Most electricity is generated by large central power stations that produce the alternating current (AC) electricity we use at home. The steam is produced in a large boilers fired by coal, oil, natural gas or a nuclear reaction. Not advertised widely is the fact that this process is very inefficient. Only 28-33% of the thermal energy is converted to electricity. The rest is lost as heat. This is typically lost to the atmosphere using a cooling tower, or through river, lake or sea water from which the cooling water is drawn. To make matters worse, about 8% of the electricity produced is lost in transporting it to the actual user. With the exception of nuclear power (which has a few problems of its own), the amount of greenhouse gases produced is enormous.

But, it gets worse. On a cold day, whilst power stations are busy heating up the atmosphere, homes, hotels, hospitals, or any other building are in need of heat. So what is the consequence? More fossil fuel is burned in order to produce the energy needed to heat those buildings. This is done at the expense of even more greenhouse gas emissions.

What if larger homes and commercial buildings were equipped with their own small power station? Then the heat produced as a by-product of the generation of electricity would heat those buildings. The energy savings are significant. 35% savings are quite achievable. So are the reductions in greenhouse gas emissions. This process is called micro co-generation. The name refers to the combined generation of two useful energies simultaneously, heat and electricity. It is sometimes also called Combined Heat and Power (CHP). This process has been used in industry for decades, where heat is required for factory processes and the electricity powers machines. Smaller size systems (less than 50kW) are called "Micro Cogeneration" or compact CHP systems.