Combined Heat and Power Market

Industry Overview

The Global Combined Heat and Power Market is valued at USD 30.4 billion in 2024 and is expected to reach USD 39.2 billion by 2030 at a CAGR of 5.2% during the projected period.

Combined Heat and Power (CHP), also referred to as cogeneration, is the simultaneous production of heat and electricity from a solitary source. It efficiently uses heat that would otherwise be wasted, directing it to heat the power plant itself or neighboring buildings through a system of steam pipes.

The global market for Combined Heat and Power is increasing and anticipated to continue growing progressively due to its capacity to enhance power generation efficacy by up to 80%. This makes it highly suitable for settings such as industrial parks, college campuses, military bases, and similar areas where the cogenerated heat can be effectually used.

The combined heat and power market is divided into different segments. Natural gas emerges as the leading fuel type, driven by its availability, affordability, and eco-friendliness, alongside ease of installation. Larger-scale operations, exceeding 300MW, dominate the market, primarily due to the rising deployment of natural gas-based power plants, especially in response to environmental concerns.

In terms of technology, reciprocating engines lead the market, buoyed by the global uptick in distributed power generation. Meanwhile, the industrial sector commands the largest market share in end-user usage, driven by growing demand for heat and steam across diverse industries like pharmaceuticals and petrochemicals, solidifying the essential role of CHP systems in industrial operations.

Insight by Fuel

Categorized by fuel type, the combined heat and power market includes natural gas, coal, and biomass. Out of these, natural gas is expected to dominate the market and exhibit the highest CAGR during the forecast period. This is attributed to factors such as its widespread availability, affordability, environmental cleanliness, and ease of system installation compared to other fuel options.

Insight by Capacity

According to the capacity, the combined heat and power market is divided into four segments namely, >10 MW, 10-150 MW, 151-300 MW, and >300MW. Out of these, the category of more than 300MW capacity holds the largest share in the market, which is attributed to the growing prevalence of natural gas-based power plants for electricity generation, predominantly in response to rising environmental concerns in North America and Europe.

Insight by Technology

Segmented by technology, the combined heat and power market includes combined cycle, steam turbine, gas turbine, reciprocating engine, and other methods. Out of these segments, the reciprocating engine segment is projected to claim the largest market share, primarily due to the escalating distributed power generation across several regions across the world. This growing trend in distributed power generation is driving demand for this segment within the market.

Insight by End-User

Divided by end-users, the combined heat and power market comprises residential, commercial, and industrial users. Among these, the industrial sector holds the most significant market share, driven by the increasing demand for heat and steam within several industry verticals. These systems find application across diverse sectors including pharmaceuticals, petrochemicals, and more.

Global Combined Heat and Power Market Report Coverage

Industry Dynamics

Industry Trends

There is a rise in the use of natural gas due to its abundant supply, cost-effectiveness, and environmentally friendly attributes.

There is a shift to larger capacity CHP systems propelled by the increasing deployment of natural gas-based power plants.

Reciprocating engines are gaining prominence in the CHP market due to higher adaptability, efficiency, and suitability for various industries.

CHP systems are finding wider applications across various end-user sectors, including residential, commercial, and industrial.

Continuing advancements in CHP technologies, such as improved efficiencies, integration with renewable energy sources, and enhanced system controls, are also noticed.

Growth Drivers

Rising energy needs in commercial and industrial sectors is the main factor that is driving the expansion of the global combined heat and power market.

The strict governmental regulations and ample supply of natural gas at competitive prices are also propelling the growth of this market.

Growing awareness and emphasis on reducing carbon emissions and promoting sustainable energy solutions are driving the adoption of combined heat and power systems and driving market growth.

The need for reliable and resilient energy infrastructure is encouraging the application of combined heat and power systems.

Rapid advancements in CHP technologies are expanding its application, effectiveness, and thereby offering more cost-effective solutions, fueling market growth.

The potential for cost savings and improved energy economics due to lower energy bills is resulting in higher adoption of these systems across varied end users.

Rapid urbanization and industrial growth in emerging economies are also driving energy demands and the CHP market.

The market expansion is also attributed to the beneficial properties of the systems such as the ability to generate both electricity and thermal energy cleanly from a single fuel source, reducing reliance on purchasing electricity from local utilities and subsequent fuel burning in boilers.

Challenges

The significant upfront costs pose a major challenge to the potential growth of the combined heat and power market because the intricate nature of these systems raises installation expenses making it prohibitive for small or medium-sized enterprises, despite the benefits.

Opportunities

Major players in the combined heat and power sector are focusing on mergers, acquisitions, and strategic partnerships to expand their market presence and competitive advantage. Additionally, investments in research and development, alongside the integration of renewable energy, offer avenues for growth and innovation within the industry.

Geographic Overview

Asia-Pacific leads the global combined heat and power market and is projected to continue its dominance. Rapid industrialization, urbanization, and demand for clean energy are driving growth, alongside stringent carbon emission regulations and decentralized power generation trends.

The North American CHP market is growing steadily due to rising energy demand, carbon emission reduction efforts, and government support. Key industries like manufacturing and healthcare are driving adoption, supported by advancing technology and infrastructure integration.

Competitive Insight

ENER-G Rudox, AN Diesel & Turbo, General Electric, Caterpillar, Mitsubishi, Kawasaki, Bosch Thermotechnology, Viessmann Werke, FuelCell Energy, MWM, Cummins, Veolia, BDR Thermea, CENTRAX Gas Turbines, Wartsila, ABB, 2G Energy, Aegis Energy, and Siemens AG are some of the major players operating in the combined heat and power industry.

Recent Developments by Key Players

Mitsubishi Power has received an order for two of the company’s M701JAC gas turbines for the combined cycle facility. A new 1,600-MW natural gas-fired power plant project in Uzbekistan reached another milestone because of this. The Syrdarya 2 plant is being developed in the Syrdarya region of Uzbekistan.