In a cogeneration system having a generator adapted to be connectable to an AC power feed line between a commercial power network and an electrical load, an internal combustion engine for driving the generator such that exhaust heat of the engine is supplied to a thermal load and an actuator that opens and closes a throttle valve of the engine, there are provided a power demand detector that detects power demand of the electrical load, a thermal demand detector that detects thermal demand of the thermal load. The operation of the actuator is controlled in response to the detected power demand so as to increase or decrease the engine, and ignition timing of the engine is controlled in a retard direction in response to the detected thermal demand.