Combined Heat and Power (CHP) or Cogeneration is the simultaneous production of useful heat and electricity in the same plant. Conventional electricity generation is via large power stations releasing low-grade heat into the atmosphere as a wasted by-product. By retrieving some of this rejected heat via heat exchangers and being situated near where it can be used, CHP plants can greatly increase their overall efficiency and provide heat to commercial, industrial or public sectors at the same time as producing electricity.

The main components of a typical system are:
- the engine or prime mover which drives the generator.
- the generator which produces electricity.
- the heat recovery system that recovers the waste heat from both the engine water cooling jacket and exhaust gases.
- the exhaust system to take away the products of combustion.
- the control panel to monitor the operation.