Combined Heat and Power Market

Combined Heat and Power Market Size

Combined Heat and Power Market is anticipated to grow at a CAGR of 6.4% in the forecast period (2024-2034), with the market size valued at USD 27.2 billion in 2023 and projected to reach USD 54 billion by 2034.

Combined Heat and Power (CHP), is a high energy generation process that directly helps in producing electricity and at the same time captures usable heat from different single fuel resources such as coal, biomass, natural gas. As compared to the traditional methods of generating power, which discard generated heat as waste, CHP helps in utilizing this heat for various applications such as heating and cooling applications, directly improving the overall efficiency and reducing any kind of emission. The market consists of industry that involves the manufacturing, installation and maintenance of various CHP systems. This market consists of a wider range of stakeholders, which includes technology providers, energy service companies and engineering firms. CHP systems are effectively used for a wider range of applications, directly ranging from large-scale industrial facilities and district heating networks to smaller-scale residential and commercial buildings. This flexibility, together with increasing concerns about energy security, climate change, and rising energy costs, has driven the adoption of CHP solutions worldwide.

Market Highlights

Combined Heat and Power Market is expected to exhibit a CAGR of 6.4% during the forecast period, 2024-2034

Combined Heat and Power Market is anticipated to reach USD 54 billion, growing at a CAGR of 6.4% during the forecast period due to demand for better energy efficiency, reduce greenhouse gas emissions, and provide reliable power supply. Combined Heat and Power (CHP) equipment are effectively used to generate heat and power at the same time more effectively and conveniently, they are available with different technological concepts such as Gas Turbine, Combined Cycle, Steam Turbine, Reciprocating Engine, Fuel Cell, Microturbine, Others, which all are working towards the same tasks. CHPs are generally fuelled and powered with the help of Coal, Natural Gas, Biomass, Oil and Others, while being available in different capacities such as Up to 10MW, 10-150MW, 151-300 MW, Above 300 MW. CHPs are used conveniently in different types of settings such as Residential, Commercial and Industrial.

Source: Fatpos Global

Combined Heat and Power Market Segmentation

Reciprocating and Stream Tube Engines segment is expected to dominate in the forecast period

By Technology, Combined Heat and Power Market is segmented into Gas Turbine, Combined Cycle, Steam Turbine, Reciprocating Engine, Fuel Cell, Microturbine, Others. Reciprocating Engines and Steam tubes are playing crucial roles in the market, used in various different applications that can range from smaller buildings, homes, industries, they are known for the versatile fuel adaptability ranging from natural gas to biomass, being significantly cheaper to other applications give them an upper hand to catering diverse power and heat demands. Steam tubes on the other hand dominate the large-scale CHP applications use such as in district heating and industrial processes, as they are known for excelling in applications which generally require large amount of heat to process, with established technology, they have a mature technology base, while offering reliable performance for better larger scale projects. Other segments such as Micro turbines and Fuel Cells are deemed to be the fastest growing in the market, with micro turbines suitable for limited space installations with lower emissions rate, while fuel cells offering better electrical efficiency compared to other technologies, being powered by hydrogen. 

Natural Gas segment is expected to dominate in the forecast period

By Fuel Type, Combined Heat and Power Market is segmented into Coal, Natural Gas, Biomass, Oil and Others. Natural gas has been standing out as the dominant force in the market with nearly contributing to the major market share due to its better accessibility, versatility and better cost effectiveness with better regulatory landscape. Larger and better pipeline infrastructure supported by extensive global reserves makes natural gas pretty easier and available in many reasons thus offering better stability and pricing. Its better compatibility with common CHP technologies helps in better energy generation supported by high quality of heat production for different applications ranging from large to small scale. Other alternatives such as biomass currently shares the strongest growth in the total market share category driven by sustainable drive and government incentives in regions having abundance of resources. While, Coal and Oil share has been significantly reduced due to environmental impacts they can have.

Market Dynamics

Growth Drivers

Improved Focus And Demand For Energy Efficient Solutions Has Facilitated Market Growth

Traditional power generation methods often result in the loss of significant energy, with thermal efficiencies ranging from 30-50%, which directly lead to the overall increased cost. Combined Heat and Power systems are offering better solutions to reduce these kind of impacts by generating both electricity and heat, directly achieving thermal efficiencies to 80%.  The better and higher efficiencies mean that CHP systems are known for utilizing more of the fuel's energy, resulting in reduced fuel consumption and lower operating costs for businesses and organizations. Consumers also benefit from lower bills when purchasing energy from electricity and heat CHP systems. Besides, CHP reduces the overall reliance on traditional power grids, enhancing energy independence and resilience, particularly in critical infrastructure or remote locations. Likewise, CHP contributes to improved energy security by decreasing dependence on imported fuels in some regions, raising a more sustainable and self-reliant energy ecosystem.

Rising Focus On Sustainability Is Shifting The Market Dynamics Towards Positive Trajectory

The overall issues of greenhouse gas emissions and air pollution rising from burning of fossil fuels in power plants has shifted a growing focus on sustainability. Combined Heat and Power systems are now offering better multifaceted solutions with more environmental benefits. By incorporating heat and power generation, CHP has facilitated in reducing the overall greenhouse effect up to 50% as compared to separate production methods, dependent upon the fuel source. CHP systems directly emit lower levels of pollutants such as NOx and SOx, directly improving the overall air quality. Acceptance of renewable energy sources such as biomass, biogas, and waste heat, CHP systems are playing an essential role in nurturing a more sustainable energy mix. Besides, CHP aligns with strict environmental regulations widespread in many regions, positioning it as a obedient and attractive option for organizations seeking to mitigate their environmental impact while maintaining operational efficiency.

Restraints

Complex Nature Of CHP Projects Acts As A Challenging Restraint For The Market Dynamics

Complexity of Combined Heat and Power (CHP) projects are presenting several challenges across different verticals such as engineering, project management, financing, and operations. Engineering complexities are arising from the need for better expertise, optimal system design, and fuel selection integration. Project management involves managing logistics, navigating certain regulations, and integrating with existing infrastructure. Several financial constraints include high upfront costs, limited financing options, and complex long-term cost analysis. Operational and maintenance issues stem from specialized expertise requirements, troubleshooting complexities, and higher spare parts and maintenance costs. Overcoming these challenges requires strategies such as standardizing designs, providing specialized training, offering financial incentives, and entering into partnerships for sharing better knowledge. These approaches can reduce certain complexities and promote wider adoption of CHP technology, advancing its role in sustainable energy solutions.

Recent Developments

• In 2023, General Electric Company (GE), introduced the Jenbacher J624S gas engine, designed for high-efficiency power generation and CHP applications. They are also focusing on expanding their distributed energy portfolio, including gas engines and hybrid CHP systems.
• In 2023, Siemens AG, partnered with Ørsted in order to develop and deploy integrated energy solutions, including CHP systems, for industrial customers. They have also successfully introduced the SGT-800 gas turbine, offering high efficiency and flexibility for CHP applications.
• In 2023, Doosan Corporation, acquired majority stake in Hydrogenious LOHC Technologies, expanding its hydrogen storage and transportation capabilities for potential use in CHP systems. They are also actively investing in R&D for next-generation gas engines and fuel cells for CHP applications.
• In 2023, Caterpillar, introduced the Cat G3520C gas engine, designed for combined heat and power and microgrid applications. They are trying to successfully focus on providing integrated power solutions, including CHP systems, for various industries.
• In 2023, Wärtsilä Corporation, successfully introduced the Wärtsilä 31SG gas engine, offering improved efficiency and flexibility for CHP applications. They are also successfully focusing on emphasizing digitalization and remote monitoring solutions for optimizing CHP system performance.

Combined Heat and Power Market

Key Players:

• General Electric Company
• Siemens AG
• Doosan Corporation
• Caterpillar Inc.
• Wärtsilä Corporation
• Mitsubishi Hitachi Power Systems
• ABB Group
• MAN Energy Solutions
• Veolia Environment S.A.
• Cummins Inc.
• BDR Thermea Group
• Capstone Turbine Corporation
• 2G Energy AG
• Tecogen Inc.
• Yanmar Co. Ltd.
•  Other Prominent Players (Company Overview, Business Strategy, Key Product Offerings, Financial Performance, Key Performance Indicators, Risk Analysis, Recent Development, Regional Presence, SWOT Analysis)

Regional Analysis

Combined Heat and Power Market is segmented based on regional analysis into five major regions: North America, Latin America, Europe, Asia Pacific and the Middle East and Africa. At the present market scenario, Asia Pacific region leads the race as rapid economic development, with more focus on urbanization and stronger government support with better subsidies and incentives are providing positive push for positive growth. Abundance of coal and biomass resources in some regions are acting as a strong market factor. 

Source: Fatpos Global

Impact of Covid-19 on Combined Heat and Power Market

The COVID-19 pandemic had a significant short-term impact on the Combined Heat and Power (CHP) market, leading to an overall decline in demand, supply chain disruptions, and project delays or cancellations. However, the pandemic also brought long-term growth prospects, driving a focus on flexibility and sustainability, increasing interest in microgrids and distributed energy solutions, promoting cleaner energy options like biomass or fuel cells, and accelerating digitalization and remote monitoring technologies. Overall, while the pandemic caused temporary setbacks, it also spurred a shift towards more sustainable, efficient, and resilient energy solutions, which could benefit specific segments of the CHP market in the long run, depending on regional dynamics and market trends.

Combined Heat and Power Market is further segmented by region into:

• North America Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – United States and Canada
• Latin America Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – Mexico, Argentina, Brazil, and Rest of Latin America
• Europe Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – United Kingdom, France, Germany, Italy, Spain, Belgium, Hungary, Luxembourg, Netherlands, Poland, NORDIC, Russia, Turkey, and Rest of Europe
• Asia Pacific Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – India, China, South Korea, Japan, Malaysia, Indonesia, New Zealand, Australia, and Rest of APAC
• Middle East and Africa Market Size, Share, Trends, Opportunities, Y-o-Y Growth, CAGR – North Africa, Israel, GCC, South Africa, and Rest of MENA

Combined Heat and Power Market Scope and Segments:

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