Combined Heat Power Market Trends

Introduction

The combined heat and power market in 2023 is undergoing a radical transformation, driven by a combination of technological advances, regulatory developments and changing customer behavior. Combined heat and power systems are increasingly being used to deliver energy-efficient and lower-carbon solutions. Regulations are increasingly encouraging industries to adopt CHP to meet compliance standards. In addition, changing customer behavior towards greener energy is influencing market dynamics, as both businesses and residential customers seek to find reliable and cost-effective energy solutions. This report helps industry players to understand the complex CHP market and to seize the opportunities emerging from the shifts taking place.

Top Trends

1. Increased Adoption of Renewable Energy Sources
   In a growing number of countries, CHP is being combined with the use of regenerative energy, such as solar and wind energy. The European Union, for example, is aiming at a reduction in greenhouse gas emissions of 55 per cent by the year 2030, and CHP is being promoted as a key technology. It is expected to reduce dependence on fossil fuels and increase energy efficiency. Companies are investing in hybrid systems, which in the long term could lead to more sustainable energy solutions.
2. Technological Advancements in CHP Systems
   The use of micro-CHP systems and fuel cells is gaining in popularity. There is a great deal of work being done on gas-turbine engines, for example by Siemens. These developments could lead to a lower cost of operation and higher energy yield. And the market may well shift towards more compact and efficient systems, with better performance as a result.
3. Government Incentives and Policy Support
   Many governments are encouraging the construction of cogeneration plants, thus promoting energy conservation. The American Department of Energy provides a subsidy for cogeneration projects, which has led to a substantial increase in the number of cogeneration plants. In addition to encouraging the growth of the market, such subsidies encourage companies to install cogeneration plants. Governments may further increase subsidies to encourage the construction of cogeneration plants in various industries.
4. Focus on Energy Resilience and Security
   In view of the energy-related disruptions caused by climate change, the need for energy resilience has become paramount. Companies are investing in CHPs to ensure a reliable supply of energy in the event of a blackout. Engie, for example, has implemented CHP solutions in critical sites, thereby strengthening energy security. This trend is likely to continue as companies prioritise energy independence and resilience.
5. Integration with Smart Grid Technologies
   The integration of CHP with smart grids is increasingly important. It makes it possible to manage the energy more efficiently and optimize the use of resources. ABB, for example, develops solutions that enable CHP systems to be monitored and controlled in real time. The synergy between smart grids and CHP is expected to result in more efficient distribution and use of energy.
6. Decarbonization Efforts in Industrial Sectors
   It is a fact that the industry is under pressure to reduce its carbon emissions. Hence companies like Mitsubishi Heavy Industries are now developing low-carbon technology to meet the new regulations. It is anticipated that this will stimulate further investment in clean cogeneration solutions, thus contributing to decarbonisation. Moreover, in the future, even stricter regulations may force industries to adopt sustainable practices.
7. Rising Demand for District Heating Solutions
   In cities, the district heating systems which are now being set up are based on the CHP. These systems are the only ones that can provide the citizens with an efficient heating solution, as has been shown in several European cities. It is the need for sustainable development and energy efficiency that drives this development. As urbanization continues, the demand for district heating is likely to increase, thereby creating new opportunities for the CHP.
8. Enhanced Focus on Waste Heat Recovery
   Waste heat recovery is becoming an important component of cogeneration, thereby improving its overall efficiency. Companies are pursuing the development of waste heat recovery. Ricardo’s innovations are a case in point. This approach not only increases the efficiency of the system but also reduces the cost of operation. Waste heat recovery is a promising technology that could be applied to many different industries.
9. Emergence of Hybrid Energy Systems
   CHPPs in combination with other energy sources are beginning to offer a viable solution. For example, Cummins is developing a system that combines CHPs with batteries. This combination is able to supply energy when it is needed and to meet the demand. This will change the way energy is used in many industries.
10. Growing Interest in Energy-as-a-Service Models
    Energy as a Service is becoming a popular model that allows businesses to access cogeneration systems without making a large initial investment. This service is provided by companies such as Veolia, which makes cogeneration more accessible to smaller businesses. This trend could democratise access to efficient energy solutions, thereby widening the market. In the future, we may see more and more service companies offering tailor-made energy solutions.

Conclusion: Navigating the CHP Market Landscape

The combined heat and power market in 2023 is characterized by a very strong competitive situation and significant fragmentation, with the market share of both old and new players being contested. The development of the regional trends is towards a stronger emphasis on energy efficiency and sustainable development, which makes it necessary for suppliers to develop and adapt their offers. The established players will have a head start in terms of customer relations and installed capacity, while newcomers will be able to differentiate themselves by using advanced capabilities such as artificial intelligence, automation and flexibility. In the future market, the ability to integrate sustainable solutions and offer flexible solutions will be decisive for the leadership. Strategically, suppliers should therefore ensure that they are able to exploit these capabilities and ensure that they are competitive in the rapidly changing market.