Cogeneration, or CHP (Combined Heat and Power), is the simultaneous generation, in a single process, of electricity and heat. For a company it means producing electricity on site and using the heat recovered from the engine or turbine for hot water, steam or, with an absorption chiller, cooling. The advantage over buying electricity and boiler fuel separately depends above all on how much heat is actually used.
How it works
The law calls «useful heat» only the heat that meets an economically justifiable demand for heating or cooling: dissipated heat does not count. This is why a cogeneration unit is sized on heat demand, not on electricity demand.
When it is «high-efficiency» (CAR)
The status that gives access to the benefits is high-efficiency cogeneration (CAR in Italian), governed by Legislative Decree 20/2007 and by the ministerial decrees of 4 August and 5 September 2011. The parameter is primary energy savings (PES): how much less energy the plant consumes compared with the separate production of the same quantities of electricity and heat, calculated with European reference efficiency values (Delegated Regulation EU 2015/2402, updated by 2023/2104).
Recognition is not permanent: GSE verifies it every year on actual figures, using the data of the previous year, and the request must be sent by 31 March through the RICOGE portal. Under the European criteria, if the annual overall efficiency stays below 75% (80% for combined cycles and for steam condensing extraction turbines), only part of the electricity produced is considered cogenerated.
The benefits in force
| Benefit | What it provides | Conditions |
|---|---|---|
| CAR white certificates | Certificates recognised every year by GSE in proportion to primary energy savings, for 10 calendar years (15 if the unit is combined with a district heating network) | New or rebuilt units that entered into operation after 6 March 2007 and are recognised as CAR on actual figures |
| Excise duty on gas | The gas attributed to electricity production (conventionally, 0.220 cubic metres per kWh produced) is subject to the rate set for that use, not the one for combustion; for self-production the rate is applied at 30% | Combined generation of electricity and useful heat (Article 21 of the Italian excise code) |
Every year the operator chooses whether to receive the certificates in its own account at GME, to sell them, or to transfer them to GSE at a withdrawal price fixed for the whole period: the one in force when the unit entered into operation. On the certificate market see white certificates.
The new European criteria
Directive (EU) 2023/1791 confirms the 10% PES threshold and adds an emission limit: for fossil-fuelled units built or substantially refurbished after transposition, less than 270 grams of CO₂ per kWh of energy output, adding up electricity, heating and cooling. Units in operation before 10 October 2023 may derogate until 1 January 2034, with a progressive emission reduction plan. As of October 2026 Italy has not completed transposition of the directive: anyone assessing a new plant must allow for stricter CAR requirements.
For a business: what to look at
- Who should be interested. Sites with a demand for heat or cooling that is continuous and simultaneous with electricity demand for most of the year: processes using steam or hot water, drying, large air-conditioned facilities.
- The data to start from. Hourly electricity and heat curves for at least one year, ideally from a recent energy audit: with bill totals alone you risk oversizing the plant and losing the PES.
- The business case. It depends on the ratio between the gas price and the electricity price, which changes over time: it must be simulated on several scenarios.
- Metering and deadlines. You need meters for fuel, electricity and useful heat; the CAR request must be sent every year by 31 March and, before entry into operation, a preliminary assessment can be requested from GSE.
- The effect on other obligations. The fuel of the cogeneration unit enters the toe calculation for the appointment of the energy manager.
- Typical mistakes. Sizing on the electrical load, taking CAR status for granted, ignoring the European emission limit in an investment that lasts beyond 2034.
To assess whether cogeneration makes sense at your site, IPGS ENERGY, which is a consultant and not a supplier, starts from hourly data: Request a discussion.
Sources
- GSE — Cogenerazione ad alto rendimento (accessed 10 October 2026)
- GSE — CAR e certificati bianchi (accessed 10 October 2026)
- GSE — Cogenerazione ad alto rendimento: documenti (accessed 10 October 2026)
- Normattiva — Legislative Decree 20/2007, Article 2 (definitions) (accessed 10 October 2026)
- Normattiva — Legislative Decree 504/1995, Article 21 (excise duties) (accessed 10 October 2026)
- EUR-Lex — Directive (EU) 2023/1791 on energy efficiency, Annexes II and III (accessed 10 October 2026)
- Publications Office of the EU — Delegated Regulation (EU) 2023/2104 on reference efficiency values (accessed 10 October 2026)
- European Commission — October infringements package: key decisions on energy (accessed 10 October 2026)
Informational content by IPGS ENERGY. Information is reviewed as of the stated update date and does not replace a contractual, tax or regulatory assessment specific to an individual business.
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