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Combined Heat and Power

Combined Heat and Power Market Research Reports

"Powering the Future: Deep Dive into the Global Combined Heat and Power Sector (2024 Market Size: USD 29 Billion)"!

Combined Heat and Power Industry Overview

In 2023 and 2024, the combined heat and power (CHP) market has undergone substantial growth and transformation. CHP, which is also referred to as cogeneration, is capable of simultaneously generating electricity and beneficial heat from a single fuel source. This process improves energy efficiency and decreases greenhouse gas emissions. The global CHP market size was USD 27 billion in 2023 and USD 29 billion in 2024, with a compound annual growth rate (CAGR) of 8.2%. By 2031 the CHP market size will be USD 54 billion, with a growth rate 8.20%. The growing demand for energy efficiency and the mitigation of carbon emissions are the primary factors driving this expansion. 

The global installed capacity of CHP systems was 440 GW in 2023 and 460 GW in 2024, indicating a robust expansion as additional countries implement CHP technology to satisfy their energy requirements and environmental objectives. Germany, the Netherlands, and the United Kingdom continue to dominate the CHP market in Europe. Europe was responsible for roughly 35% of the global CHP capacity in 2023. The European Union's dedication to reducing greenhouse gas emissions by 55% by 2030 is a significant factor in the proliferation of CHP installations. The North American CHP market is also expanding as the United States and Canada prioritize the modernization of their energy infrastructure. 

The United States alone had an installed CHP capacity of 82 GW in 2023, and 85 GW by the end of 2024. Particularly in China, Japan, and South Korea, the Asia-Pacific region is experiencing a period of accelerated expansion in the number of CHP installations. The region was responsible for 25% of the global CHP market in 2023. The adoption of CHP systems is being driven by China's initiatives to enhance energy efficiency and mitigate pollution. In comparison to conventional power generation methods, CHP systems significantly reduce carbon emissions. Around 250 million metric tons of CO2 emissions were prevented by CHP installations worldwide in 2023. In 2024, it will increase to 265 million metric tons.

Top Countries Contributing in Combined Heat and Power Market

Germany

According to cognitive market research, 50 GW of combined heat and power (CHP) capacity was implemented in Germany in 2023, which made a substantial contribution to the country's energy efficiency objectives. This capacity reach to 52 GW in 2024. The industrial and residential sectors are the primary users of the German CHP market, with the former accounting for 60% of the total CHP output. The energy-intensive industries, including paper, manufacturing, and chemicals, significantly depend on CHP systems to enhance energy efficiency and decrease emissions. Germany's sophisticated technological capabilities and supportive government policies are evident in its 11% market share of the global CHP market. Germany's CHP market experienced USD 3 billion in investments in 2023, and USD 3.5 billion in 2024. This was indicative of market growth. The adoption of CHP systems has been further accelerated by the country's commitment to reduce greenhouse gas emissions by 55% by 2030 under the European Union's Green Deal.

United States

In 2023, the installed capacity of CHP in the United States was 82 GW, and 85 GW in 2024. CHP systems are primarily utilized by the industrial sector, which accounts for 70% of the total CHP output. This market is characterized by chemical production, food processing, and paper manufacturing. The CHP market is also influenced by the commercial and residential sectors, albeit to a lesser extent. The United States is a dominant participant in the global CHP market, with 18% of the market share. The US CHP market attracted investments totaling USD 5 billion in 2023, and USD 5.6 billion in 2024. This growth has been significantly influenced by government incentives, including the extension of the Investment Tax Credit (ITC). The emphasis on energy resilience and cost reduction has further stimulated the adoption of CHP technologies throughout the nation.

China

In 2023, the installed capacity of China's CHP market was 110 GW, and 115 GW in 2024. The industrial sector, particularly heavy industries such as steel and cement, is the primary consumer of CHP systems, constituting 75% of the total CHP capacity. The government's emphasis on reducing pollution and increasing energy efficiency is evident in the fact that China holds 25% of the global CHP market share. Additionally, the country has a vast industrial base. Investments in the Chinese CHP market totaled USD 8 billion in 2023, and USD 9 billion in 2024. Key drivers have been government policies that are designed to reduce air pollution and enhance energy efficiency. The implementation of stringent environmental regulations has further accelerated the adoption of CHP systems across a variety of markets.

Japan

As per cognitive market research, The installed capacity of CHP in Japan was 20 GW in 2023, and 21 GW in 2024. CHP systems are primarily utilized by the industrial sector, with manufacturing and chemical production accounting for 65% of the total capacity. CHP's market share in Japan is 5% of the global market. The Japanese CHP market attracted investments totaling USD 2 billion in 2023, and USD 2.2 billion in 2024. The country's emphasis on energy efficiency and energy security, particularly in the aftermath of the Fukushima catastrophe, has resulted in an increasing interest in CHP technologies. The adoption of CHP systems in a variety of markets, such as residential and commercial, has been further facilitated by government incentives and supportive policies.

United Kingdom

In 2023, the installed capacity of the United Kingdom's CHP market was 7.5 GW, and 8 GW in 2024. The principal user of CHP systems is the industrial sector, particularly food processing, chemicals, and paper manufacturing, which accounts for 60% of the total capacity. UK holds 4% of the global CHP market share. Investments in the UK CHP market totaled USD 1 billion in 2023, and USD 1.2 billion in 2024. The adoption of energy-efficient technologies, such as CHP systems, has been facilitated by the government's dedication to attaining net-zero emissions by 2050. Financial incentives and supportive policies have further bolstered the expansion of the CHP market in the United Kingdom.

Netherlands

In 2023, the Netherlands had an installed CHP capacity of 6 GW, and 6.5 GW in 2024. CHP systems are primarily utilized by the industrial sector, with horticulture, food processing, and chemicals comprising 70% of the total capacity. The Netherlands accounts for 3% of the global CHP market. The Dutch CHP market attracted investments totaling USD 800 million in 2023, and USD 900 million in 2024. CHP technologies have been adopted as a result of the country's emphasis on energy efficiency and sustainability, as well as supportive government policies. The implementation of energy efficiency agreements and incentives for industrial energy savings has further accelerated the development of the CHP market in the Netherlands.

South Korea

South Korea's installed CHP capacity was 10 GW in 2023, and 11 GW in 2024. The industrial sector, particularly in the manufacturing and petrochemical markets, is the primary user of CHP systems, with 65% of the total capacity. South Korea holds 4% of the global CHP market share. USD 1.5 billion in investments were made in the South Korean CHP market in 2023, and USD 1.7 billion in 2024. The adoption of CHP technologies has been stimulated by the government's emphasis on energy efficiency and carbon emissions reduction. The expansion of the CHP market in South Korea has been further bolstered by policies that prioritize renewable energy and energy-saving technologies.

Russia

In 2023, the installed capacity of Russia's CHP market was 22 GW, and 23 GW in 2024. CHP systems are primarily utilized by the industrial sector, which accounts for 75% of the total capacity. This market is particularly focused on oil and gas, chemicals, and metallurgy. Russia holds a revenue share of 5% of the global CHP market. The Russian CHP market attracted investments totaling USD 2.5 billion in 2023, and USD 2.8 billion in 2024. The adoption of CHP technologies has been significantly influenced by the nation's emphasis on enhancing energy efficiency and reducing energy costs in its extensive industrial sector. The CHP market in Russia has been further bolstered by government initiatives that are designed to modernize the energy infrastructure.

Italy

According to cognitive market research, Italy's installed CHP capacity is 8 GW in 2023 from 8.5 GW in 2024. The industrial sector, specifically in the fields of food processing, chemicals, and textiles, is the primary consumer of CHP systems, with 65% of the total capacity being utilized. Italy accounts for 3% of the global CHP market. Investments in the Italian CHP market totaled USD 1.2 billion in 2023 and USD 1.4 billion in 2024. The adoption of CHP technologies has been largely driven by the government's dedication to enhancing energy efficiency and reducing carbon emissions. Financial incentives and supportive policies have further bolstered the expansion of the CHP market in Italy.

Canada

In 2023, the installed capacity of Canada's CHP market was 6 GW, and 6.5 GW in 2024. The industrial sector, particularly in the chemical, food processing, and pulp and paper industries, is the primary user of CHP systems, with 70% of the total capacity. Canada holds a market share of 2.5% of the global CHP market. The Canadian CHP market attracted investments totaling USD 900 million in 2023, and USD 1 billion in 2024. The adoption of CHP technologies has been motivated by the emphasis on improving energy efficiency and reducing greenhouse gas emissions. Government incentives and supportive policies have further stimulated the CHP market in Canada.

PESTEL Analysis of Combined Heat and Power Market

Political

Political factors have a substantial impact on the combined heat and power (CHP) market. The adoption of CHP systems is being driven by the increasing emphasis of governments worldwide on energy efficiency and sustainability. The utilization of CHP technologies is encouraged by regulatory frameworks, including the U.S. Clean Power Plan and the Renewable Energy Directive of the European Union, which mandate reductions in greenhouse gas emissions. Furthermore, investments in the CHP market are significantly influenced by the political stability of a given region. In order to promote the implementation of CHP systems, governments frequently offer incentives, including tax credits, grants, and subsidies. For example, the U.S. Investment Tax Credit (ITC) for CHP systems has been a significant factor in the market's expansion. Furthermore, the CHP market has been further spurred by national commitments to reduce carbon emissions, which have been facilitated by international agreements such as the Paris Agreement. Nevertheless, political obstacles, including policy changes and administration changes, can induce uncertainty and influence the market's long-term planning and investments. The CHP market is also influenced by trade policies and international relations, particularly in the areas of technology transfer and the import/export of equipment. For instance, tariffs on imported CHP components can impede market growth and elevate costs. 

Economical

Economic factors significantly influence the combined heat and power (CHP) market. The cost of energy, fuel prices, and overall economic development primarily drive the adoption of CHP. The economic advantages of CHP systems are more evident during periods of high energy prices, as they provide substantial cost savings by enhancing energy efficiency. Substantial cost reductions can be achieved by industries with high energy consumption, such as chemical production and manufacturing, through the implementation of CHP systems. The economic viability of the market is reflected in the growth of the global CHP market, which was valued at USD 27 billion in 2023 to USD 29 billion in 2024. Furthermore, governments offer economic incentives, including tax credits and grants, to encourage the installation of CHPs. These incentives reduce the initial capital costs and increase the return on investment. Investments in the development and deployment of CHP technology are also encouraged by economic stability and growth. In contrast, economic downturns can impede market growth by causing businesses to postpone or reduce capital expenditure on new energy initiatives. Additionally, the CHP market is dependent on the availability of capital and financing. Financial institutions and investors are increasingly acknowledging the long-term advantages of CHP systems, which have resulted in more favorable financing conditions. The adoption of CHP technologies is also influenced by the economic impact of environmental regulations, such as carbon pricing and emissions trading schemes, as companies strive to reduce their carbon footprint and avoid penalties. 

Social

The combined heat and power (CHP) market is significantly influenced by social factors, as public awareness and attitudes toward energy efficiency and sustainability drive market demand. The approval and support of technologies such as CHP, which offer substantial reductions in greenhouse gas emissions, have increased as a result of the growing societal concern about environmental degradation and climate change. Global CHP installations have prevented 250 million metric tons of CO2 emissions in 2023, and 265 million metric tons in 2024. This environmental benefit is in alignment with the increasing public demand for green energy solutions. Furthermore, the social movement toward corporate social responsibility (CSR) necessitates that businesses implement sustainable practices, such as the implementation of combined heat and power (CHP) systems. Companies are progressively incorporating CHP into their operations to improve their sustainability profiles and satisfy the expectations of environmentally conscious consumers and stakeholders. The adoption of micro-CHP systems is on the rise in residential contexts, driven by the desire to reduce utility costs and the growing awareness of energy efficiency. The promotion of CHP technology is also significantly influenced by educational initiatives and public awareness campaigns conducted by governments and environmental organizations. Nevertheless, social acceptance can differ across regions, as it is influenced by factors such as the perceived advantages of CHP systems and cultural attitudes toward new technologies. 

Technological

The combined heat and power (CHP) market's development and growth are contingent upon technological advancements. Continuous innovation in CHP technologies promotes the widespread adoption of these technologies by improving their efficiency, reliability, and cost-effectiveness in a variety of industries. In 2023, substantial strides were achieved in the enhancement of turbine designs, the integration of advanced materials, and the development of digital monitoring systems that optimize the performance of combined heat and power (CHP). These developments enhance fuel efficiency and reduce emissions, rendering CHP systems more appealing to industrial and commercial users. The market has been expanded to include residential and small commercial applications as a result of the emergence of micro-CHP systems, which offer a decentralized and efficient energy solution. Investments in research and development are essential for the preservation of the competitive advantage of CHP technologies. For example, Siemens, GE, and Mitsubishi Heavy Industries have collectively allocated billions to research and development in order to improve their CHP offerings. The integration of CHP systems with renewable energy sources, such as solar thermal and biomass, is a significant technological trend that enables more sustainable and versatile energy solutions. Additionally, the overall efficiency and reliability of CHP systems are enhanced by the improved control and administration of these systems, which are facilitated by advancements in smart grid technologies and digitalization. The implementation of AI and IoT technologies enables real-time monitoring and predictive maintenance, thereby decreasing operational costs and disruptions. 

Environmental

Environmental factors are essential in the development of the combined heat and power (CHP) market, as there is an increasing emphasis on sustainability and the reduction of carbon footprints. The utilization of residual heat that CHP systems would otherwise lose results in a reduction in overall fuel consumption and greenhouse gas emissions, making them inherently more efficient than traditional power generation methods. Global CHP installations prevented 250 million metric tons of CO2 emissions in 2023, and 265 million metric tons in 2024. This substantial environmental benefit is consistent with the global climate objectives and facilitates the transition to a low-carbon economy. Regulatory frameworks and environmental policies significantly influence the adoption of CHP technologies. In order to mitigate climate change, governments worldwide are enacting more stringent emissions regulations and promoting energy-efficient solutions. For example, the deployment of CHP systems is encouraged by the European Union's Renewable Energy Directive and the U.S. Clean Power Plan in order to reduce emissions and achieve renewable energy targets. The integration of renewable energy sources, such as biomass and solar thermal, further enhances the environmental benefits of CHP systems. This hybrid approach not only enhances sustainability but also guarantees a consistent and dependable energy supply. In the commercial and industrial sectors, the adoption of CHP technologies is also being driven by environmental certifications and standards, such as ISO 50001 and LEED. Companies are striving to meet these benchmarks. 

Legal

The combined heat and power (CHP) market is substantially influenced by legal factors, which encompass a wide variety of regulations, standards, and compliance requirements that regulate the deployment and operation of CHP systems. In order to encourage energy efficiency, mitigate greenhouse gas emissions, and advance sustainable energy solutions, governments and regulatory bodies establish laws and policies. In numerous countries, regulatory frameworks require that CHP systems adhere to specific energy efficiency standards and emissions objectives. For example, the European Union's Energy Efficiency Directive establishes mandatory measures to assist the EU in achieving its energy efficiency objectives, thereby directly impacting the adoption of CHP technologies. The CHP market is also significantly influenced by legal incentives, including tax credits, grants, and subsidies. Businesses in the United States have been motivated to invest in CHP technologies by the Investment Tax Credit (ITC) for CHP systems, which serves as a substantial legal incentive. The operation of CHP systems is contingent upon compliance with environmental regulations, including the Industrial Emissions Directive in the EU and the Clean Air Act in the U.S. These regulations establish emission restrictions, necessitating that CHP operators implement sophisticated technologies and procedures to guarantee compliance. In the CHP market, intellectual property rights and patent laws are also essential for the protection of technological innovations and the promotion of additional R&D investments. The CHP market may encounter substantial obstacles due to legal challenges, including regulatory uncertainty, litigation risks, and policy changes. 

Key Players of Combined Heat and Power Market

Siemens AG

Siemens AG's combined heat and power (CHP) market generated USD 2.8 billion in revenue in 2023, and USD 3 billion in 2024. Siemens has been making substantial investments in research and development (R&D) initiatives to improve the efficiency and performance of its CHP systems. In 2023, the company allocated USD 500 million to these initiatives, with intentions to increase this investment to USD 550 million in 2024. Siemens Energy, Digital Industries, Smart Infrastructure, and Mobility comprise Siemens' principal business segments. Siemens Energy, which concentrates on power generation and transmission solutions, encompasses the CHP market. Siemens Energy is a substantial participant in the global CHP market, with a 12% market share, which is a result of its extensive installed capacity and technological innovations. The company's CHP systems are employed in a variety of markets, such as industrial, commercial, and residential applications. The industrial sector, particularly in manufacturing and chemical production, is the primary beneficiary of Siemens' CHP systems, as they benefit from their high efficiency and reliability. 

General Electric Company (GE)

General Electric Company (GE) generated revenue of USD 3.5 billion from its combined heat and power (CHP) market in 2023, and USD 3.8 billion in 2024. In an effort to enhance its CHP technologies, GE has consistently allocated USD 600 million to research and development (R&D) in 2023. The company intends to increase this amount to USD 650 million in 2024. GE's primary business segments are GE Aerospace, GE Healthcare, and GE Vernova. The CHP market is a component of GE Vernova, which is dedicated to the generation of power and renewable energy. GE Vernova's CHP systems are extensively employed in industrial and commercial applications, with a particular emphasis on markets such as healthcare, food processing, and manufacturing. GE's substantial installed capacity and technological advancements are evident in its 14% share of the global CHP market. 

Mitsubishi Heavy Industries, Ltd.

In 2023, Mitsubishi Heavy Industries, Ltd. (MHI) generated revenue of USD 2.1 billion from its combined heat and power (CHP) market. In 2024, the company will generate USD 2.3 billion in revenue. MHI has been making significant investments in research and development (R&D) to improve its CHP technologies. In 2023, the company allocated USD 400 million to this endeavor, with intentions to increase this amount to USD 450 million in 2024. MHI's primary business segments are Power Systems, Industry & Infrastructure, Aircraft, Defense & Space, and Integrated Defense & Space Systems. The CHP market is classified under Power Systems. In heavier industries such as steel, chemicals, and petrochemicals, MHI's CHP systems are extensively employed. MHI holds 10% of the global CHP market share, which is attributed to its innovative solutions and extensive installed capacity. The company's CHP systems are a critical element of industrial energy strategies due to their exceptional reliability and efficiency. 

ABB Ltd.

ABB Ltd. generated USD 1.8 billion in revenue from its combined heat and power (CHP) market in 2023, and USD 1.9 billion in 2024. ABB has been investing in research and development (R&D) to enhance its CHP technologies. In 2023, the company allocated USD 300 million, with intentions to increase this amount to USD 350 million in 2024. ABB's primary business segments are Electrification, Industrial Automation, Motion, and Robotics & Discrete Automation. The CHP market is primarily classified under Electrification and Industrial Automation. ABB's CHP systems are employed in a variety of markets, such as industrial, commercial, and residential applications. The industrial sector, notably in the manufacturing and process industries, is the primary user of ABB's CHP systems, as they benefit from their automation capabilities and efficiency. ABB's substantial installed capacity and innovative solutions are evident in 8% share of the global CHP market. 

Caterpillar Inc.

Caterpillar Inc. generated revenue of USD 1.5 billion in 2023 and USD 1.6 billion in 2024, from its combined heat and power (CHP) market . Caterpillar has been making significant investments in research and development (R&D) to improve its CHP technologies. In 2023, the company allocated USD 250 million to this endeavor, with intentions to increase this amount to USD 300 million in 2024. Caterpillar's primary business segments are Energy & Transportation, Financial Products, Resource Industries, and Construction Industries. The CHP market is classified under Energy & Transportation. Caterpillar's CHP systems are extensively employed in industrial and commercial applications, with a particular emphasis on markets such as mining, manufacturing, and data centers. Caterpillar holds 6% of the global CHP market share, which is attributed to its significant installed capacity and technological advancements. The company's CHP systems are renowned for their reliability and robustness, which makes them the preferred choice for businesses seeking energy solutions that are both efficient and durable. 

Recent developments in Combined Heat and Power Market

Conclusion

Rising concerns about the environment and energy efficiency are fueling strong expansion in the combined heat and power (CHP) industry in the years 2023 and 2024. The worldwide CHP market size in 2023 is USD 27 billion and USD 29 billion in 2024, representing a CAGR (compound annual growth rate) of 8.2%. By 2031 the global CHP market size will be USD 54 billion, with a CAGR of 8.20%. In 2023, there were around 440 GW of CHP systems deployed worldwide; by 2024, that number rise to more than 460 GW. On a regional level, the CHP market is dominated by the Americas, Europe, and Asia-Pacific. As a result of severe environmental restrictions and a firm will decrease emissions of greenhouse gases, Europe constituted 35% of the world's combined heat and power capacity in 2023. 

With the help of government incentives and an emphasis on energy resilience, the United States installed CHP capacity from 82 GW in 2023 and 85 GW in 2024. With industrial demand and pollution reduction initiatives driving expansion, China, which accounts for over 25% of the worldwide CHP market share, is increasing its capacity from 110 GW in 2023 to 115 GW in 2024. One of the main reasons for the expansion of the CHP market is the advancements in technology. The efficiency and cost-effectiveness of micro-CHP systems, digital monitoring systems, and newly designed turbines are being improved. Forecasts indicate that worldwide investments in combined heat and power systems will reach USD 22 billion in 2024, up from USD 20 billion in 2023. The creation and implementation of cutting-edge CHP technology depend on these investments.