Government Subsidies and Emission Reduction Targets Drive Market Expansion
The global combined heat & power (CHP) market, valued at US$19.1 billion in 2020, is on track for substantial growth, with projections indicating it will reach a valuation of US$26.9 billion by 2026, representing a CAGR of 6.2% during the forecast period. Additionally, the market is expected to see an increase in capacity, with the addition of 181 GW from 2020 to 2026.
CHP: Efficient Electricity and Heat Generation
Combined heat & power, also known as cogeneration, is a highly efficient process that simultaneously generates electricity and usable heat. The installation of CHP systems allows for the efficient use of primary fuel to produce both heat and power. CHP systems outperform conventional methods such as on-site boilers and power stations in terms of efficiency. This technology helps reduce stress on power grids while providing industries with an uninterrupted power supply and improving grid distributed generation.
Government Initiatives and Emission Reduction Goals
Governments worldwide have enacted policies, introduced programs, and offered subsidies to promote the adoption of cogeneration. CHP systems play a vital role in conserving energy that is typically wasted in other thermal power processes. The recovered waste heat from cogeneration plants can be utilized for various purposes, including district heating and cooling applications. An increasing number of industries are considering CHP systems for electricity generation due to their ability to use natural gas and biomass as fuel. CHP power plants are equipped with advanced technologies designed to enhance efficiency and meet emission control standards.
Challenges in the CHP Market
While the CHP market is poised for growth, it faces certain challenges. High capital expenditure (CAPEX) and operational costs, as well as business uncertainty resulting from the COVID-19 pandemic, are among the key hurdles. CHP installations are cost-sensitive, with the installation cost of CHP systems being twice that of conventional systems. Payback periods for CHP systems can span several years, posing challenges for suppliers to reduce installation costs further. The operating cost of CHP systems depends on factors such as the type of fuel used, system efficiency, and electricity generation capacity. Consequently, the significant lead time and financial investment required can deter potential market entrants.
Natural Gas Leads the Way
Currently, natural gas dominates the global CHP market. Natural gas accounted for over 45% of the market share in 2020. Residential and commercial CHP applications predominantly use natural gas due to its affordability and lower environmental impact compared to coal. Moreover, natural gas is readily available and offers longer-term availability with lower investments, greater flexibility, and ease of capacity expansion compared to coal-fueled plants.
Countries such as the U.S., China, and Russia are leaders in CHP usage, with a preference for natural gas-fueled systems. Year-on-year growth in CHP installations in these nations is expected to drive demand for natural gas-fueled CHP systems.
Regional Market Dynamics
- Europe Dominates: Europe holds the largest installed CHP capacity globally, accounting for 39% of the market share in 2020. The regions cold weather conditions, particularly in Finland and the U.K., contribute to the demand for cogeneration equipment, which can be utilized for both electrical and thermal applications.
- Asia Pacific Growth: The CHP market in Asia Pacific is anticipated to expand significantly, driven by increased industrial activities and government initiatives for infrastructure development. Countries like Denmark and Germany offer tax incentives and subsidies to organizations employing cogeneration equipment.
- North Americas Potential: In North America, the U.S. is poised to be a strong candidate for CHP installations. The aging grid infrastructure in the U.S. necessitates investments in smart grids and microgrids to enhance distributed generation. State regulators have introduced programs to incentivize the use of CHP technologies.
- Latin America and Middle East & Africa: These regions are expected to register significant CHP market growth due to expanding industrial, commercial, and residential sectors. Governments in the UAE, Saudi Arabia, and Brazil offer subsidies to maximize output from combined cycle CHP installations to meet the needs of growing populations.
Key Players in the Global CHP Market
Prominent companies in the global CHP market include Siemens AG, GE, Veolia, ABB Group, 2G Energy AG, Cummins Inc., Tecogen Inc., MAN Energy Solutions SE, Clarke Energy, Generac Power Systems, Inc., Capstone Green Energy Corporation, and Wartsila. These industry leaders are driving innovation and development in the sector, contributing to market growth and technological advancement.
Browse Global Combined Heat & Power (CHP) Industry Analysis, Size, Share, Growth, Trends, Regional Outlook, and Forecast 2021-2026 – [2023 UPDATE Available – Forecast 2023-2030*] (By Fuel Type Coverage, By Technology Coverage, By Geography, By Company): https://www.fairfieldmarketresearch.com/report/combined-heat-power-chp-market
Similar Reports:
Heat Exchanger Market: https://www.fairfieldmarketresearch.com/report/heat-exchanger-market
Waste Heat Recovery Market: https://www.fairfieldmarketresearch.com/report/waste-heat-recovery-market
Contact
Fairfield Market Research
London, UK
UK +44 (0)20 30025888
USA (Toll-free) +1 (844) 3829746
Web: https://www.fairfieldmarketresearch.com/
Email: sales@fairfieldmarketresearch.com
This press release first seen on Brilad
COMTEX_440946158/2840/2023-09-26T01:54:48