Back as an undergrad at Michigan State, all electrical engineering students took a trip out to the campus power plant and learned exactly why the dorm rooms were so hot in the winter and into the spring; the waste heat from the power plant was being used to heat--and cool--all buildings on campus. Although a great deal of the heat went through the single pane windows of Bryan Hall and other dorms (we left the windows open when it was zero outside, it was so hot), the efficiency of the "cogeneration" system was said to be about 60%--roughly twice that of the average coal fired power plant of the day. Even today, it's about 50% better efficiency than the best coal and gas fired power plants.
Enter Volkswagen, which has developed a nifty little natural gas fired power plant that will be sufficient to power a few homes, and will produce waste heat for hot water and heat. Now it's a hefty price at 5000 euros (roughly $7500), but if it indeed replaces a $2000 heater, a $500 water heater, and $100 or so a month in electric bills, this could indeed be the first thing that actually comes close to being an ecologically and economically sound replacement for centralized generation and distribution of electricity.
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