A combined electrical/mechanical and thermal power generating system is undoubtedly the way to go for optimum overall efficiency in energy conversion. Traditionally, electric power is generated in centralized power stations and subsequently supplied to consumers via extensive grid distribution networks. Waste heat is a by-product that cannot inexpensively be conveyed to meet the demand for thermal power in the communities served. Consequently, the needed thermal power is produced either using the high grade electricity delivered from the grid supply, or by combustion of expensive fuels such as natural gas and oil. Cogeneration and CHP (Cooling, Heating, and Power) systems are designed to utilize waste heat from in-house electrical/mechanical power producing devices such as micro turbines and diesel engines used in industries that are located in the community or district. The generation of mechanical and thermal power from a single fuel input significantly enhances the overall conversion efficiency, which translates to lower CO2 emissions to the environment. Greater stability and reliability in power supply at the community level is achieved via the deployment of CHP systems that provide power on the required scale as well as meet local demand for cooling and/or heating. The magnitude of efficiency gain for CHP systems is often overstated simply because the quality difference between electrical/mechanical power and thermal power is not factored into the equation. This paper focuses on a complete thermodynamic analysis of CHP systems on the basis of the first and second laws of thermodynamics.

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