This report outlines a cogeneration dispatch strategy for use in a deregulated electricity market, considering both the monthly demand charges and the fluctuating hourly price. To investigate the opportunity for cost savings with this strategy, its application has been simulated for three office buildings, considering cogeneration systems of various sizes and efficiencies. The results show simple payback periods in the range of 5-10 years for suitably sized systems. These results are analysed and compared with other dispatch strategies. Strategies which consider the real-time electricity price but not the demand charges give simple payback periods which are usually 2 or 3 years longer than the strategy outlined herein. Time-of-day dispatch strategies fare much worse. Further refinements to the strategy are discussed, and detailed consideration is given to its practical application. Copyright (c) 2005 John Wiley & Sons, Ltd.