Cogeneration, also known as Combined Heat and Power (CHP), is the on-site production of multiple types of energy – usually electricity, heat and/or cooling – from a single source of fuel. Cogeneration often replaces the traditional methods of acquiring energy, such as purchasing electricity from the power grid and separately burning natural gas or oil in a furnace to produce heat or steam. While the traditional method of purchasing electric energy from a utility is convenient, it is very inefficient and wastes almost 75 percent of the energy in the original fuel due to production and transportation losses.
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