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Cogeneration Payback Calculator

CHP / cogeneration produces electricity + thermal at 70–85% combined efficiency.

System kW size

Installed $/kW

Annual run hours

Avoided electric $/kWh

Thermal recovery $/kWh

Fuel + maint $/kWh

Simple payback (yrs)

1.96

Annual margin

$1,125,000

Total capex

$2,200,000

How the math works

kWh = kW × hours. Margin = kWh × (electric + thermal − fuel/maint). Payback = capex / margin.

1,000 × 7,500 = 7.5M kWh × ($0.18 + $0.05 − $0.08) = $1.125M. $2.2M / $1.125M = 1.96 yr.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

How this calculator works

What this page estimates

This Cogeneration Payback Calculator is built to give a quick, browser-based estimate for cogeneration payback. CHP / cogeneration produces electricity + thermal at 70–85% combined efficiency. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.

Example workflow

For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.

Practical checks

Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
Run a low, base, and high case when the inputs are estimates.
Check the related calculators below when the next decision depends on a different assumption.

How to interpret the cogeneration payback result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

Cross-check

Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.

This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this cogeneration payback estimate

Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.

Confirm source numbers

Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.

Separate cash flow from total cost

A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.

Run conservative cases

Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.

Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.

How to Use

Enter system kW size.
Enter installed $/kW.
Enter annual run hours.
Enter avoided electric $/kWh.
Enter recovered thermal $/kWh equivalent.
Enter fuel + maintenance $/kWh.
Read simple payback.

Frequently Asked Questions

CHP applications?

Best fit: continuous thermal load (hot water, steam, space heating). Hospitals, hotels, multifamily, district energy: ideal. Office, retail: poor fit (thermal load too intermittent). System size: 50 kW micro-CHP up to 50 MW industrial. Sweet spot for buildings: 250 kW - 5 MW. Co-located with absorption chiller: extends viability.

Economics?

Installed cost $1,500-3,500/kW. Operating cost (fuel + maint): $0.06-0.10/kWh produced. Avoided electric retail: $0.10-0.25/kWh. Net spread: $0.04-0.15/kWh × 6,000-8,000 hours = $240-1,200/kW/yr operating margin. Simple payback: 4-9 years typical. Better with thermal recovery + state incentives.

Incentives?

Federal ITC: 30%+ via IRA. NY-Sun: $1-2/W in NY. CA SGIP: $0.50-2.00/W. NJ CHP grant: $1-3M typical. C-PACE financing: most states. Utility CHP rebates: $0.05-0.50/kWh produced for first 1-3 years. State + utility stacking can offset 30-70% of capex.

Operating challenges?

24/7 staffing or remote monitoring required. Permitting (air emissions, electrical interconnection, gas pressure) takes 12-24 months. Long-term gas contracts critical for fuel cost stability. Maintenance contracts ($30-80/kW/yr) standard. Heat recovery system commissioning: complex. Best results: dedicated O&M provider + utility partnership.