SWEP kindly provided a blog on the importance of CHPs to improving energy efficiency, and the overall performance of electricity and distribution network.
Christer Frennfelt has this to say about the importance of Combined Heat and Power to improving energy efficiencies:
Traditional power systems produce electric power at around 40% efficiency, so there is a lot of waste. A way to improve efficiency is to install cogeneration systems that produce electricity and heat simultaneously. Such plants are called CHP – Combined Heat and Power.
CHP plants are usually built around a gas engine genset. They collect thermal energy from an intercooler, engine jacket water, lubrication oil, and exhaust gas. Hot water can then be produced via heat exchangers, increasing total energy utilization efficiency, often to a level in excess of 90% efficiency.
Some CHP plants are connected to an ORC (Organic Rankine Cycle) system where the excess heat from the engine is used to further create electricity.
CHP plants are typically embedded close to the end user and therefore help reduce transportation and distribution losses, improving the overall performance of the electricity transmission and distribution network.