The environmental and economic impact of a municipal wastewater treatment plant can be reduced through a novel application of CHP technology. By operating a natural-gas fired prime mover to generate electricity and utilizing the rejected heat in the sludge drying process, energy cost savings and both site- and grid-wide emissions reductions can be realized. The design case is the Almeda Sims Wastewater Treatment Plant for the City of Houston. This plant treats the waste, and then dewaters the sludge that results from the process with a large natural-gas fired dryer. The plant handles about 40 tons of sludge per day. The proposed CHP plant would use a natural-gas fired turbine to generate base-load electricity for the facility, and utilize the heat from the turbine exhaust to reduce the natural-gas requirement at the burner tip of the dryers. Utilization of emission-reducing technology on the turbine exhaust and the reduction in natural-gas consumption at the dryer burner tip, as well as reduced electrical draw from the grid, results in a significant reduction in environmental pollutants. Modeling of the proposed system shows a potential for a CHP system efficiency of approximately 76%, compared to 30–35% efficiency of grid-wide power generation equipment. The result is an economically viable green energy solution for any municipality with significant wastewater processing needs.