Combined Heat and Power (CHP) Systems Market

Combined Heat and Power (CHP) Systems Market Outlook (2023 to 2033)

Fact.MR reported that worldwide sales of combined heat and power systems have reached US$ 20.17 billion in 2023 and are expected to climb to US$ 29.86 billion by the end of 2033. The global combined heat and power (CHP) systems market is forecasted to expand at 4% CAGR over the next ten years, thereby providing an absolute dollar opportunity of US$ 9.68 billion.

Cogeneration, sometimes referred to as combined heat and power systems, is a group of technologies whose main use is the simultaneous production of usable heat and electricity. Due to the combined heat and power system's increased energy efficiency, lower operating costs, minimal CO2 emissions, and other benefits, this combined creation of usable heat and electricity is significantly more efficient than a separate generation of useful heat and electricity.

Combining heat and power is an efficient and ecologically beneficial way to generate thermal and electrical energy from the same fuel source. One benefit of cogeneration systems over standard practices is cost reductions in industrial operations. This is a result of a reduction in redundant energy use. The market is being driven by the use of waste materials, which results in energy savings and reduced costs.

• Integration of combined heat and power systems in industrial applications is anticipated to rise at a CAGR of 4.1% over the decade.

For industrial facilities, combined heat and power systems produce heat and power. Natural gas, biomass, or coal are the primary fuel sources for industrial combined heat and power systems. Some advantages of installing CHP systems in industrial applications include non-fuel operation, low installation and maintenance costs, and heat output.

CHP technology has minimal geographical restrictions and can be installed rapidly. Continuous attempts to minimize the reliance on coal power plants and the implementation of cleaner-generating technologies to lower rising emissions are boosting market expansion.

It is anticipated that the reusability of the byproducts and the system's economic and environmental advantages will boost demand for combined heat and power systems and expand the market for their installation. It is projected that significant financial incentives for combined heat and power systems will increase demand for combined heat and power system installation.

The appeal of natural gas as an affordable and environmentally suitable alternative to oil and coal is projected to support market expansion over the coming years. Extensive developments in the energy sector have heightened the demand for combined heat and power systems worldwide.

Report Attributes	Details
Combined Heat and Power Systems Market Size (2023)	US$ 20.17 Billion
Forecasted Market Value (2033)	US$ 29.86 Billion
Global Market Growth Rate (2023 to 2033)	4% CAGR
Market Share of Natural Gas-powered CHP Systems (2023)	63%
United States Market Growth Rate (2023 to 2033)	4.2% CAGR
Market Share of Industrial Applications (2023)	37%
Germany Market Growth Rate (2023 to 2033)	4.3% CAGR
Japan Market Value (2023)	US$ 1.39 Billion
Key Companies Profiled	General Electric Company Siemens AG 2G Energy Inc. Tecogen Inc. Generac Holdings Inc. Capstone Turbine Corporation Aegis Energy Services, Inc. Cummins Inc., Wärtsilä Primary Energy Recycling Corporation

What is Widening the Deployment Scope of Combined Heat and Power Systems?

“Energy Efficiency Requirements Driving Demand for CHP Systems”

Demand for combined heat and power systems has accelerated in recent years owing to the snowballing requirement for energy-efficient equipment in end-use industries. Compared to a standard power plant, which operates at about 45% efficiency, a combined heat and power facility typically operates at 80% efficiency, resulting in reduced operational costs.

To avoid energy wastage in the power sector, manufacturers are incorporating AI and IoT in combined heat and power facilities, which is likely to boost demand over the coming years. As per the International Finance Corporation (IFC) AI, it has the potential to cut energy wastage, lower costs, and facilitate the use of renewable energy sources in power grids worldwide.

• According to EPA, the technical and cost-effectiveness potential of combined heat and power systems make it a feasible solution for power supplies in residential and commercial buildings, municipal, institutions, and manufacturers.

Advanced economies are leading the way in the application of AI in the power sector. Hence, the demand for combined heat and power systems is projected to offer lucrative opportunities for manufacturers worldwide.

• DeepMind, a subsidiary of Google, has been applying machine learning algorithms to predict power output 36 hours ahead of actual generation.

Ever-increasing Demand for Electricity Boosting Market Expansion”

Rapid industrialization is driving the electricity demand. As a result, there will likely be an increase in demand for combined heat and power systems over the coming years.

To meet the rising electricity demand, governments worldwide are concentrating on renewable energy. Market growth is driven by the availability of efficient power generation technology, rising demand for natural gas-fired power plants, the impact of the shale gas revolution, and a reduction in the emission of carbon dioxide.

“Efforts by Several Governments to Reduce Carbon Emissions”

Excessive carbon emissions have harmed the environment as a whole, leading to an increase in temperature and sea level. By implementing highly effective, clean, and sustainable energy technologies, several governments and business organizations are consistently trying to reduce growing carbon emissions, which are projected to expand the market.

Performance-wise, combined heat and power units are quite effective. They can produce power to support the grid while achieving an efficiency of over 85% to fulfill the increased demand for hot water and space heating and cooling.

What is Restraining Global Demand Growth for CHP Systems?

“High Installation and Maintenance Cost of CHP Systems”

Lack of awareness of the site clearances required to establish these systems is one of the barriers to market growth. These systems are also prohibitively expensive for small businesses due to their high initial costs of installation.

To maintain the high efficiency of combined heat and power systems, regular maintenance of all the components is required. Due to the complicated assembly of the system, which comprises many components, there are also substantial maintenance expenses.

How Can New Companies Transform the Combined Heat and Power Systems Landscape?

“Emerging Market Players Offering Renewable Energy Solutions”

The only option to get electricity in areas without a power system is through onsite energy generation. When communities have easy access to a lot of biomass, such as agricultural waste, bioenergy can be an economically viable and environmentally friendly solution. Numerous techniques are being developed by energy entrepreneurs to produce bioenergy from biomass. It provides energy resilience as well as heat for HVAC services in the areas served by the grid.

• A start-up based in the United States, Enexor Bioenergy, offers onsite renewable energy solutions. The start-up's Bio-CHP technology generates renewable energy continuously by using organic waste and polymers. The technology also uses waste heat to run onsite boilers, eliminating the need for fossil fuels to generate hot water or steam. The system is made to function in environments that are humid and salty.

Country-wise Insights

What is Supporting the Sales of CHP Systems in the United States?

“Increase in Government Initiatives for Installation of CHP Systems in Data Centers”

• Implementation of combined heat and power systems in the United States is valued at US$ 3.8 billion in 2023.

An increase in government initiatives for the installation of combined heat and power systems in data center facilities and increasing demand for energy-efficient and reliable space heating solutions are the key factors driving market expansion. The market is complemented by a rise in industrial facilities, economical funding programs & rebates, promising research and development projects, and strict environmental regulations.

How is Demand for Combined Heat and Power Systems Evolving in Germany?

“Significant Investments in Micro and Smart Grids”

• The combined heat and power systems market in Germany is predicted to reach US$ 2.71 billion in 2033.

The market is being driven by the rising need for district energy systems, significant investments in micro and smart grids to boost distributed generation, and huge demand for power monitoring systems from commercial sectors. The key factors supporting the market are increasing subsidies and tax benefits for cogeneration equipment, increasing electricity demand, and the implementation of gas-based technology.

What Sets the CHP Systems Industry in China apart from Others?

“Rapid Increase in Power Generation Projects Driving Market Growth”

• Sales of combined heat and power systems in China are set to increase at a CAGR of 4.6% over the next ten years.

Several CHP facilities in China run on biomass, coal, and natural gas as fuel. Robust developments in both the residential and commercial sectors, an increase in power generation projects, and infrastructure developments are boosting market expansion. Market growth is attributed to surging investments in gas-fired power plants and major cogeneration facilities.

Category-wise Insights

Why is Natural Gas the Ideal Fuel for Combined Heat and Power Systems?

“Growing Usage of Natural Gas in CHP Systems Attributed to Less Carbon Footprint”

The market is classified into natural gas, coal, biomass, and other renewable resources based on the fuel.

• Natural gas-powered combined heat and power systems account for 63% share of the global market owing to properties such as easy transportation and less carbon footprint.

The ideal fuel for CHP technology is natural gas due to its great efficiency and growing global production. Globally, governments are attempting to boost the proportion of cleaner fuels in their energy mix, which will ultimately drive up demand for natural gas over the coming years.

Natural gas is perfect for use in combined heat and power systems since it is widely accessible and affordable. The growth rate of coal-based combined heat and power systems is probably going to slow down as a result of the advent of these natural gas-based systems. Furthermore, strict government rules and carbon emission targets will compel decision-makers to use cleaner fuels, including natural gas.

Competitive Landscape

Top combined heat and power system providers are concentrating on forming crucial contracts and collaborations to join creative initiatives and introduce technologically advanced items. They are working to provide a wide range of combined heat and power solutions for various power plants all over the world.

Leading companies are investing heavily in thorough research and development projects to create environmentally friendly systems. They are focusing on quality control, product standards, and new developments to increase their consumer base and solidify their position in the market.

For instance :

• In 2019, EC Power teamed up with Lochinvar to introduce a cogeneration solution for the North American market.

Key Segments of Combined Heat and Power Systems Industry Research

• By Product Type :

  • Up to 30 MW
  • 31 MW to 60 MW
  • Above 60 MW

• By Fuel :

  • Natural Gas
  • Coal
  • Biomass
  • Other Renewable Resources

• By Prime Mower :

  • Gas Turbines
  • Steam Turbines
  • Gas Engines
  • Fuel Cells

• By Application :

  • Industrial
  • Residential
  • Commercial

• By Region :

  • North America
  • Europe
  • Asia Pacific
  • Latin America
  • Middle East & Africa