Cogeneration is the combined production of electricity and thermal energy (heating and/or cooling) from the one fuel source. Thermal energy can be produced as hot water, steam or cold water via absorption refrigeration. A cogeneration plant can be designed to meet site requirements in terms of electricity and heating/cooling, but can also be designed to provide backup power in the event of electricity supply grid failure. Cogeneration plants are most economic when the electricity and heating/cooling is required at the same time and when this occurs during peak electricity tariff periods.

The primary benefit of cogeneration is reduced energy supply costs, but it also substantially reduces the total site greenhouse emissions from energy use by 40-70%.