Some industries like chemical, pulp and paper, oil production and refining, steel making, food processing and textile industries, require energy input in the form of heat, called process heat.

Process heat in these industries is usually supplied by steam at 5-7 atm and 150-200 .

Energy is transferred to the steam by burning coal, oil, natural gas or another fuel in a furnace. The temperature in furnace is typically very high (- 1370 ), and thus the energy in the furnace is of very high quality. This high-quality energy is transferred to water to produce steam at about 200 or below (a highly irreversible process). Associated with this irreversibility is a loss in availability. It is simply not wise to use high-quality energy to accomplish a task that could be accomplished with low-quality energy.

Industries that use large amounts of process heat also consume a large amount of electric power. Therefore, it makes sense, economical as well as engineering, to use the already existing work potential to produce power, instead of letting it go to waste. The result is a plant which produces electricity while meeting the process heat requirements of certain industrial processes. Such a plant is called a cogeneration plant.

Cogeneration is the production of more than one useful form of energy (such as process heat and electric power) from the same energy source.

A cogeneration power plant is equivalent to a process heating plant combined with a power plant that has a thermal efficiency of 100 percent.

The use of cogeneration dates to the beginning of this century when power plants were integrated to a community to provide district heating, i.e., space, hot water, and process heating for residential and commercial buildings. The district heating systems lost their popularity in the 1940s owing to low fuel prices. But the rapid rise in the fuel prices in the 1970s brought about renewed interest in district heating.