Market Perspective

The global Combined Heat and Power Market was valued at USD 15.12 billion in 2022 and is projected to reach USD 30.89 billion by 2030, growing at a CAGR of 8.20% from 2023 to 2030.

The increasing adoption of gas-fired systems due to their low carbon emissions, coupled with the growing customer preference for clean energy, will significantly contribute to the penetration of Combined Heat and Power (CHP) technology. The replacement of conventional energy-producing systems with highly efficient cogeneration plants will drive business growth. For instance, in February 2021, MWM, a manufacturer of gas engines and Gensets, introduced the Remote Asset Monitoring (RAM) software, which allows real-time monitoring of combined heat and power site operations. This innovative digital monitoring solution provides early alerts for any malfunctions, reducing the risk of severe damage.

Analyst’s Review on Combined Heat and Power Market

The adoption of CHP systems has been on the rise globally. Businesses and organizations are recognizing the benefits of CHP, such as energy efficiency, cost savings, and environmental sustainability. This trend is driven by factors like the need for energy resilience, government incentives, and a growing focus on reducing greenhouse gas emissions. However, there have been advancements in CHP technology, including improvements in system efficiency, control mechanisms, and the integration of smart grid capabilities. These advancements enhance the overall performance and reliability of CHP systems, making them more attractive to a wider range of industries and applications.

Market Definition

Combined Heat and Power (CHP), also known as cogeneration, is a highly efficient energy generation process that simultaneously produces electricity and useful heat from a single fuel source. In CHP systems, the waste heat produced during electricity generation is captured and utilized for heating, cooling, or other industrial processes, maximizing the overall energy efficiency of the system. CHP offers significant advantages over traditional separate heat and power generation, including reduced energy costs, lower emissions, and improved energy security.

CHP systems can utilize a wide range of fuels, including natural gas, biogas, biomass, coal, oil, and even waste materials. Natural gas is the most commonly used fuel for CHP systems due to its availability, relatively low emissions, and high energy efficiency. Biogas, produced from organic waste materials such as agricultural waste or sewage, is another environmentally friendly fuel option for CHP systems. Biomass, including wood chips or pellets, can also be used as a renewable fuel source in CHP systems. Additionally, some CHP systems can be designed to utilize multiple fuel sources, providing flexibility and resilience to changing energy demands.

CHP systems find applications in various sectors, including industrial, commercial, and residential settings. In industrial facilities, CHP systems are commonly used to meet the electricity and thermal energy needs of manufacturing processes, allowing for significant energy cost savings and increased operational efficiency. CHP systems are also deployed in commercial buildings, such as hospitals, universities, and hotels, where there is a simultaneous demand for electricity and heating or cooling. In residential settings, small-scale CHP systems can be used to provide electricity and heat for individual homes or communities. Furthermore, CHP systems can play a crucial role in enhancing energy resilience and reducing greenhouse gas emissions, contributing to a more sustainable energy future.

Market Dynamics

The combined heat and power technology has been gaining momentum in recent years due to the rising installations of microgrids. Microgrids are small-scale power systems that can operate independently or in connection with the main power grid. They consist of generation units, such as CHP systems, which produce both electricity and useful heat from a single fuel source. Furthermore, the use of CHP in microgrids enhances energy. In the event of a grid outage, microgrids with CHP systems can continue to provide electricity and heat to critical facilities, ensuring uninterrupted operations. This capability is particularly valuable for hospitals, data centers, and other essential infrastructure. Increasing installations of microgrids, driven by factors such as the need for energy resilience, cost savings, and environmental sustainability, have contributed to the growing adoption of CHP technology.

The concerns pertaining to high initial investment associated with implementing combined heat and power systems is likely to hinder the market. CHP systems typically involve the installation of specialized equipment, such as generators and heat recovery systems, which can be costly. This initial investment can sometimes be a barrier for businesses or organizations considering the adoption of CHP technology. Moreover, the cost of CHP units, which include generators and heat recovery systems, can vary depending on the size and capacity of the system. Additionally, the integration of CHP into existing infrastructure may require modifications or upgrades, further contributing to the initial investment.

Segmentation Analysis

The global combined heat and power market is segmented based on type, capacity, fuel, application, and geography.

Based on type, the market is bifurcated into gas turbine, steam turbine, fuel cell, microturbines, reciprocating engines, and others. The gas turbine segment held the largest market revenue in 2022 due to the increasing deployment of gas turbines in different industries is contributing to the growth of combined heat and power technology. Gas turbine CHP plants, which utilize the waste heat from gas turbines, are a common type of CHP system. Gas turbines are being widely adopted due to their efficiency and ability to generate both electricity and heat simultaneously. This deployment of gas turbines in various industries, such as manufacturing, is driving the expansion of CHP technology. The integration of CHP systems with gas turbines offers a cost-effective and energy-efficient solution for meeting the growing energy demands of different industrial sectors.

Based on capacity, the combined heat and power market is divided into up to 10 MW, 11-150 MW, 151-300 MW, and above 300 MW. The up to 10 MW segment held the largest market in 2022. Residential combined heat and power systems are typically sized between 1.5kW and 0.5MW and utilize natural gas as their fuel source. These systems offer significant advantages in terms of energy cost reduction, particularly in comparison to conventional systems with capacities of up to 10 MW. Moreover, the government's micro-CHP initiative supports the use of fuel cells that can generate up to 10 MW of power. Unlike reciprocating engines and gas turbines, fuel cells produce electricity without the need for fuel combustion. Leading providers of cogeneration solutions within this power range include AB Holding, 2G Energy, FuelCell Energy, and Capstone.

Based on fuel, the combined heat and power market is divided into natural gas, renewables, and others. The natural gas segment captured the largest industry share in 2022 owing to driven by initiatives focused on reducing installation and operational costs, as well as consistent funding from government and private entities to support the development of natural gas power plant projects. These factors play a crucial role in promoting the widespread adoption of this technology.

Geographical Analysis

Based on region, the global combined heat and power market is classified into North America, Europe, Asia Pacific, MEA, and Latin America.

Europe dominated the global market in 2022 owing to the growing demand for district energy (heating) and cooling systems, driven by changing climatic conditions and ongoing technological advancements that enable fuel flexibility. The European market, in particular, is supported by ambitious carbon reduction targets set by regional authorities, as highlighted by the European Commission. The district is further bolstered by a wide range of sustainable policy objectives and energy security strategies, which stimulate the demand for CHP systems. For instance, in November 2021, the European Commission approved Greece's state aid scheme of USD 2.40 billion, aimed at supporting power production from renewables and high-energy efficiency combined heat and power plants. The scheme will remain open until 2025, with aid payments being made for a maximum period of 20 years.

Competitive Landscape

The global combined heat and power industry report will provide valuable insight with an emphasis on the fragmented nature of the global market. Prominent players are focusing on several key business strategies such as partnerships, mergers & acquisitions, product innovations, and joint ventures to expand their product portfolios and increase their respective market shares across different regions. Expansion & investments are the major strategic initiatives. Industry players are investing in R&D activities, building new manufacturing facilities, and supply chain optimization. The major players in the combined heat and power market are

• Kawasaki Heavy Industries, Ltd.
• General Electric
• Viessmann Werke GmbH & Co. KG
• Bosch Industriekessel GmbH
• Wartsila
• Veolia
• Siemens AG
• 2G Energy AG
• MAN Energy Solutions SE
• MITSUBISHI HEAVY INDUSTRIES, LTD.

Key Developments

• August 2023 (Agreement): Kawasaki Heavy Industries (Thailand) Co., Ltd. (KHIT) recently entered into a Memorandum of Understanding (MoU) with PTT Global Chemical Public Company Ltd. (GC) in Thailand. The purpose of this partnership is to conduct a comprehensive study on the potential development, construction, and operation of a hydrogen gas turbine power generation facility. The facility will utilize the cutting-edge hydrogen gas turbine technology developed by Kawasaki.
• July 2023 (Agreement): Mitsubishi Power contracted by Chiba-Sodegaura Power Co., Ltd., a company with investment from TOKYO GAS CO., LTD. The contract entails the construction of three gas turbine combined cycle (GTCC) power plants in Sodegaura City, Chiba Prefecture, featuring state-of-the-art 650MW class natural gas-fired units. Additionally, a long-term service agreement (LTSA) covering a wide range of services has also been signed.
• May 2022 (Agreement): MAN PrimeServ successfully secured a five-year service contract renewal for a 51MW gas-engine power plant located in Frankfurt. This comprehensive contract encompasses the provision of maintenance services, OEM spare parts, and digital solutions. The contract extends to all aspects of the supply chain, including engines, plant accessories, and generators.

The global Combined Heat and Power Market is segmented as:

By Type

• Gas Turbine
• Steam Turbine
• Fuel Cell
• Microturbines
• Reciprocating Engines
• Others

By Capacity

• Up to 10 MW
• 11-150 MW
• 151-300 MW
• Above 300 MW

By Fuel

• Natural Gas
• Renewables
• Others

By Application

• Residential
• Commercial
• Industrial
• Utility

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • France
  • UK
  • Spain
  • Germany
  • Italy
  • Russia
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Rest of Asia Pacific
• Middle East & Africa
  • GCC
  • North Africa
  • South Africa
  • Rest of Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America