Abstract: A method for co-generation of electrical power and air conditioning for structures, such as office buildings, and housing units is disclosed. An internal combustion engine, preferably a diesel, drives an alternator or generator to supply the building electrical load or for reverse sale to a public utility power grid. Heat from engine exhaust gases is recovered by an absorption-cycle heat-pump system. The system is characterized by using only a single external heat exchanger and a single building air conditioning heat exchanger for selectively heating or cooling air in the air conditioning system. Selection of heating or cooling is by reversable valve means for directing heated refrigerant vapor from a heat powered vapor generator either into the inside heat exchanger for heating or to the external heat exchanger for cooling.