This paper describes an investigation in the optimisation of a steam turbine CHP (combined heat and power) system under three economic cases resulting from the introduction of a carbon price in Australia: no carbon price (case one); carbon price and not liable (case two); and a carbon price and liable (case three). A case study was considered for validation purposes. Steam turbine partial load equations and required pricing data under the various cases were derived. For this coal boiler steam turbine CHP system, the most economical situation was case two, and the least economical situation was case three. These results indicate the introduction of the carbon price has made the installation of these types of systems more attractive in terms of economic benefits as long as the system is not liable. All scenarios proved uneconomical with a natural gas boiler. The high price of fuel compared to the low cost of purchasing electricity resulted in recovered heat following the demand. This shortfall in electricity generation required the system to purchase the majority of its electricity demand from the grid in all three cases. Due to the low price of selling electricity, no excess electricity was produced in any investigation. (C) 2013 Elsevier Ltd. All rights reserved.