The fuel sources used can be fossil fuels, like natural gas, or renewables. These are combusted, which leads to energy production, which in turn is used to power a reciprocating engine or gas turbine. This process produces heat and mechanical power. The latter is converted to electricity with the help of an alternator, an electrical generator. The heat can be either used directly or converted, depending on location requirements. CHP is hailed as more efficient compared to other energy production technologies. This efficiency means that the actual production costs are lower, and since the energy is used directly, typical transmission losses are avoided. Other benefits include lowering CO2 emission levels and generally reducing primary energy consumption.
In Germany, the fuels used most for CHP generation are gas, renewable energy and coal, though gas made up the largest share by far at over 109 terawatt hours in 2021. Therefore, natural gas production plays an important role in the success of CHP. Levels of domestic production, however, have been decreasing in recent years.