Not Spaghetti

This subject is touched on in the book "Sustainable Energy – without the hot air" by David MacKay. He makes the observation that CHP plants generally are less effective at making electricity (you don't get to extract that heat without at least some efficiency impact), and if we want to heat buildings it would be better to design the most efficient plant for making electricity, and then using that electricity to run heat pumps. The lower efficiency of making electricity is more than counterbalanced by the fact that heat pumps can generate 3-4 (or more) times more heat than they consume electricity. Ie, the extra heat you get out of a CHP system is lower than if you take the extra electricity you get out of a maximally efficent electricity generator and then use it to run a heat pump.

That seemed like a pretty damning verdict for CHP to me. Of course, then it depends on the feasibility and cost of installing ground-source heat pumps everywhere, and on how much heat you can continuously take out of the ground. (Though he points out that you can dump the heat back in from running AC in the summer.)