The purpose of this project is to develop a new hybrid chiller that can (1) reduce end-user energy costs, (2) lower building peak electric load, (3) increase energy efficiency, and (4) provide standby power. This new hybrid product is designed to allow the engine to generate electricity or drive the chiller's compressor, based on the market price and conditions of the available energy sources. Building owners can minimize cooling costs by operating with natural gas or electricity, depending on time of day energy rates. In the event of a backout, the building owner could either operate the product as a synchronous generator set, thus providing standby power, or continue to operate a chiller to provide air conditioning with support of a small generator set to cover the chiller's electric auxiliary requirements. The ability to utilize the same piece of equipment as a hybrid gas/electric chiller or a standby generator greatly enhances its economic attractiveness and would substantially expand the opportunities for high efficiency cooling products.