The Emergence of Combined Heat Power System

The combined heat and power (CHP) market is expected to grow at a compound annual growth rate of 14.58% to reach a market size worth US$28.532 billion by 2027. This market was valued at US$11.002 billion in 2020.

A combined heat and power system is any system that generates electricity while also recovering and reusing the thermal energy byproduct. CHP systems significantly improve energy efficiency because they generate two forms of useful energy, heat, and electricity, from a single fuel source. In contrast, vast amounts of heat are simply wasted in traditional methods of generating electricity. Combined Heat and Power systems can offer a variety of advantages to users in terms of cost, efficiency, environmental impact, and dependability. Increasing the amount of electricity generated by CHP systems in the world has also been identified as having significant potential for impressive global economic and environmental outcomes.

The CHM market is rising due to increased efforts to reduce carbon emissions and aim toward a sustainable future.

According to the US Department of Energy, doubling US installed capacity to 40 GW by 2020 would reduce annual greenhouse gas emissions by at least 150 million metric tonnes of carbon. Because CHP systems require less fuel to produce the same amount of energy as conventional power systems, they can provide the same output while consuming less fuel and emitting less pollution. CHP systems have the potential to reduce greenhouse gas emissions, which contribute to climate change and have several negative consequences for the planet.

• As a result, several companies have come forward and begun partnerships and investments to develop CHP systems in the United States. For example, in 2021, 2G Energy Inc. and LIMA Company of Philadelphia, PA announced a collaboration to build, develop, and operate net-zero-ready CHP projects. LIMA's primary goal under the agreement is to use 2G's best-in-class CHP products to provide commercial and industrial energy users with carbon reduction and cost efficiency.
• Furthermore, the US government had announced an aggressive strategy to cut GHG emissions, which would be followed by the shutdown of many coal facilities by 2023. The ongoing low-emission programs of the state government will replace coal-fired power facilities and enhance the domestic renewable power generation ratio.

Additionally, the current generating capacity of US CHP plants accounts for roughly 9% (85GW) of total US capacity, according to the Department of Energy. In 2006, US CHP stations produced more than 12% (506 billion kWh) of total annual US electricity generation. Increasing generating capacity to 20% of total US capacity by 2030, according to their analysis, would have major positive impacts.

As a result of implementing CHP systems, greenhouse gas emissions such as carbon dioxide and other air pollutants will be reduced. CHP has the potential to dramatically cut carbon dioxide and air pollutant emissions. These emissions contribute to a variety of serious environmental issues, such as climate change, haze, acid rain, and others.

The development of industrial and commercial buildings will drive market growth for the CHP market.

Combined Heat and Power (CHP) is being used by commercial building operators to cut operating costs and greenhouse gas emissions. Because of this, most of the expenses connected with operating a commercial facility are fixed. Reduced energy usage not only saves money and promotes energy sustainability, but it also has the potential to improve working conditions and hence productivity.

In large commercial buildings, supermarkets, hotels, restaurants, and major retail marketplaces, CHP has a lot of potentials. Mixed-use developments are an emerging market for CHP due to the clean, dependable on-site power they provide. According to ICF predictions, the industrial and commercial/institutional sectors have a technological capacity of 65 GW each. As a result of the development of industrial and commercial buildings, the CHP industry will experience a surge.

Furthermore, the US Census Bureau reports that New York and California offer the highest prospects for multifamily CHP, with each having over 1 million housing units in buildings with 50 or more units. Several US firms have also formed or purchased artificial intelligence-based companies that provide CHP systems. For example, in 2022, Alkaline Fuel Cell Power Corporation announced the acquisition of AI Renewable 2018-I Limited Partnership's CHP generation business. The company develops and manufactures alkaline fuel cell heat and power systems for residential, industrial, and commercial sectors globally.

According to analysts, the European region is expected to occupy a notable share of the market in the upcoming years. 

CHP already has a significant presence in Europe. Germany, as one of Europe's largest economies, has taken the lead in installing CHP systems. MAN Energy Solutions, for example, announced plans to open a new municipal CHP gas power plant in Frankfurt in 2022. Five MAN 20V35/44G gas engines power the CHP plant, which generates 51 MW of electricity and 50 MW of district heating. This plant previously used both lignite and natural gas, but the new facility will supply the same distribution network with heat and electricity generated solely from the more environmentally friendly natural gas. Additionally, UPM boosted its cost competitiveness and reduced CO2 emissions by 5% in 2019 by investing in a combined heat and power plant at its Nordland paper mill in Dörpen, Germany. The new facility contributes to the stability of the German energy transition, known as the "Energiewende."

COVID-19 Insights

Due to the COVID-19 pandemic, governments all over the world imposed lockdowns that resulted in the closure of office buildings and others. Several economic operations came to a halt as a result, discouraging market expansion and progress. This disrupted the CHP demand. Furthermore, according to the United Kingdom Government, the COVID-19 lockdown has impacted some CHP operators, causing the CHPs to operate differently than usual. As a result, the pandemic slowed the market in 2020.