Blowing off steam may be beneficial for frustrated individuals, but it is a waste of money for manufacturers. Now, though, entrepreneurs are creating a burgeoning business that turns waste steam heat into profits.

The underpinning of this new industry, called cogeneration, is the production of electricity from steam that, until recently, was vented to the atmosphere. Cogeneration is one of the hottest new ventures around. Frost & Sullivan Inc., an international market research firm, predicts that it will be a $5-billion industry by the end of the century, with some of the biggest winners being the suppliers of facilities and equipment.

In the past, giants like Dow Chemical Co. shrugged off heat energy produced by their plants. But last year, the U.S. Supreme Court upheld a law requiring public utilities to buy cogenerated electricity for their power grids. Industrial producers thought that they could turn steam into gold by selling the electricity or using it themselves. That was good news for the cogeneration equipment merchants.

Fayette Manufacturing Corp., of Tracy, Calif., has grown from revenues in 1980 of $50,000 as a wind turbine manufacturer to $53 million in cogeneration operations last year. Applied Energy Services Inc., founded in 1981, has one cogeneration facility under construction today, and five more in negotiation. The company predicts it will gross $60 million by the end of 1986 from the one project now under construction.

"Cogeneration is destined to be a huge industry," says Robert Danziger, president of Sunlaw Energy Corp., a California company that recently closed a deal on a $70-million cogeneration project. "There is plenty of room for all." With waste steam as the raw material, it seems like an alchemist's dream.