year is factored into these calculations, as there is rarely a pefect continuous 1:1 ratio of heat to electricity need. For example, if additional electricity is needed above that produced by the CHP system, it will be purchased from the grid. Any excess electricity will be sold to the grid.
The long term outlook of ever-increasing energy prices, coupled with rising carbon taxes and other energy concerns are all factors that have led to a resurgence of interest in CHP.
If you would like to know more about CHP or CCHP and if it might benefit your organisation, please email us at solutions@watt-knots.co.uk with your name and 'phone number and we'll be in touch.