In the sustainable energy agenda, thermoelectric generators (TEG) can be a central technology for low-cost combined heat and power (CHP) systems. TEG module (TEM) is the combination of TEG cells, heat pipes, heat sinks and copper blocks that produce electrical power and thermal energy for low temperature heating simultaneously. Two TEG cells were used in each TEM for CHP in a bakery factory with a reference waste heat temperature of 250°C. Different designs of TEM affect the heat transfer mechanics through the components. However, actual testing of each design requires high cost and time consuming. Identifying the principal parameters affecting the desired output is indeed important before investing in actual design fabrication. One-dimensional model is developed in this manuscript to evaluate the fundamental interactions between each component. Parametric variation for nine main parameters characterized the steady-state response of each parameter under four novel heat sink configurations. The parameter sweeps approach benefits in designing a novel TEM for optimum system output. An improved TEM with 6 TEG cells was designed and it increased the heat recovery ratio from an initial 14% to 38%. The Reynolds number of streams are the major operating parameter as it influences the heat sink effectiveness. Large heat exchanger frontal area and copper block housing surface area are also significant parameters. Identification of these principle parameters would assist in effective designs of TEM systems for industrial CHP.