This paper is part I of the study on the energy, exergy, and exergoeconomic analysis of diesel engine powered cogeneration (DEPC). Part 1 presents the formulation developed for such a comprehensive analysis while part 2 is an application of the developed formulation that considers an actual cogeneration power plant. Compression ignition engine powered cogeneration application is among the most efficient simple cycle power generation plants where the efficiencies are around 50%. The DEPC is mostly preferred in regions where natural gas is not available or not preferable because of high unit prices. In this paper, a DEPC plant is considered with all associated components. Mass. energy, and exergy balances are applied to each system component and subsystem. Exergy balance formulations are aimed to yield exergy destructions. Various efficiencies based on both energy and exergy methods and the performance assessment parameters are defined for both the system components and the entire cogeneration plant. The formulations for the cost of products, and cost formation and allocation within the system are developed based on both energy and exergy (i.e., exergoeconomic analysis). The cost analyses formulated here have significant importance to obtain the optimum marketing price of the product of thermal systems to maximize the benefit and/or minimize the cost. (C) 2008 Elsevier Ltd. All rights reserved.