Exergoeconomics is also called thermoeconomics, and thermoeconomic analysis methodologies combine economic and thermodynamic analysis by applying the cost concept to exergy which accounts for the quality of energy. The main concept of thermoeconomics is the exergetic cost and it deals with cost accounting methods. This paper is a review on the exergoeconomic analysis and optimization of combined heat and power production (CHPP). A brief historical overview on the exergoeconomics analysis and optimization is given. The concept of exergetic cost and cost accounting methods are discussed. An application of relevant formulation is given using a diesel engine powered cogeneration system as an example. Main thermoeconomic methodologies available in literature are described and their advantages and disadvantages with respect to one another are compared and discussed through a well-known problem, namely CGAM. Important studies on thermoeconomic analysis and optimization of combined heat and power production are listed based on the methodology used and the type of system considered. (C) 2009 Elsevier Ltd. All rights reserved.