What is a CHP unit explained simply, how cogeneration works

A cogeneration unit converts one fuel source into electricity and heat simultaneously. In this article, we explain the operating principle in simple terms, break down the strengths and weaknesses of the technology, and show in which cases a CHP unit becomes the most profitable investment for a facility.

What cogeneration is and why people are talking about it again

Cogeneration is the simultaneous production of two useful outputs from one fuel source: electrical energy and heat. The word itself consists of two parts: 'co' (together) and 'generation' (production). The English acronym is CHP — combined heat and power.

The classic energy supply scheme for a facility looks different. You buy electricity from the grid — it was generated somewhere at a large thermal power plant, travelled hundreds of kilometres over wires with losses, and only a fraction of what burned in the furnace reached your meter. You get heat separately: your own boiler house, which burns gas or coal specifically for hot water and heating. The result is that the same facility pays twice — for electricity in one place and for heat in another.

Cogeneration breaks this scheme. A single engine running on gas or diesel drives a generator and produces electricity. This happens in any regular power plant. The difference is that the exhaust gases of such an engine have a temperature of 400–500 °C, and the engine's coolant heats up to 90 °C. In the traditional scheme, this heat is simply released into the atmosphere — wasted. In a CHP unit, it is captured by heat exchangers and used for heating, hot water supply, or process applications.

In simple terms: you pay for fuel once but get two outputs — electricity and heat. That is why CHP efficiency reaches 85–92%, whereas a typical power plant achieves only 35–40%.

Cogeneration is being discussed in Ukraine again with new urgency for two reasons. First, rising tariffs on electricity and gas forced facilities to rethink how they spend on energy. Second, attacks on energy infrastructure and blackouts have made autonomy not a nice-to-have but a condition for the survival of production.

What is a CHP unit explained simply, how cogeneration works, and what are its main components?

What is a CHP unit explained simply, how cogeneration works

In simplified form, a CHP unit comprises four main components assembled into a single system.

Internal combustion engine. The heart of the unit. It can be a gas engine (running on natural gas, biogas, mine gas) or a diesel engine (running on diesel fuel, biodiesel, vegetable oils). Dieselmash engines, models 6CHN25/34 and 8CHNP25/34, are rated for up to 80,000 operating hours before major overhaul — approximately 9 years of continuous operation.

Electrical generator. Converts the mechanical rotation energy of the engine into electrical energy. Connected to the engine directly or through a coupling.

Heat exchangers. The main difference between a CHP unit and a conventional generator. Here, exhaust heat is recovered (via the exhaust heat exchanger) along with heat from the engine cooling system (via the jacket water heat exchanger). The output is hot water at 90 °C for heating or, with deeper recovery, steam for industrial processes.

Control system. An automation cabinet that synchronizes the unit with the grid or maintains autonomous operation, monitors parameters, protects against faults, and collects operational data.

What fuels can a CHP unit use

Fuel choice is one of the key decisions that determines the economics of a project. Dieselmash produces units for several types of fuel:

·        Natural gas — the primary choice for most industrial facilities with grid gas connection. The cheapest option in terms of cost per kilowatt-hour.

·        Biogas — gas produced from organic waste: manure, silage, food processing waste. Particularly profitable for agricultural enterprises with their own feedstock, as it effectively provides 'free' fuel.

·        Mine gas (coal seam methane) — an ideal solution for coal mines where this gas must be vented for safety reasons anyway.

·        Landfill gas — naturally produced at solid waste landfills. Converting waste into electricity.

·        Diesel fuel and biodiesel — for sites without gas supply or with irregular load.

Each option has its own economics. Natural gas is predictable in price but requires a connection. Biogas is the most cost-effective in terms of energy cost but requires its own feedstock source and preparation equipment. Diesel has the highest fuel cost but offers maximum flexibility and autonomy.

Where CHP makes sense and where it doesn't

Cogeneration is profitable where a facility constantly needs both electricity and heat at the same time. If the load is irregular or only electrical energy is needed — the project economics deteriorate.

Ideal profile for a CHP unit

A facility with continuous operation (24/7 or 16 hours a day), year-round demand for heat or steam, constant electrical load, and connection to the gas grid.

Such facilities include dairy plants and meat processing operations, greenhouses (especially with additional use of CO₂ from exhaust gas), district heating utilities and community boiler houses, agricultural enterprises with processing and their own feedstock for biogas, hotel and resort complexes with high heat demand, pharmaceutical and chemical production sites.

CHP is not very profitable for office buildings without summer heat demand, for production with sharp load peaks and long idle periods, for sites with short-term energy needs (construction sites, temporary facilities). In these cases, it is better to consider a backup diesel generator or hybrid solutions.

What power outputs Dieselmash manufactures

The Dieselmash CHP unit range covers from 315 to 750 kW of electrical power output. These are the most in-demand sizes for medium-sized businesses in Ukraine.

315 kW CHP unit is suitable for small production facilities, biogas-running farms, small community boiler houses, greenhouses up to 1 hectare.

500 kW CHP unit (model DvG1A-500) — the most versatile size. Suitable for medium-capacity dairy plants, 2–3 ha greenhouses, district heating in small towns, agricultural enterprises with processing.

630 kW CHP unit (model DvG1A-630) — for large facilities, greenhouse complexes of 3–5 ha, district heating in mid-sized cities.

750 kW CHP unit — for large industrial sites or cascade connection of multiple units for greater total load coverage.

If you need a different output — this is solved by combining several units. For example, two DvG1A-500 in cascade provide 1 MW with flexible regulation: one unit can run in baseload mode while the second connects during peak loads.

Next step: how to make a decision

If a CHP unit looks like the right solution for your facility, the next step is a feasibility study. It answers the main question for any investor: what is the payback period in your specific conditions.

A feasibility study requires concrete data about your facility: operating hours per day and per year, average electrical load and peak load, demand for heat or steam broken down by season, current tariffs for electricity and gas, the area you can allocate for the unit.

Dieselmash performs an individual payback calculation free of charge — we will send the numbers based on your inputs within 3 business days.

Find out if a CHP unit will pay off for your business

REQUEST A QUOTE