Combined Heat and Power (CHP) Systems Market

Market Outlook for Combined Heat and Power (CHP) Systems

The global combined heat and power systems (CHP) market will likely expand 1.5x until 2031, bucking initial scepticism about how the market would perform during a global pandemic. Total sales of combined heat and power systems is estimated to reach US$ 26 Bn by 2031.

As per Fact.MR, demand for CHP abounds in the industrial sector and is the segment with the greatest potential for growth. Advocates for energy efficiency have set a goal of increasing CHP capacity to 20% by 2031.

Consumption Analysis of Combined Heat and Power Systems during 2016-2020 Vs Future Outlook for 2021 to 2031.

The demand for combined heat and power systems thrived at a CAGR of nearly 4% to reach US$ 18 Bn by 2020. Extensive developments in the energy sector have heightened demand for combined heat and power systems worldwide.

Based on application, the greatest portion of current installed CHP capacity is in the industrial sector with 1/3rd revenue share, exhibiting the greatest expansion potential.

Manufacturers are inclined to capitalized on the surging demand across the Asian markets. Shifting preference towards replacing conventional energy systems owing to operational cost and uninterrupted utility supply is projected to surge market growth.

According to Fact.MR- market research and competitive intelligence provider- consumption outlook for CHP systems according is to surpass US$ 26 Bn with an expansion rate of over 4% over the forecast period 2021-2031.

How are Energy Efficiency Requirements Widening CHP Systems Adoption?

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

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

Will AI Emerge as the Dominant Combined Heat & Power (CHP) Technology in Forthcoming Years?

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

Furthermore, advanced economies are leading the way in the application of AI in the power sector. For example, DeepMind, a subsidiary of Google, has been applying machine learning algorithms to predict power output 36 hours ahead of actual generation. Hence, the demand for CHP systems is projected to offer lucrative opportunities for manufacturers worldwide.

Country-wise insights

How is the U.S. Facilitating Uptake of CHPs in Recent Years?

In the U.S, individuals consume over 3x as much electricity per year as they did 50 years ago.  Additionally, it consumes nearly 25% of the world's energy. Based on such high consumption requirements, uptake of CHPs is on the incline across the country.

According to Fact.MR, the United States combined heat and power systems industry is expected to reach US$ 520 Mn by 2031. Manufacturers are striving to introduce energy efficient and cost saving CHP systems, a trend which will majorly influence demand growth.

Why are Combined Heat and Power Systems Flourishing in China?

China’s CHP equipment market was worth US$ 5 Bn as of 2020. According to IEA, China is the only major economy where coal demand increased in 2020. Strong economic growth underpins electricity demand in 2021, while post-COVID stimuli measures support production of steel, cement and other coal-intensive industrial products. 

The Chinese coal power fleet represents around a third of global coal consumption. This includes combined heat and power plants. This demand is only anticipated to accelerate in the future, paving way for future market expansion.

Category-wise insights:

Why Natural Gas is Gaining High Traction by Fuel Type?

Owing to properties such as easy transportation and less carbon footprint, natural gas based combined heat and power systems demand is surging, with an anticipated absolute $ opportunity worth US$ 5 Bn through 2031.

The surged demand forecast can be met by conventional assets that were previously approved or under development before the pandemic, mainly in Russia and the Middle East. Supply is also prospective to be enhanced by new investment in U.S shale gas production to support export capacity for liquefied natural gas (LNG) that is currently under development. 

Why Demand for Gas Turbines is Increasing Worldwide?

By prime mower, gas turbine CHP systems are expected to register a CAGR of approximately 3.8% during the forecast period. Global electricity demand is increasing, and it doubled within the last two decades. It is estimated to expand at 2x the pace of energy demand as a whole, in the next 25 years.

This progress can be attributed to the increasing demand for electricity, availability of efficient power generation technology, rising demand for natural gas-fired power plants, impact of the shale gas revolution, and reduction in the emission of carbon dioxide.

Competitive Landscape:

Prominent players are embracing innovative approaches such as ground-breaking marketing tactics, technological advancements, mergers, and acquisitions.   

• In March 2021, The European Marine Energy Centre (EMEC) collaborated with Highlands and Islands Airports Limited (HIAL) to decarbonise heat and power at Kirkwall Airport through green hydrogen technology.
• 2G Energy was selected to deliver a CHP plant which generates heat and electricity of 100% hydrogen – The first one in the UK.
• In July 2021, Capstone Green Energy signed a 10-year service contract on 1.2 MWs of micro-turbines installed in the fourth-tallest building in New York City. The skyscraper's 1.2 MW energy efficiency plant consists of two Capstone C600S microturbines with Capstone's Integrated Heat Recovery Modules.

Report Scope:

Attribute	Details
Forecast Period	2021-2031
Historical Data Available for	2016-2020
Market Analysis	US$ Mn for Value & ‘000 Units for Volume
Key Regions Covered	North America Latin America Europe East Asia South Asia Oceania MEA
Key Countries Covered	U.S. Canada Germany U.K. France Spain Italy Russia China Japan South Korea India Australia Brazil Mexico Argentina GCC South Africa
Key Companies Profiled	Siemens AG, 2G Energy Inc., Capstone Turbine Corporation, Aegis Energy Services, Inc., Cummins Inc., Wartsila, General Electric Company, Aegis Energy, Services Inc., Generac Holdings Inc., Primary Energy Recycling Corporation, Integral Power, Tecogen Inc., Caterpillar, Elite Energy Systems, LLC, Doosan Fuel Cell America, Inc.
Pricing	Available upon Request

Key Segments Covered

• Product

  • CHP Systems Up to 30 MW
  • CHP Systems 30 MW to 60 MW
  • CHP Systems Above 60 MW

• Fuel

  • Natural Gas powered CHP Systems
  • Coal powered CHP Systems
  • Biomass powered CHP Systems
  • Other Renewable Resources powered CHP Systems

• Prime Mower

  • Gas Turbines powered CHP Systems
  • Steam Turbines powered CHP Systems
  • Gas Engines powered CHP Systems
  • Fuel Cells powered CHP Systems

• Application

  • Industrial CHP Systems
  • Residential CHP Systems
  • Commercial CHP Systems