Micro Combined Heat and Power (m-CHP or cogeneration) technology combines two energy systems into one to simultaneously generate 3kW electical and 15-18 kW thermal energy at unmatched efficiency.

Significant reductions in energy use, criteria pollutants[1] and carbon emissions can be achieved from the more efficient use of fuel. Generating electricity at the point of consumption reduces transmission and distribution losses and defers expansion of the electricity transmission grid with more nuclear power stations or large scale wind turbines.

The UK government is presently reviewing the technologies that address these growing problems - in its interim Micro-generation Report, m-CHP was the only technology highlighted as having the potential to break-even, in respect of its cost of purchase and installation, with or without any subsidy within the foreseeable future. 

According to research by EST[2], only two technologies can in due course achieve financial break-even without subsidy - m-CHP (by 2010) and fuel cell technology (by 2020 at the earliest). Whereas m-CHP is now deemed as cost-effective, competing technologies are dependent on subsidies (Micro Hydro, Biomass, and Ground Source Heat Pump, Domestic Photovoltaic or Small Domestic Wind generation.

The Kyoto Accord marked the shift towards the Stirling engine. According to COGEN Europe Briefing Number 8, January 1999: "The climate change debate which culminated in the Kyoto Protocol has proven to be an important incentive for the development of cogeneration as it is one of the most cost-effective ways to produce energy while reducing emissions."

In the UK, m-CHP attracts substantial government subsidies:

Britain has 23 million domestic gas boilers with an average life of approximately 15 years. About 6% of these boilers or 1.38 million are replaced each year. About 200,000 new homes are built each year in the UK adding to the market potential for m-CHP as does the SME market which adds add another 400,000 boilers replaced annually. The UK market for domestic boilers is therefore about 1.8 million per annum

Mainland Europe: 6 million boilers in homes and businesses are replaced annually. In two alone, Germany and the Netherlands, the annual domestic replacement market for gas boilers is about a further 1.2 million units per annum. EU credibility of a robust m-CHO market was evidenced by the May 2004 Powergen purchase of 80,000 1 kilowatt units for distribution in the EU.

North America:   In excess of 5 million domestic boilers or furnaces are replaced annually. SMEs add a further 8 million boilers/furnaces to the replacement market annually.