Combined Heat And Power (CHP) Market Is Estimated To Witness High Growth Owing To Growing Need For Decentralized Power Generation
Combined heat and power (CHP) is an efficient way of capturing wasted heat from an on-site generation of electricity. With increasing energy costs and rising demand for reliable power supply, CHP systems provide an economically viable solution by generating both electricity and useful thermal energy from a single source of fuel. CHP systems offer energy savings of up to 50% compared to separate heat and power as the waste heat from electricity generation is recovered for various applications. The global combined heat and power (CHP) Market is estimated to be valued at US$ 31.09 Billion in 2023 and is expected to exhibit a CAGR of 12.% over the forecast period 2024 to 2031, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics:
The combined heat and power (CHP) market growth is primarily driven by the growing need for decentralized power generation. CHP systems allow for reliable and localized power generation using natural gas, biomass or biogas as fuel. This eliminates transmission and distribution losses associated with centralized power plants. With rising energy demand worldwide and ageing grid infrastructure in many countries, distributed generation through CHP provides energy security and reliability. The other key driver for the CHP market is growing emphasis on cogeneration to improve energy efficiency. Recovering wasted heat allows CHP systems to achieve an overall efficiency of more than 80% compared to typical efficiencies of 33-45% for separate generation of electricity. The increased focus on energy savings through CHP adoption will continue to support the market growth over the forecast period.
SWOT Analysis
Strength: Combined Heat And Power (CHP) systems provide simultaneous heat and power and are more energy efficient than separate generation of heat and power. The systems help in reducing carbon footprint significantly as they consume less fuel. Due to high efficiency, operating costs of CHP plants are lower compared to separate generation of heat and power.
Weakness: Initial capital investment required for installing CHP systems is high. Significant maintenance costs are involved to ensure smooth functioning of the systems. Limited availability of experienced workforce for operating and maintaining CHP plants poses operational challenges.
Opportunity: Stringent government regulations regarding reduction of carbon emissions are promoting increased adoption of energy efficient technologies like CHP. Growing demand for reliable and uninterrupted power supply especially from commercial and industrial sectors provides growth opportunities. Rapid industrialization and urbanization in developing regions of the world increases the need for localized power generation through CHP.
Threats: Volatility in fuel prices poses risks for consistent power generation through CHP systems. Adoption of alternative clean technologies like solar and wind energy may threaten the growth of CHP market. Lack of awareness about benefits of CHP systems limits their widespread adoption.
Key Takeaways
The global Combined Heat And Power (CHP) market size is expected to witness high growth.
Regional analysis:
Asia Pacific region is expected to dominate the CHP market during the forecast period. Rapid industrialization and infrastructure growth in countries such as China and India will drive the demand for reliable and affordable power, thereby boosting the adoption of CHP systems in the region.
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 market is moderately consolidated with major players capturing a sizeable market share. Key players focus on product innovation and development of advanced CHP technologies to gain competitive edge. Partnerships and collaborations with end users is a key strategy adopted by players to strengthen their foothold in the market.
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