Abstract The exergoeconomic analysis is one of the most used exergy sub-methods that combine exergy analysis with economic analysis. Based on a previous exergetic analysis of a combined heat and power (CHP) system which has a total installed electricity and steam generation capacities of 11.52 MW and 9.0 tons/h at 140 °C respectively, this study considers the thermoeconomic analysis in order to provide cost-based information and suggests possible locations for the CHP system improvement. The analysis is based on the Specific Exergy Costing (SPECO) approach and the results show that the specific unit exergy cost of electrical power produced by the CHP system is calculated as 4.48 $/GJ. The capital investment cost, the operating and maintenance costs, and the total cost of CHP system as found to be 649 $/h, 149.6 $/h and 810.2 $/h respectively. The exergoeconomic factor of the diesel engine, heat recovery exchanger, cooling tower exchanger, and cooling exchanger are 79.86%, 41.99%, 87.93%, and 55.58% respectively. The exergoeconomic factor of the compressor is 54.51% while this value is 88.3% for the turbine. The relative cost difference for lubrication oil cooler is calculated to be 57.60% which is the third lowest value after the charge air cooler.