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Glossary · Energy industry & energy transition

Combined heat and power unit (CHP unit, BHKW)

Combined heat and power plant CHP unit combined heat and power heat electricity generation district heating

A combined heat and power unit, BHKW for short (from the German Blockheizkraftwerk), is usually a compact plant that generates electricity and useful heat at the same time. Technically it belongs to combined heat and power. Often a gas or diesel engine drives a generator. Larger plants also use gas turbines, and some small plants use Stirling engines. A fuel cell, by contrast, generates electricity directly through an electrochemical process and needs no generator. The electricity is used in the building, supplied to a local site network or fed into the public grid. Most of the heat produced during conversion is not released to the environment but used for space heating, hot water, process heat or a heat network. Even with good integration, a remainder is lost as flue gas and radiation losses.

Basic principle: waste heat makes the difference

A BHKW differs from a pure power plant not in how it generates electricity, but in that it uses the waste heat. An engine-based BHKW converts only about a quarter to a good two fifths of the fuel's chemical energy into electricity. The exact share depends on size and design. A large part arises as heat in the exhaust gas, the cooling water and the lubricating oil circuit. If this heat is used, the overall efficiency rises markedly. If it is not needed and is dissipated through emergency coolers, little remains of the efficiency argument. A BHKW is therefore not efficient by its design alone, but only through suitable heat use.

Key figures and units

  • Electrical output (kW electrical or MW electrical): how much electricity the plant can generate at a given moment. The range extends from micro-CHP units with a few kilowatts for single-family and multi-family homes to engine plants in the megawatt range for municipal utilities and industry.

  • Thermal output (kW thermal or MW thermal): how much useful heat is available at the same time. This is to be distinguished from the quantities of energy generated, i.e. kilowatt hours of electricity and kilowatt hours of heat.

  • Power-to-heat ratio: the ratio of electricity generated to heat used. It shows whether a plant is more electricity-oriented or more heat-oriented. Engine-based BHKW typically lie roughly between 0.5 and 1. Fuel cells often achieve higher values.

  • Full-load hours: the annual electricity generated divided by the electrical output. They show how intensively a plant is used. In the KWKG they are also the calculation basis for the support period. Further factors are annual operating time, the number of starts and the size of the heat storage.

Distinction from boiler, emergency generator and combined heat and power plant

A BHKW is not a boiler with electricity as a by-product, even though in many buildings it is operated that way. A boiler produces only heat and can usually adapt its output well to demand. A BHKW always also generates electricity when it supplies heat. Nor is it an ordinary emergency generator. Such a generator is meant to be on standby in case of a grid outage and normally runs only rarely. A BHKW is designed for regular operation. Without appropriate equipment for island operation, it does not automatically keep running during a grid outage. It differs from large combined heat and power plants mainly in size, proximity to heat consumption and often decentralised integration. The basic idea is the same: electricity generation and heat use are coupled.

Heat-led and electricity-led operation

Many BHKW are operated heat-led: the plant runs when heat is needed. This suits hotels, hospitals, swimming pools, residential districts, commercial businesses or local heating networks with steady heat demand. For the power system, this can result in unfavourable operating times. In winter, many plants run even when a lot of wind power is on the grid at the same time. Their feed-in then adds to an oversupply, although the market is already signalling low or negative electricity prices.

Electricity-led BHKW are oriented more towards electricity prices, grid requirements or self-consumption. To avoid heat surpluses in the process, they usually need a heat storage or a flexible heat consumer. The storage separates the time of electricity generation from the time of heat use. It can be thought of as a buffer: the BHKW charges it in hours of scarce, expensive electricity and pauses when there is plenty of wind and solar power, while the buildings continue to be supplied from the storage. Without storage, heat demand determines the operating time. With storage, the plant can help complement wind and photovoltaics.

Efficiency and climate impact

BHKW are often described with overall efficiencies of 80 to over 90 percent. Such values apply only if the heat is used completely and at the required temperature level. The value also depends on whether it is based on the net calorific value or the gross calorific value of the fuel. It does not automatically say anything about the climate impact. A natural gas BHKW uses the fuel better than separate generation in an old condensing power plant and a boiler, but it remains fossil generation. Emissions depend on the fuel, the electrical efficiency, the heat generation replaced, the electricity displaced and the actual mode of operation. The more wind and solar power is on the grid, the less fossil electricity a BHKW displaces. The calculated advantage thus shrinks. A BHKW is therefore neither inherently harmful to the climate nor inherently climate-friendly. The assessment depends on the chosen system boundary.

Decentralised does not automatically mean grid-relieving

Decentrally generated electricity does not automatically relieve the power grid. If it is consumed on site at the same time, the draw from the grid falls. If it is fed into the grid during high feed-in or low local demand, the same coordination questions arise as with other generation plants. For the distribution system operator, what matters is not that a plant is small or close to buildings, but what output it feeds in or draws and when. Grid connection, controllability, metering concept and balancing determine how the BHKW is integrated technically and economically.

Economic viability

Economically, a BHKW sits at the intersection of several sets of rules. Revenues and savings can come from avoided electricity purchases, the sale of electricity and heat, premiums under the Combined Heat and Power Act, balancing energy or optimisation against time-variable electricity prices. Costs arise from fuel, maintenance, CO₂ price, grid charges, metering, taxes, levies and the investment. Economic viability therefore does not depend on efficiency alone. What is decisive is whether heat demand, operating time and use of the electricity fit together. An oversized BHKW with few operating hours can be uneconomic despite good technology.

Legal framework in Germany (as of November 2026)

In Germany, the KWKG regulates premiums for CHP electricity as well as support for heat and cold networks and storage. An important condition applies to new, modernised or retrofitted plants: during periods in which the spot market price in the day-ahead auction is zero or negative, the premium lapses. This rule is meant to make electricity generation that ignores demand unattractive.

The KWKG 2025 entered into force on 1 April 2025. Under it, plants that only start operation after the end of 2026 can still obtain approval. The prerequisite is that by 31 December 2026 a permit under the Federal Immission Control Act (Bundes-Immissionsschutzgesetz) is available or, if no permit is required, the plant has been bindingly ordered. Corresponding rules apply to networks and storage.

In September 2026, the Federal Ministry for Economic Affairs and Energy presented key points for a further amendment. According to these, support is to be extended until the end of 2035 and geared more strongly towards flexible, system-serving operation. For new support cases, fewer eligible hours are to apply, but with higher premium rates. Entry into force is planned by the first quarter of 2027 at the latest. This is so far a plan and not applicable law. For concrete projects, the version in force at the time and the transitional rules are decisive.

Role in district and local heating

In district heating and local heating, BHKW can supply base-load heat and generate electricity at the same time. In many heat networks, gas-fired or biogas-fired BHKW were a building block for replacing boilers and making better use of fuel. With a growing share of renewable electricity generation, this role is changing. Heat networks are increasingly combined with a large-scale heat pump, waste heat, solar thermal energy, geothermal energy, electrode boilers and storage. A BHKW can remain useful within this, for example in hours with high electricity prices or as firm capacity in low-wind winter weeks. However, it loses its role as a blanket efficiency solution when inexpensive renewable electricity is available for heat pumps and fossil gas is burdened with CO₂ costs.

Biogas and biomethane

BHKW operated with biogas or biomethane are assessed differently from natural gas BHKW because their fuel can be renewable. However, sustainable biogas is limited, its provision costs money, and land-use conflicts can arise. For the power system, biogas is particularly valuable when it is not burned at a constant rate but delivers electricity specifically when wind and photovoltaics generate little. This requires gas storage, an engine capacity that is larger relative to average gas production (oversizing) and heat storage. A continuously running biogas BHKW does use the fuel continuously, but offers the power system little flexibility.

Assessment

A BHKW connects areas that are often planned separately. Heat planning looks at buildings, networks and local heat sources. The electricity market values generation by time and price. The grid must absorb the power fed in and maintain voltage. Support rules set incentives. The same plant can therefore make sense for the building operator, be problematic for the local grid and be advantageous for the climate balance only under certain assumptions.

A BHKW is not an energy source in its own right, but a conversion plant that generates electricity and heat from a fuel. Its value lies in the coupled use, not in being decentralised and small. In the future power system, a BHKW is useful if it flexibly provides firm capacity, integrates heat sensibly and limits fossil operating times. Without this integration, it may generate electricity when electricity is not scarce, and consume fuel although other heat sources would be available.

Sources

Related glossary entries

Edited by eCMS on 11.11.2026 16:12

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