Between Natural Gas and Hydrogen: What Does the Future Hold for Combined Heat and Power Plants?

Combined heat and power (CHP) plants are considered efficient, but at the same time they face criticism because they are often still powered by fossil fuels. Stefan Liesner of 2G Energy AG has been working with these very systems for years. This interview explores the conditions under which CHP can actually be sustainable, the role that hydrogen and alternative gases play, and how the technology fits into a future energy system.

Jessica Dzikonski: Mr. Liesner, combined heat and power plants are considered particularly efficient, but at the same time they are also the subject of criticism because they are often powered by fossil fuels. How do you view this debate at the moment?

Stefan Liesner: If a combined heat and power plant is permanently fueled by fossil natural gas and has no prospect of decarbonization, then that certainly cannot be the vision for a climate-neutral energy system.

What is often overlooked in the discussion, however, is the distinction between technology and fuel, as well as their role within the overall system. Combined heat and power is, first and foremost, a highly efficient form of energy conversion. While separate electricity and heat generation results in significant losses, CHP plants achieve very high overall efficiency.

What matters, therefore, is not just the current fuel source, but the system’s function: CHP can flexibly provide power precisely when wind and solar energy are not sufficiently available. In this role, it is a key component of an overall renewable energy system.

Jessica Dzikonski: To put it more bluntly: Under what conditions do you believe combined heat and power is truly sustainable?

Stefan Liesner: Sustainability in CHP arises from the interplay of several factors. First, efficiency is a technical advantage that is inherent to CHP. However, two other aspects are crucial: the fuel used and the operating mode. CHP becomes sustainable when renewable or climate-neutral gases such as biomethane, biogas, or—in the future—hydrogen are used. Equally important is integration into a flexible energy system. Increasingly, CHP plants are no longer operated as base-load technology but rather as flexible, system-supporting capacity. This means they generate electricity and heat exactly when the energy system needs them (especially during periods of low renewable energy feed-in). Sustainability here therefore means not only low emissions but also system stability.

Jessica Dzikonski: You brought it up. Fuel plays a key role. What alternatives to natural gas are realistically viable today?

Stefan Liesner: There are already several tried-and-true alternatives available today. Biomethane and biogas have been in use for many years and are well established, particularly in agriculture, waste management, and municipal infrastructure. And even if the ramp-up of hydrogen is proceeding less rapidly than we would all like, its importance is set to grow significantly in the future. For many years, we have successfully demonstrated that stationary engines can easily process hydrogen from a wide variety of sources. Plants of German origin are already being successfully operated around the globe. The challenge, therefore, lies less in the technology than in availability and infrastructure. In my view, it is crucial that we use renewable energy sources where they deliver the greatest systemic benefits.

Jessica Dzikonski: How does the economic viability of combined heat and power plants change when we shift our focus more toward green gases?

Stefan Liesner: In the short term, green gases are generally more expensive than fossil natural gas. That is a reality we cannot ignore. At the same time, focusing solely on fuel costs is not enough. We need to focus more on the total system costs. These include CO₂ costs, which are increasingly affecting fossil fuels, as well as the system benefits provided by flexible plants. Combined heat and power (CHP) can be particularly economically attractive when it supplies electricity when prices are high and provides heat at the same time. In the long term, the ability to use renewable gases will increasingly become an economic advantage because fossil fuel alternatives are becoming structurally more expensive.

Jessica Dzikonski: Many critics say that combined heat and power (CHP) prolongs the use of fossil fuels. Is this a valid concern, or does this view fall short?

Stefan Liesner: This concern definitely falls short, as it fails to distinguish between short-term reality and long-term prospects. The real challenge of the energy transition is not whether we need less fossil fuel—that is undisputed—but how we can ensure security of supply during the transition while keeping energy costs within a socially acceptable and competitive range. A failure of this endeavor poses enormous risks to social and political stability in Germany.

The central question is therefore: how can we use the fossil gas that will still be needed in the coming years as efficiently as possible and in the most sensible way from an infrastructure perspective? CHP certainly plays a pioneering role here, as it combines flexibility and efficiency like no other technology. It is important to emphasize here that, aside from the aforementioned immediate usability of hydrogen and biogas, CHP plants currently powered by fossil natural gas can also be retrofitted at a later date to run on green gases. Fears of a fossil fuel lock-in are therefore definitely unfounded.

Jessica Dzikonski: How should CHP plants be integrated into energy systems in the future so that they work optimally with renewable energy sources?

Stefan Liesner: The future clearly lies in interconnected, hybrid energy systems. In this context, CHP becomes part of an overall system comprising photovoltaics, wind energy, heat pumps, storage systems, and smart energy management. Each technology fulfills a specific function: renewable generation provides low-cost electricity when available, heat pumps use it efficiently, storage systems shift energy over time, and CHP delivers flexible power during periods of high demand. The key lies in the intelligent coordination of these components. The focus is not on individual technologies, but on how they work together. This is precisely why it is so important that the legislative proposals currently under discussion—whether the EEG, StromVKG, GModG, or KWKG—are sensibly coordinated with one another.

Jessica Dzikonski: Our readers often deal with solar power, heat pumps, and energy management in their own homes. What can they take away from the discussion about combined heat and power (CHP) for their own energy systems?

Stefan Liesner: The key insight is that energy systems rarely achieve optimal performance through a single technology. It’s always about combination and smart control. In the private residential sector, photovoltaics and heat pumps—in combination with electric vehicles and home energy storage—will play a central role in many cases. Landlords are also grappling with these same issues. Whether for private individuals or large real estate companies, the appeal of a rental property increases with smart energy solutions. Where district heating is available or planned, connected households often benefit directly from the advantages of combined heat and power (CHP). At the same time, the discussion surrounding CHP clearly demonstrates how important flexibility and system integration are becoming. Anyone investing in energy systems today should therefore focus less on individual efficiency ratings and more on how well the components work together and how they fit into a changing energy system.

Jessica Dzikonski: If you had to name one thing that is currently misunderstood in the public debate about cogeneration, what would it be?

Stefan Liesner: The biggest misconception is the assumption that CHP primarily competes with renewable energy. In fact, its role has been undergoing a fundamental shift for many years now. The CHP of the future is not a baseload technology, but rather a flexible complement to a predominantly renewable energy system. It does not aim to produce as many operating hours as possible, but rather targeted, valuable operating hours—exactly when the system needs them. Its role is not to replace wind and solar energy, but to back them up.

Stefan Liesner dispels what is probably the most persistent misconception surrounding combined heat and power (CHP) plants: CHP is not a “fossil fuel extender,” but rather a system integrator. Anyone who judges the technology solely based on today’s fuel mix fails to recognize its role in the transition to a renewable energy system. Biomethane and hydrogen already make it a climate-friendly option today—one that can also be retrofitted. What remains crucial, as Liesner consistently emphasizes, is not the individual technology, but the interaction of all components.

Translation of original article | Author: Jessica Dzikonski, CEO and founder of EEAktuell