Our purpose in this paper is to examine if there is any profitability for a company with a factory in the timber industry to invest in a combined heat and power, CHP. Based on analysis and the results that the paper generates, we will give Derome AB a suggestion on how it is a profitable investment or not to installing in a CHP. By investing in a CHP plant, you can get a high efficiency, which means that companies can use their resources more effectively. The Swedish wood industry has by-products of production that can be used for combustion in their boiler which is an advantage. The essay is a qualitative study where we have a case company, Derome AB. In this company, we interviewed two employees who have knowledge in the study. They have helped us to provide information and data about their business. We chose to use the pay-off- and the net present value method, NPV, to see if there are profitable advantages for the investment. For investment decisions these two methods are the most common for companies. Pay-off is a simply method to see whether an investment is profitable, while the NPV is a more accurate method. CHP plants produce both electricity and heat for consumption. They have a high efficiency between 80-90%. Previous studies show that Sweden is in a situation where they need to install more CHP to expand the district heating network and to increase electricity production. CHP will according to previous studies also be an important part of Sweden's electricity supply. Swedish timber industry is important for Swedish exports and has nearly 270 thousand employees either directly or indirectly. Wood industry has a great potential for expansion to produce both electricity and heat. The conclusion of our study indicates that there are profitability advantages of investing in a CHP plant in Kinnared. The investment could be seen as an environmental investment and therefore use a low discount rate in NPV. But for Derome AB it can not be seen as an investment profitable when they use a 12% discount rate and 15% in return on investment. The pay-off time for the investment can be seen as profitable by both authors and Derome AB.