A cogeneration system comprising a generator connected to an AC power feed line between a power network and an electrical load and an internal combustion engine for driving the generator and for supplying its exhaust heat to a thermal load. The power supply from the generator to the power network is interrupted by turning off a switch installed in the feed line when an outage of the power network is detected. A battery for storing DC power is connected to an inverter circuit to invert the DC power to AC power, such that the inverted AC power of the battery and the output of the generator are supplied to the electrical load, thereby enabling the system to respond to a power network outage and preventing reverse flow of the power output by the cogeneration system into the power network while supplying as much electric power as possible to the electrical load.