Combined Heat and Power

Combined Heat and Power (CHP), or cogeneration, provides both an on-site source of electric power and useful thermal energy from a single fuel source. These systems capture thermal energy that would normally be lost in traditional power generation and use it to serve heating and cooling needs.

The objective of the Pepco CHP Program is to help customers further improve energy efficiency and reduce operating costs. CHP installations reduce the amount of electricity delivered via the power grid to Pepco customer facilities in Maryland.

The CHP Program will offer two forms of financial incentives to qualified CHP projects:
  • Capacity Incentive – Payment per kilowatt (kW) of system capacity. This payment will be made in two steps: 30% when the Customer provides a signed contract for installation and 70% when the CHP system has been installed and commissioned. The capacity incentive will be capped at $1,250,000.
    • Systems 250 kW and larger are eligible for a Capacity Incentive of $250 per kW of rated power output from the generator
    • Systems smaller than 250 kW are eligible for a Capacity Incentive of $350 per kW of rated power output from the generator
  • Production Incentive – A production payment of $0.07/kWh incentive for net electricity (kWh) produced during a period of 18 months following system commissioning. Production payment incentive checks will be issued quarterly. The production incentive will be capped at $1,250,000.

Total incentive payments are capped at the lower of: a) $2,500,000 per project, or b) 50% of total cost. Projects approved by Pepco to participate in the CHP Program shall provide:
  • Brief monthly letter-type progress reports until the system has been commissioned and is in operation
  • Similar monthly reports during the period when Production Incentives are being paid.

How to Participate

Contact the program office to obtain more information and assistance in completing the CHP Application Workbook. Submit all required documentation to the program office.
  • The Application shall be sufficiently detailed to demonstrate that the project can be achieved in conjunction with a workable plan. All Applications shall become the property of Pepco. Incomplete applications will not be considered.
  • Proposed projects are required to satisfy a Total Resource Cost test.
  • Contact CHP Point of Contact if you have questions about the process or need assistance.

CHP Service Providers
To assist customers, Pepco has compiled information for vendors, project developers, contractors and engineering firms that provide and install CHP projects. Click CHP Service Providers (PDF) for the list.

If you are interested in becoming an authorized supplier please email:

Frequently Asked Questions: Combined Heat and Power FAQs (PDF)

These programs support EmPOWER Maryland administered by the Maryland Energy Administration