CHP in 2026: when does a combined heat and power unit still pay off for businesses?

The short answer

A combined heat and power (CHP) unit pays off in 2026 where a business needs heat all year round and uses most of the electricity it generates itself – typically hotels, care homes, hospitals or manufacturing. The lever is the gap between purchased electricity and the gas burned; the CHP surcharge and tax benefits are extras, not the load-bearing pillar.

What a kilowatt-hour of heat from gas, oil, district heating or a heat pump costs by comparison is covered in the heating costs guide. This piece is about the question that should come before any CHP investment: is there enough left after fuel?

How does a CHP unit make money at all?

A CHP unit burns gas in an engine, generates electricity and uses the waste heat for heating. Four items matter economically:

• Avoided electricity purchases: every kilowatt-hour used on site does not have to be bought. According to Destatis, non-household customers consuming 20 to 500 megawatt-hours a year paid an average of 23.66 cents per kilowatt-hour in the first half of 2026.
• Replaced boiler heat: the waste heat saves gas that would otherwise be burned in the boiler.
• CHP surcharge: under the KWKG, the grid operator pays a surcharge per kilowatt-hour of CHP electricity.
• Taxes: electricity from highly efficient CHP plants of up to 2 megawatts is exempt from electricity tax when consumed on site (§ 9(1) no. 3 StromStG); the gas receives partial relief of 4.42 euros per megawatt-hour under § 53a EnergieStG.

Against this stands the gas input. For non-household customers consuming 1,000 to 10,000 gigajoules a year, Destatis reports 8.11 cents per kilowatt-hour. The ratio of electricity price to gas price is therefore just under 3 to 1 – precisely the spread that makes a CHP unit interesting.

What does the KWKG pay in 2026 and 2027?

Rule	Legal basis	Value
Surcharge, new plant up to 50 kW, fed into grid	§ 7(3a) KWKG	16 ct/kWh
Surcharge, new plant up to 50 kW, own use	§ 7(3a) KWKG	8 ct/kWh
Surcharge fed into grid, share 250 kW to 2 MW	§ 7(1) KWKG	4.4 ct/kWh
Total subsidy period	§ 8(1) KWKG	30,000 full-load hours
Eligible hours per year	§ 8(4) KWKG	3,300 (2026), 3,100 (2027), 2,900 (2028)
Exchange price zero or negative	§ 7(5) KWKG	no surcharge

The deadline is what matters: under § 6(1) KWKG the surcharge is available for plants entering continuous operation by 31.12.2026 – or later, if by that date an immission control permit has been granted or the plant has been bindingly ordered and goes into operation within four years. For own use without grid feed-in, the surcharge applies only in certain cases, for instance plants of up to 100 kilowatts (§ 6(3)). Investment grants generally cannot be combined with the surcharge (§ 7(4)).

Worked example: a 50 kW CHP unit in a business with year-round heat demand

Assumptions, stated openly: 50 kilowatts electrical output, 5,000 operating hours a year, electrical efficiency 33 per cent and thermal efficiency 55 per cent (a typical order of magnitude; in each case check the manufacturer’s data sheet), all electricity used on site, the replaced boiler runs at 90 per cent efficiency. Prices: Destatis, first half of 2026.

Item	Quantity	Amount per year
Gas input CHP	757,600 kWh × 8.11 ct	− €61,441
Avoided electricity purchases	250,000 kWh × 23.66 ct	+ €59,150
Replaced boiler gas	463,000 kWh × 8.11 ct	+ €37,549
CHP surcharge 2027 (own use)	155,000 kWh × 8 ct	+ €12,400
Energy tax relief	757.6 MWh × €4.42	+ €3,349
Result before maintenance, insurance, financing		≈ €51,000

If the unit runs only 3,000 hours, the result falls to around 35,000 euros on the same assumptions. In both cases the CHP surcharge is only a fraction – and it is used up after 30,000 full-load hours. Maintenance and financing still have to be deducted; both are plant-specific and deliberately not set at a flat rate here.

When does a CHP unit not pay off?

Three situations tip the calculation. First: too little heat demand in summer. A CHP unit that stands idle from May to September does not reach its operating hours. Second: electricity that is not needed on site. Power fed into the grid earns only the market price plus the surcharge, but no avoided purchase price – and in hours of negative exchange prices, no surcharge. Third: falling electricity prices with stable gas prices. Every relief on business electricity – grid fees, electricity tax – narrows the spread a CHP unit lives on (see the guide to the components of the business electricity price).

What lies ahead for CHP operators from 2027?

Two developments belong in any ten-year calculation. In § 43, the Building Modernisation Act requires gas-fired heating systems installed in an existing building after 29.07.2026 to draw at least 10 per cent of their heat from biomethane or hydrogen from 2029 and at least 30 per cent from 2035 – according to the wording, this also applies to a gas-fired CHP unit. And the CO₂ price on natural gas is rising: in 2026 within a corridor of 55 to 65 euros per tonne, from 2028 via the European emissions trading system ETS2 without a fixed cap.

On the subsidy itself, the Federal Ministry for Economic Affairs presented key points in September 2026: extending the KWKG to 2035, fewer subsidised hours, more weight on flexible operation. As of mid-October there was still no draft bill; entry into force is planned for the first quarter of 2027 at the latest. Anyone planning today therefore calculates with current law – and with the order deadline of 31.12.2026.

What should businesses do now?

1. Get the load profile: analyse electricity and heat demand in quarter-hours or at least monthly values – what matters is how much electricity is needed at the same time as the heat.
2. Be honest about operating hours: size the CHP unit to the summer base load, not the winter peak.
3. Check the 31.12.2026 deadline: if the plant is to fall under the current KWKG, the binding order or permit must be in place by then.
4. Secure the tax benefits: the electricity tax exemption and energy tax relief require high efficiency and proof of efficiency – plan the metering concept from the start.
5. Price in the bio-fuel staircase: include rising biomethane shares from 2029 in the long-term calculation.
6. Compare the alternative: set a heat pump plus purchased electricity, district heating or contracting against it using the same full-cost logic, as described in the guide Contracting or own investment.