As the low-pressure steam has a large quantum of heat which is lost in the process of condensing, the efficiency of conventional power plants is only around 35%. In a cogeneration plant, very high efficiency levels, in the range of 75%–90%, can be reached. This is so, because the low-pressure exhaust steam coming out of the turbine is not condensed, but used for heating purposes in factories or houses.

Since co-generation can meet both power and heat needs, it has other advantages as well in the form of significant cost savings for the plant and reduction in emissions of pollutants due to reduced fuel consumption.