The combined heat and power (CHP) market utilizes a single fuel source to generate both electricity and useful thermal energy in the form of steam or hot water. It is more efficient than separate systems for producing heat and power as it recovers heat that would otherwise be wasted. CHP systems provide reliable on-site power and heating/cooling while reducing carbon emissions by around 30% compared to the separate production of these energy services. By capturing heat that would otherwise be wasted, CHP can operate at overall efficiencies of 50-80%, while conventional fossil fuel power plants typically operate at just 33-42% efficiency.
The Global Combined Heat And Power (CHP) Market is estimated to be valued at US$ 31.09 Bn in 2024 and is expected to exhibit a CAGR of 12% over the forecast period from 2024 to 2031.
Key Takeaways
Key players operating in the combined heat and power (CHP) market are Lonza Group Ltd., Thermo Fisher Scientific Inc., Merck KGaA, and STEMCELL Technologies Inc.
The growing demand for a decentralized power generation system from industrial and commercial sectors is driving the adoption of Combined Heat and Power (CHP) Market Demand systems. CHP provides reliable on-site electricity and heat generation while reducing carbon footprint and energy costs for large energy users.
Major companies are focusing on strategic collaborations and geographic expansion into emerging markets in the Asia Pacific and Latin American regions to tap the growing demand for reliable and green power solutions. Increasing investments in district energy systems and expansion of natural gas networks in developing countries will further accelerate the adoption of CHP technology globally.
Market Drivers
The main driver for the combined heat and power market is the increasing demand for a decentralized power generation system. Installing an on-site CHP system helps commercial, institutional and industrial facilities generate heat and power at the point of use, improving energy security. CHP also reduces transmission and distribution losses associated with centralized grid electricity as it captures wasted heat to serve local heating and cooling needs efficiently. Stringent regulations regarding carbon emissions and emphasis on utilizing wasted energy are further expected to drive the demand for combined heat and power solutions over the forecast period.
The current geopolitical situation is impacting the growth of the combined heat and power (CHP) market. Geopolitical uncertainties and environmental regulations are encouraging investments in renewable and clean energy sources across regions. However, the ongoing Russia-Ukraine war has severely disrupted the European energy markets and supply chains. It has led to a surge in natural gas and electricity prices in Europe. This is encouraging utilities and industries in Europe to adopt decentralized CHP systems that can help reduce dependence on imported fuels. Many European countries are formulating policies to incentivize transition to localized CHP-based district heating networks in the coming years.
North America currently accounts for the largest share of the global CHP market in terms of value. The region has a well-established district energy infrastructure and CHP finds widespread usage in commercial, institutional and industrial applications. Strict emission norms are driving replacements of old coal-fired power plants with highly efficient cogeneration systems. Growing emphasis on energy security and resilience is also influencing greater deployment of modular CHP across critical infrastructures and microgrids. Europe is another major regional market for CHP globally. However, the ongoing geopolitical issues have increased challenges for expansion in the near-term.
The Asia Pacific region is poised to become the fastest growing regional market for CHP during the forecast period. Rapid industrialization and urbanization are driving the need for reliable and uninterrupted power and thermal supplies across developing nations. Furthermore, policy focus toward reducing emissions and curbing coal dependencies are encouraging adoption of clean and decentralized CHP technologies. China in particular has been implementing supportive measures to scale up biomass and waste-to-energy based CHP capacity. The long-term growth outlook remains positive as more countries recognize the strategic, environmental and economic merits of integrated heat and power solutions.
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