Cogeneration (Combined Heat and Power or CHP) is the simultaneous production of electricity and heat, both of which are used. The central and most fundamental principle of cogeneration is that, in order to maximise the many benefits that arise from it, systems should be based on the heat demand of the application. This can be an individual building, an industrial factory or a town/city served by district heat/cooling. Through the utilisation of the heat, the efficiency of a cogeneration plant can reach 90% or more. Cogeneration projects therefore offers energy savings ranging between 15-40% when compared against the supply of electricity and heat from conventional power stations and boilers.