Cogeneration Equipment Market

Market Definition

The market encompasses the production, development, and utilization of systems designed to simultaneously generate electricity and useful thermal energy from a single fuel source. 

These systems operate through processes such as gas turbines, steam turbines, reciprocating engines, and fuel cells, optimizing fuel efficiency and reducing energy wastage. Applications span manufacturing plants, hospitals, district heating networks, and wastewater treatment facilities, offering a sustainable and cost-effective energy solution for diverse operational needs.

Cogeneration Equipment Market Overview

The global cogeneration equipment market size was valued at USD 23.75 billion in 2023 and is projected to grow from USD 25.68 billion in 2024 to USD 47.97 billion by 2031, exhibiting a CAGR of 9.34% during the forecast period. 

Market growth is driven by rising energy efficiency requirements, as industries and utilities seek to optimize fuel utilization and reduce operational costs. Additionally, the adoption of renewable energy-based cogeneration systems is rising, supported by biomass, biogas, and hydrogen-based technologies that align with sustainability and energy security goals.

Major companies operating in the cogeneration equipment industry are Siemens, General Electric Company, MITSUBISHI HEAVY INDUSTRIES, LTD., ABB, Wärtsilä, Caterpillar, CNH Industrial N.V., Veolia, United Technologies Inc., 2G Energy AG, AB International Holdings Pty Ltd, Bosch Industriekessel GmbH, Ameresco, Baxi, Enercon Industries Corporation, and others.

The increasing need for reliable power solutions in essential facilities such as hospitals, schools, and commercial institutions is fostering market expansion. These units provide a stable supply of electricity and heat, ensuring uninterrupted operations in regions facing energy shortages or infrastructure challenges.

• In February 2025, Siemens delivered advanced cogeneration units to Ukraine to address it's critical need for heat and electricity. These high-efficiency systems are crucial for providing power and thermal energy to essential facilities, including hospitals, schools, and kindergartens, amid widespread damage.

Key Highlights:

1. The cogeneration equipment industry size was valued at USD 23.75 billion in 2023.
2. The market is projected to grow at a CAGR of 9.34% from 2024 to 2031.
3. North America held a share of 36.42% in 2023, valued at USD 8.65 billion.
4. The natural gas segment garnered USD 10.69 billion in revenue in 2023.
5. The gas turbines segment is expected to reach USD 19.51 billion by 2031.
6. The industrial segment secured the largest revenue share of 42.12% in 2023.
7. Asia Pacific is anticipated to grow at a CAGR of 10.86% over the forecast period.

Market Driver

Rising Energy Efficiency Requirements

Several industries and commercial facilities are increasingly prioritizing energy efficiency to reduce operational costs and enhance sustainability, propelling the expansion of the market. These systems optimize fuel usage by simultaneously producing electricity and useful heat, leading to lower energy wastage and higher efficiency compared to conventional power generation. 

Governments worldwide are introducing energy efficiency mandates, prompting businesses to invest in CHP systems. The ability to achieve cost savings while complying with regulatory standards is fostering market expansion.

• In September 2024, Caterpillar Inc. announced that Deromedi Carrières et Matériaux deployed a high-efficiency cogeneration system from Cat dealer Eneria France  at its limestone quarry in Ciez, France. This CHP system delivers 850 kW of power for quarry operations while simultaneously supplying 605 kW of thermal energy for drying processes. This integration enhances energy efficiency and reduces NOx emissions to less than half of the TA Luft standard, supporting compliance with stringent environmental regulations.

Market Challenge

High Initial Investment and Installation Costs

The cogeneration equipment market faces a significant challenge due to the high initial investment required for installation and infrastructure development. The cost of advanced turbines, heat recovery systems, and grid integration limits adoption, particularly for small and medium-sized enterprises.

To address this challenge, companies are offering flexible financing models, leasing options, and long-term service agreements to lower upfront costs. Additionally, technological advancements in modular and scalable cogeneration units are improving affordability and accessibility. 

Strategic collaborations with governments and energy providers are further helping companies secure subsidies and incentives, making cogeneration solutions more viable for a wider range of industries.

Market Trend

Expansion of Renewable Energy-Based Cogeneration Systems

The rising integration of renewable energy sources such as biomass, biogas, and hydrogen is propelling the expansion of the market, supported by a shift toward greener energy alternatives. Biomass-fired CHP plants are increasingly used for industrial heating and electricity generation, reducing reliance on fossil fuels. 

Biogas cogeneration systems are being deployed in wastewater treatment plants, agricultural facilities, and landfills. The shift toward sustainable energy solutions is bloating the adoption of renewable-based cogeneration technologies.

• In April 2024, Ameresco secured a contract worth nearly USD 140 million to design and build a state-of-the-art biogas cogeneration facility for the Sacramento Area Sewer District in California. The plant will utilize biogas (methane), a byproduct of the EchoWater Facility’s solids treatment process, to generate renewable electricity and heat. The integrated 13.4 MW cogeneration plant will incorporate both fuel cell and engine technology to supply power and thermal energy to the EchoWater Facility efficiently.

Cogeneration Equipment Market Report Snapshot

Segmentation	Details
By Fuel Type	Natural Gas, Diesel, Biogas, Others
By Technology	Gas Turbines, Gas Engines, Steam Turbines, Others
By End-use Industry	Power Generation, Industrial, Commercial, Residential
By Region	North America: U.S., Canada, Mexico
	Europe: France, UK, Spain, Germany, Italy, Russia, Rest of Europe
	Asia-Pacific: China, Japan, India, Australia, ASEAN, South Korea, Rest of Asia-Pacific
	Middle East & Africa: Turkey, UAE, Saudi Arabia, South Africa, Rest of Middle East & Africa
	South America: Brazil, Argentina, Rest of South America

Market Segmentation

• By Fuel Type (Natural Gas, Diesel, Biogas, and Others): The natural gas segment earned USD 10.69 billion in 2023 due to its cost efficiency, lower carbon emissions compared to coal, and widespread availability, making it the preferred fuel for industries and utilities seeking reliable and sustainable energy solutions.
• By Technology (Gas Turbines, Gas Engines, Steam Turbines, and Others): The gas turbines segment held a share of 41.71% in 2023, fueled by its efficiency, fuel flexibility, and suitability for large-scale combined heat and power applications.
• By End-use Industry (Power Generation, Industrial, Commercial, and Residential): The industrial segment is projected to reach USD 21.56 billion by 2031, attributed to the high energy demands in manufacturing, chemical, and refining industries, where continuous power and heat generation improve operational efficiency, reduce energy costs, and support sustainability targets.

Cogeneration Equipment Market Regional Analysis

Based on region, the global market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America.

The North America cogeneration equipment market share stood at around 36.42% in 2023, valued at USD 8.65 billion. Major cities across North America are investing in district energy systems to enhance energy efficiency and sustainability. 

Government-backed initiatives, such as the U.S. Department of Energy’s support for district energy projects, are accelerating the deployment of CHP systems in commercial and residential developments, contributing to regional market progress.

Additionally, the rapid expansion of cloud computing and digital services is accelerating data center construction across North America. These facilities require continuous power and efficient cooling solutions, making cogeneration systems an ideal choice for reducing operational costs and enhancing sustainability. The rising energy demands of hyperscale data centers are fostering domestic market growth.

Asia Pacific cogeneration equipment industry is estimated to grow at a CAGR of 10.05% over the forecast period. Governments in are investing heavily in smart city projects focused on energy efficiency and sustainable infrastructure. Countries such as South Korea, Singapore, and China are deploying cogeneration systems in urban developments to ensure a stable power supply while reducing emissions, influencing the regional market. 

Furthermore, several countries iare shifting from coal-fired power plants to cleaner alternatives, leading to the widespread adoption of gas turbine-based cogeneration systems. Governments in China, India, and Indonesia are promoting natural gas as a transitional fuel to achieve carbon reduction targets while ensuring stable power generation.

• In August 2023, GE Vernova’s Gas Power division secured orders for four GE 6F.03 gas turbines to support Yangjiang City in the Guangdong–Hong Kong–Macao Greater Bay Area, China. These turbines aim to enhance energy reliability and support the city’s transition from coal to gas-fired power,  reducing emissions. Scheduled to be operational by early 2025, the units are projected to deliver a combined output of 480 megawatts (MW), aiding the region’s clean energy goals.

Regulatory Frameworks

• In the U.S., the Public Utility Regulatory Policies Act (PURPA) of 1978 mandates that electric utilities purchase power from qualifying cogeneration facilities, promoting the development of Combined Heat and Power (CHP) systems. Additionally, the Environmental Protection Agency's Combined Heat and Power Partnership is a voluntary program that supports the deployment of CHP technologies to enhance energy efficiency and reduce emissions.
• The EU's Directive 2004/8/EC aims to promote cogeneration based on useful heat demand, enhancing energy efficiency and improving supply security. This directive establishes a framework to facilitate the installation and operation of high-efficiency CHP systems across member states.
• Japan's Strategic Energy Plan emphasizes the promotion of cogeneration and heat utilization to enhance energy efficiency. The government provides subsidies and tax incentives for CHP installations, particularly those utilizing clean fuels such as natural gas, aligning with its climate change mitigation strategies.
• India's Biomass-based Cogeneration Programme, initiated by the Ministry of New and Renewable Energy (MNRE), promotes the optimal use of biomass resources in industries such as sugar production. The program offers financial incentives and clear guidelines to boost the adoption of biomass-based CHP systems.

Competitive Landscape

The cogeneration equipment market is characterized by several market players actively investing in biomass-based cogeneration projects to enhance energy efficiency and reduce dependence on fossil fuels. 

The integration of biomass as a feedstock enables industries to lower carbon emissions while ensuring a stable energy supply. The adoption of advanced biomass cogeneration technologies supports industrial decarbonization, bolstering market expansion.

• In February 2024, Norske Skog, Veolia, and Pearl Infrastructure Capital launched an industrial ecology project at the Norske Skog Golbey paper mill. Eiffage Construction is developing a biomass power plant aimed at decarbonizing industrial operations and reducing reliance on natural gas. This biomass cogeneration facility, utilizing recycled wood, will be France's largest facility of its kind, generating 200 GWh of electricity annually and 700 GWh of thermal energy annually.

List of Key Companies in Cogeneration Equipment Market:

• Siemens
• General Electric Company
• MITSUBISHI HEAVY INDUSTRIES, LTD.
• ABB
• Wärtsilä
• Caterpillar
• CNH Industrial N.V.
• Veolia
• United Technologies Inc.
• 2G Energy AG
• AB International Holdings pty ltd
• Bosch Industriekessel GmbH
• Ameresco
• Baxi
• Enercon Industries Corporation 

Recent Developments (Collaboration/Partnership)

• In November 2023, ABB partnered with DS Smith to enhance steam and power generation efficiency at its paper mill in Porcari, Lucca, Italy. ABB deployed its ABB Ability OPTIMAX Steam and Energy Optimization software to optimize cogeneration operations, reducing natural gas consumption by 4% and cutting carbon emissions by approximately 13,000 tons annually. This initiative supports DS Smith’s sustainability goals while improving operational profitability.
• In October 2023, ABB collaborated with Swedish district heating provider Mälarenergi to modernize its cogeneration plant in Västerås with advanced switchgear retrofit solutions. The upgrade was executed in three phases, incorporating tailored solutions for each switchgear cabinet. ABB’s expertise in retrofit technology enhanced the plant’s operational efficiency, reliability, and sustainability, supporting Mälarenergi’s commitment to a more resilient and energy-efficient district heating system.