Every heat engine is subject to the theoretical efficiency limits of the Carnot cycle. When the fuel is natural gas, a gas turbine following the Brayton cycle is typically used. Mechanical energy from the turbine drives an electric generator. The low-grade (i.e. low temperature) waste heat rejected by the turbine is then applied to space heating or cooling or to industrial processes. Cooling is achieved by passing the waste heat to an absorption chiller.

Thermal efficiency in a trigeneration system is defined as:

Conventional central coal- or nuclear-powered power stations convert only about 33% of their input heat to electricity. The remaining 67% emerges from the turbines as low-grade waste heat with no significant local uses so it is usually rejected to the environment. These low conversion efficiencies strongly suggest that productive uses could be found for this waste heat, and in some countries these plants do collect byproduct heat that can be sold to customers.

But if no practical uses can be found for the waste heat from a central power station, e.g., due to distance from potential customers, then moving generation to where the waste heat can find uses may be of great benefit. Even though the efficiency of a small distributed electrical generator may be lower than a large central power plant, the use of its waste heat for local heating and cooling can result in an overall use of the primary fuel supply as great as 80%. This provides substantial financial and environmental benefits.