Combined Heat and Power (CHP) for Alberta Businesses: When Cogeneration Makes Sense

Combined heat and power generates electricity on site and captures the waste heat instead of throwing it away, which is why a good CHP installation can reach far higher total efficiency than buying power and burning gas separately. It only works for a narrow set of sites — and Alberta’s cheap natural gas and comparatively expensive delivered electricity is exactly the spark spread that makes it worth checking.

Last updated September 12, 2026.

What CHP actually is

A CHP or cogeneration unit is an engine or turbine burning natural gas to spin a generator. The electricity serves your building. The heat that a normal generator dumps out of the exhaust and the jacket is recovered and used — for space heating, domestic hot water, pool heating, or process heat. Buying electricity from the grid and separately burning gas in a boiler wastes that heat twice. Recovering it is where the efficiency comes from.

The one test that matters: simultaneous demand

CHP pays only when you need electricity and heat at the same time, for a large number of hours per year. The rule of thumb is a genuine, year-round coincident heat and power load — typically four thousand hours a year or more. A site that needs heat only in winter, or power only during business hours, wastes the half of the output it cannot use, and the economics collapse.

That test rules out most offices, most retail and most warehouses immediately. It leaves a shortlist that is genuinely well suited:

Hotels, lodges and camps — constant hot water and constant power
Recreation centres with pools and arenas
Food and beverage processing with steam or hot water loads
Greenhouses, which can use heat, power and sometimes the CO₂
Care facilities and hospitals
Laundries and any process running hot water continuously

The Alberta angle

Two things make Alberta a better CHP market than most of Canada. Natural gas here is inexpensive relative to delivered electricity, so the spark spread — the gap between what a unit of gas costs and what the electricity it can make is worth — is often favourable. And the delivery half of an electricity bill, 40 to 60 per cent of the total, is avoided on every kilowatt-hour you generate and consume yourself.

That second point is the one most feasibility studies underweight. CHP is not competing against your energy rate, it is competing against your energy rate plus the variable portion of delivery. On the other side of the ledger, an interconnection with your distribution utility is required, it takes time, and it is not free. Both belong in the model.

How we assess it

We look at twelve months of both electricity and gas, the hourly shape of each where we can get it, your heat load and its seasonality, and your plant room. That produces an honest answer to one question: how many hours a year would a correctly sized unit run with both its outputs used? If the answer is small, we say no and we look at demand management and efficiency instead. If it is large, engineering, supply and interconnection support are arranged through our network as part of the package.

CHP is a capital project with a maintenance obligation attached. We would rather talk you out of a bad one than sell you a good-looking spreadsheet.

Is your site a candidate?

Signal	What it tells us
Hot water or steam demand year-round	The single strongest indicator. Without it, CHP does not pay.
Electrical load above roughly 100 kW, steady	Enough base load for a unit to run continuously.
4,000+ hours a year of coincident heat and power	The threshold most viable projects clear.
Large, ageing boiler plant due for replacement	The comparison becomes CHP versus a new boiler, not versus nothing.
Heat needed only in winter	Usually fatal to the economics unless the site is very large.
Owned building or long lease	CHP payback runs in years, not months.

This is one of the things we look at during an Energy Cost Audit, not a separate product you have to buy. If the numbers do not work for your site, we say so — that is a perfectly normal outcome and it costs you nothing to find out.

Book a free Energy Cost Audit

Send us one recent electricity bill and one natural gas bill. We review both halves — the
energy you buy and the delivery charges you are billed to receive it — and come back with a
written summary of what we found and what, if anything, is worth changing. No cost, no obligation,
and no requirement to switch anything.

Upload your bills — free Energy Cost Audit

Prefer email? Send your bills to
info@getenergy.ca, or call
(780) 665-4771, Monday to Friday 9 AM–5 PM.

Common questions

What is combined heat and power?

Combined heat and power, or cogeneration, generates electricity on site with a natural gas engine or turbine and recovers the waste heat for space heating, hot water or process heat. Because the heat is used rather than wasted, total efficiency is far higher than buying grid power and burning gas separately.

What kind of Alberta business is CHP suitable for?

Sites with a genuine year-round need for electricity and heat at the same time, typically 4,000 hours a year or more: hotels, lodges and camps, recreation centres with pools, food and beverage processing, greenhouses, care facilities and laundries. Most offices, shops and warehouses are not candidates.

Why does CHP work well in Alberta?

Natural gas is inexpensive here relative to delivered electricity, and every kilowatt-hour you generate and use on site avoids not just the energy rate but the variable portion of distribution and transmission charges, which are 40 to 60 per cent of a typical business electricity bill.

Do I need approval from my utility to install CHP?

Yes. Generating on site requires an interconnection arrangement with your distribution utility. It takes time and it has a cost, and both belong in the business case from the beginning.

Other things the review can act on

More for Alberta businesses

Energy prices move every week. Our Alberta
Energy Market Report tracks wholesale power prices, the natural gas reference price and retail
rate movement every Monday.

Get Energy is an Alberta competitive retailer and energy broker serving
residential, small business, farm and commercial consumers. Get Energy is a tradename of Utility
Network & Partners Inc.