The combined heat and power (CHP) market is evaluated at US$12.152billion for the year 2019 growing at a CAGR of 14.37% reaching the market size of US$27.196 billion by the year 2025. Combined heat and power refers to an energy-efficient system that generates electricity from several types of fuels and has the ability to capture the heat that is generated and can be reused for space heating, domestic hot water, and industrial processes among others. These systems can be installed at several places such as buildings, utilities, and individual facilities, and others. Combined heat and power systems are often considered useful especially for those facilities that have the requirement of electricity and heat both.
The market for combined heat and power systems is primarily being driven by the constantly growing end-user requirements for the replacement of conventional energy systems due to considerably high operational as well as maintenance costs and also due to uninterrupted utility supply. Furthermore, the constantly growing usage of natural gas also acts as a catalyst for the combined heat and power systems market growth during the forecast period. Additionally, the growing demand for energy efficiency especially across the industrial sector has further propelled the adoption of these systems in the coming years, which in turn is playing a significant role in shaping up the market growth during the next five years. The beneficial features such as enhanced reliability, efficiency, and safety offered by these cogeneration systems have also led to an upsurge in the adoption across several countries. Also, there are many countries in both developed and underdeveloped economies of the world that are now inclining their focus on the reduction of greenhouse gas emissions which has further led to an increased spending in renewable energy projects which in turn is anticipated to propel the business growth opportunities for the manufacturers over the course of the next five years.
According to the United States Environmental Protection Agency, approximately two-thirds of the energy that is primarily used by conventional energy systems is often wasted as discharged heat to the atmosphere. During the electricity distribution process, a significant amount of energy is also wasted in the form of heat. Thus, these systems are considered as highly beneficial as they are able to capture the heat and help in distribution losses. These systems are able to improve efficiency by almost 80% which is around 30% higher than the conventional technologies used.
However, the market may be restrained by the fact that these systems have considerably high upfront costs and maintenance costs which is considered to be one of the primary factors that is expected to restrain the market growth during the course of the next five years. Also, the advent of COVID-19 is also projected to slow down the market growth to some extent due to the fact that halt in the industrial activities has further led to a slump in the electricity demand in many parts of the world. In addition, to this, the economic shock caused by COVID has further impacted the new capital investments in the energy sector around the globe. Thus, all these factors mentioned above are anticipated to negatively impact the market growth in the coming years.
The graph mentioned above represents the total energy investment done in the power sector around the globe which represents a sharp decline during the year 2020 (Source: IEA).
The combined heat and power market is primarily being driven by the growing focus of the governments around the globe towards the reduction of carbon footprints with an aim to protect the environment as a heavy dependence on fossil fuels have led to a degradation in the overall environment. . As a result, governments and corporations across the world are investing to exploit the potential offered by renewable sources of energy, i.e. wind, solar, and hydroelectric energy among others. Growing investment in the setting up of clean energy power plants coupled with favorable government policies is poised to create significant business opportunities for combined heat and power systems manufacturers over the coming years. For example, in June 2019, the U.K Government announced a statutory instrument to amend the Climate Change Act 2008, which includes the reduction of carbon emissions by 80% until 2050. Similarly, in Germany, the Combined Heat and Power Act 2002 has been one of the major factors that is promoting the adoption of CHP plants throughout the country. The acts focused on promoting the adoption of these plants by offering numerous funding as well as subsidy schemes to persuade their adoption. Also, according to the report by the U.S Environmental Protection Agency, the country aimed to install 40 gigawatts (GW) of new, cost-effective CHP by 2020 with an aim to save $10 billion per year compared to current energy use and also to increase the total CHP capacity by almost 50% in the next decade. Thus, all the factors that are mentioned above are anticipated to propel the combined heat and power market growth during the forecast period.
The combined heat and power market has been segmented on the basis of fuel type, application, configuration, and geography. On the basis of fuel type, the classification of the market has been done into coal, natural gas, biomass, and others. On the basis of application, the market has been segmented into commercial, residential, and others. By configuration, the segmentation is done on the basis of combustion turbine and steam boilers. Geographically, the distribution of the market has been done into North America, South America, Europe, Middle East and Africa, and Asia Pacific.
Natural Gas to hold a healthy market share
By fuel type, the natural gas segment is projected to hold a substantial amount of share in the market throughout the course of the next five years. The primary factor supporting the significant share of this segment includes natural gas considered as one of the cleanest sources of energy and is comparatively less costly than other types of fuel. Furthermore, the constantly growing usage of natural gas in the energy mix especially in the developing economies of the world is supporting the growth of this segment throughout the forecast period. The coal-based combined heat and power systems are also projected to hold a considerable share in the market, however, the growth of this segment is expected to be slow due to the fact that growing focus towards the usage of renewable sources for electricity generation. However, its high calorific value coupled with the low cost are some of the factors driving the growth of this segment during the next five years. The biomass-fuelled CHP systems are projected to show promising growth during the forecast period.
APAC to show significant growth
Geographically, the European region is anticipated to hold a considerable market share owing to the fact that the region boasts of being one of the most prominent regions inclined towards reducing the carbon emission. Several countries in the region are taking all the necessary steps to curb carbon emissions. Also, increased investments in clean energy projects is also a key factor supplementing the market growth in the European region during the next five years. Also, stringent regulations regarding the promotion of combined heat and power projects in the form of funding as well as subsidy scheme is also one of the major factors supporting the significant share of the European region in the global market.
North America is also expected to hold a significant share in the market owing to the fact that the region is one of the most prominent regions in the early adoption of technology. This, combined with the presence of a state-of-art infrastructure across the power sector coupled with the increasing focus to increase the installation capacity of CHP plants in many parts of the region are the key factors augmenting the market in the North American region during the next five years.
However, the Asia Pacific region is projected to show promising growth during the next five years primarily due to the growing focus of the governments of many countries to increase the share of clean energy to the energy mix.
Prominent/major key market players in the combined heat and power (CHP) market include General Electric, Kawasaki Heavy Industries Ltd., Siemens Energy, Mitsubishi Heavy Industries, and Robert Bosch among others. The players in the combined heat and power (CHP) market are implementing various growth strategies to gain a competitive advantage over its competitors in this market. Major market players in the market have been covered along with their relative competitive position and strategies and the report also mentions recent deals and investments of different market players over the last few years. The company profiles section details the business overview, financial performance (public companies) for the past few years, key products and services being offered along with the recent deals and investments of these important players in the combined heat and power (CHP) market.