How hybrid CHP systems can cut costs and boost resilience

COGEN Europe has launched a new study by Compass Lexecon that demonstrates combining power-to-heat technologies with cogeneration reduces fuel use compared with electrified configurations. This is achieved by avoiding indirect fuel use from grid electricity.

The study, Hybridised and Flexible Cogeneration, assessed hybrid CHP energy systems combined with power-to-heat, thermal storage and renewable energy solutions.

Specifically, it focused on five industrial and district heating use cases in Germany, Italy, Poland, Spain and Romania, comparing CHP-based hybrid systems with non-CHP, mostly electrified alternatives over the period 2025–2040.

The analysis found that CHP complements electrification and renewables by reducing primary energy consumption, lowering emissions, supporting electricity grids and reducing energy costs.

Besides showing that cogeneration reduces fuel use compared with electrified configurations, the study also demonstrated that optimising cogeneration in hybrid systems can accelerate early emission reductions by lowering both indirect and direct emissions associated with heat electrification.

As power systems decarbonise, cogeneration can continue to reduce emissions through flexible operation and efficient use of renewable fuels.

Gerald Aue, Vice President of Compass Lexecon, said the study “shows that the value of cogeneration increasingly lies in its potential for hybridisation and its flexibility". 

"As integrated energy systems evolve towards higher electrification and increasing shares of renewables, it is important that energy modelling further explore the efficient interactions between power- and heat-coupling technologies such as cogeneration, heat pumps and storage.”

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Compared with electrification, highly efficient hybrids that include cogeneration help reduce energy costs because sites can switch between grid electricity when prices are low and cogenerated electricity when power prices are high.

Synergies between cogeneration and electrification also enable the cost-efficient use of energy storage and grid connection capacities, while additional revenue streams may become available through the provision of ancillary services and system adequacy.

The analysis further shows that CHP-based hybrid systems can adapt to evolving market and system conditions, responding to electricity price signals while continuing to meet heat demand efficiently.

As Europe’s energy mix changes towards 2040, CHP installations can adjust their operating patterns, ensuring their continued relevance within a more electrified and renewables-based system.

The study confirms that cogeneration complements renewable energy by providing dispatchable capacity alongside variable generation and by using renewable gases efficiently.

As renewable penetration increases, CHP is expected to operate more selectively in a grid-supportive manner to cover residual power demand -displacing grid electricity when renewables are insufficient to cover demand and reducing output when renewable power is abundant