Combined Heat and Power (CHP) Performance Program

Incentives are available for CHP Systems with an aggregate nameplate greater than 1.3 MW that provide summer on-peak demand reduction. These incentives are performance-based and correspond to the summer-peak demand reduction (kW), energy generation (kWh), and fuel conversion efficiency (FCE) achieved by the CHP System on an annual basis over a two-year measurement and verification (M&V) period. CHP Systems of 1.3 MW and less should refer to the NYSERDA CHP Acceleration Program.

How to Apply

CHP Performance Program, Program Opportunity Notice (PON 2701), will be available on a first come, first served basis until December 30, 2016 or until funds are exhausted. Applicants shall submit a completed application for the proposed CHP system, including the required engineering analysis, CHP Program forms, and utility bills at the time of application. The engineering analysis must meet the minimums requirements as stated within the CHP Systems Manual [PDF].


  • Projects must have a total installed nameplate of greater than 1.3 MW
  • The applicant and/or host site must contribute to the Systems Benefits Charge (SBC) on their electric or gas bill
    • All new construction applicants, including those in a negotiated rate class, must pay the SBC in order to be eligible for this program
    • Proration of incentives based on SBC contribution is at NYSERDA’s discretion
  • The CHP System must:
    • Consist of commercially available gas-fired reciprocating engine(s) or turbine-based technologies that result in an electrical peak demand reduction during the summer capability period
    • Have a minimum 60% annual FCE
    • Have a NOx emission rate ≤ 1.6 lbs/MWhr. Should NYSDEC establish a more stringent NOX emission rate, it will supersede the 1.6 lbs/MWhr
    • Have the ability to operate during a grid outage
    • If in a flood zone, have critical components of the CHP system located above flood level
  • The following measures and projects are ineligible:
    • Fuel cells
    • A CHP system currently contracted for installation under another NYSERDA program or projects eligible to submit to the customer-sited tier of the Renewable Portfolio Standard

An applicant or a facility may receive an incentive for a CHP System either through NYSERDA or one of the associated utility companies but not both.

Please see the CHP Systems Manual [PDF] for additional details on eligibility.


Base Incentives Upstate Downstate**
Electricity Generation $0.10 x kWh $0.10 x kWh
Peak Demand Reduction* $600 x kW $750 x kW

*kW is summer peak demand reduction, not installed capacity
**Electric and/or Gas Utility customers paying into the SBC within the following counties: Bronx, Kings, Nassau, New York, Queens, Richmond, Suffolk and Westchester

The total Base Incentive is capped at the lesser of $2,000,000 per CHP project or 50% of Total Project Cost. CHP Systems are subject to non-performance incentive reductions for not achieving the contracted summer peak demand reduction, minimum fuel conversion efficiency or the air emissions requirements.

Bonus Incentives

CHP Systems may receive up to 30% Bonus Incentive above the Base Incentive as defined below:

  • A maximum of 10% additional incentive is available to those projects serving Critical Infrastructure, including Facilities of Refuge.
  • A maximum of 10% additional incentive is available to those projects that are within a Targeted Zone as established by Consolidated Edison as being a load service area of particular interest.
  • A maximum of 10% additional incentive is available to those projects that demonstrate superior performance as determined by the measured FCE.

Potential maximum incentives are capped at the lesser of $2,600,000 per CHP Project or 50% of Total Project Cost.

Incentive Payments

Incentives will be paid based on review and approval of the appropriate documentation and M&V data by NYSERDA or its consultant. See the CHP Systems Manual [PDF] for payment requirements and Bonus Incentive payment schedules.

Potential Incentive Payment Schedule

Base Incentive Brief Description
15% Progress Payment Invoice – Bill of Lading
15% Progress Payment Invoice – Interconnection Letter
10% Project Installation Payment Invoice
30% Completion of M&V Year 1 Invoice (contingent on performance)
30% Completion of M&V Year 2 Invoice (contingent on performance)
100% Total % of Contracted Base Incentive

Incentive Reductions for Non-Performance

CHP Systems are subject to non-performance incentive reductions for not achieving the:

  • Contracted summer-peak demand reduction
  • Contracted Electricity Generated
  • Minimum required FCE
  • Emissions requirements

Measurement and Verification (M&V)

CHP Systems will undergo M&V for a period of two years. NYSERDA or its Consultant will create an M&V Plan in collaboration with the applicant. The purpose of M&V is to quantify useful thermal heat recovery, energy generated, fuel consumed, and summer peak demand performance. In addition, air emission testing will be performed to ensure program compliance. See the CHP Systems Manual for additional details for how the M&V Plan will be created and implemented. Information regarding the instrumentation specifications is also provided.

All M&V data shall be transmitted to NYSERDA’s CHP Integrated Data Systems WebsiteLink opens in new window - close new window to return to this page..

Contact Us

If you have further questions, please email

Last Updated: 10/10/2014
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How To Apply

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Who Can Participate

Large CHP installations (1.3 MW or greater) that pay into the SBC.

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Who To Contact

Contact the CHP team at

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