Micro Combined Heat & Power (Micro CHP) Market Trends [2031]

Report Description

Micro Combined Heat & Power (Micro CHP) Market Outlook 2031

The global micro combined heat & power (micro CHP) market size was USD 3.91 Billion in 2022 and is likely to reach USD 8.75 Billion by 2031, expanding at a CAGR of 11.1% during 2023–2031. The market is fueled by the increasing demand for clean energy across the globe.

Growing requirement for energy efficiency and environmental sustainability is expected to drive the market during the assessment period. Micro CHP systems offer enhanced energy efficiency by simultaneously producing electricity and capturing usable heat, thereby reducing the overall energy waste. Increasing conventional energy costs motivates consumers and businesses to opt for alternative, cost-effective solutions such as micro CHP systems to manage their energy expenses.

• As per the data provided by the US Energy Information Administration in August 2023, the amount spent by the US consumers on energy reached USD 1.3 trillion in 2021. When adjusted for inflation, this amount turns out to be a 25% increment from the expenditure of 2020.

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Micro CHPs or cogeneration plants are systems that produce electricity and thermal energy in a single integrated system. They require less fuel to generate energy, making them a cost-effective way to ensure efficient power generation and reduce greenhouse gas emissions. These factors are expected to drive the market during the assessment period.

The COVID-19 pandemic hindered the market, due to the lockdown restrictions imposed by several governments across the globe. Manufacturing and production activities considerably decelerated, due to the halt of import and export. This led to a market slowdown, curbing the demand for micro CHPs during this period.

Micro Combined Heat & Power (Micro CHP) Market Dynamics

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Major Drivers

Growing demand for clean energy and awareness of carbon emissions is expected to drive the market during the projection period. Clean energy offers various environmental and economic benefits, such as curbing air pollution and lesser dependence on imported fuels. The efficiency and environmental-friendliness of micro CHP further contribute to its positive impact on the product penetration.

Moreover, the formation of favorable government policies toward encouraging the adoption of clean and efficient energy sources is projected to impel the market during the forecast period.

• As per the data updated by the International Energy Agency in December 2021, global renewable electricity is projected to account for close to 95% of the increment in global power capacity. The capacity for renewable energy is estimated to be 50% higher in the period of 2021-2026 as compared to the period of 2015-2020.

Existing Restraints

High cost of installation and maintenance is likely to hamper the market during the forecast period. Micro CHP units are widely used to maintain spaces and achieve a clean & renewable energy environment-friendly city, due to urbanization and industrialization. Reciprocating internal combustion engines, Stirling engines, and many micro CHP devices have high costs for setup and maintenance. This increases the overall operating costs of the product, leading to consumers in developing countries being less interested in investing in such equipment.

Emerging Opportunities

Technological advancements in the power sector are anticipated to provide substantial growth opportunities for the market in the coming years. Micro CHP produces both electricity and heat, developed to enhance the efficiency of the energy used for burning fuel to produce electricity.

This feature of the technology is extensively used in various areas such as hotels, buildings, restaurants, factories, hospitals & clinics, shops, and others. Countries such as Japan, South Korea, the UK, and Germany proactively make efforts to incorporate micro CHP technology into their industries to ensure environmental and economic benefits. This is likely to create lucrative prospects for the market during the projection period.

Scope of the Micro Combined Heat & Power (Micro CHP) Market Report

The market report includes an assessment of the market trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Micro Combined Heat & Power (Micro CHP) Market Segment Insights

Fuel Type Segment Analysis

Based on fuel type, the micro combined heat & power (micro CHP) market is divided into biogas, natural gas, hydrogen, and others. The biogas segment is projected to hold the major share of the market during the projection period, as it decarbonizes electricity and heat production. Micro-CHP efficiently uses gas for power production and heating. It saves carbon dioxide, owing to the use of waste-derived biogas injection into gas networks. This is likely to impel the growth of this segment in the coming years.

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Prime Mover Segment Analysis

On the basis of prime mover, the global market is segregated into fuel cell, Stirling engine, IC engine, and others. The fuel cell segment is projected to register a high CAGR during the forecast period, due to the numerous benefits associated with fuel cell technology, including silent operation, zero emissions, and efficient power generation.

Furthermore, automotive fuel cells have the capacity to achieve overall efficiencies in the range of 65-95%. This indicates their increasing popularity in the automotive industry, which is expected to create lucrative prospects for the segment.

• As per a survey report published in May 2023, around 1600 commercial electric vehicles across the globe were based on fuel cells. By the year 2030, there are expected to be approximately 1 million fuel cell-based electric trucks.

Capacity Segment Analysis

On the basis of capacity, the micro combined heat & power (micro CHP) market is segmented into 10 – 50 kW, 2 – 10 kW, and up to 2 kW. The up to 2 kW segment is anticipated to register a robust growth rate during the forecast period, owing to the rising installation targets and the operational efficiency of micro CHP in homes in comparison to other capacities.

The demand for GHG emission cogeneration units for commercial and residential infrastructure is driving the market, particularly for systems with 2kW capacity. Therefore, the market for micro CHP systems is expanding rapidly, and there is a surging interest in using them as an alternative to traditional power generation technologies. This is expected to boost the market during the projection period.

Application Segment Analysis

Based on application, the market is divided into commercial, industrial, and residential. The commercial segment is expected to generate a major revenue share of the market in the coming years, due to the energy efficiency and cost-saving factors. Technology generates both, heat and electricity on-site, and it curbs the need for purchasing power from external sources, potentially lowering overall expenses.

Moreover, commercial establishments often require continuous power supply. The on-site power generation of micro CHP reduces the dependence on external grids, which proves vital for businesses during power disruptions. These factors are likely to impel this segment during the forecast period. The residential segment is anticipated to expand at a significant pace in the market.

Residential micro CHP systems offer numerous benefits to users, such as a comfortable, affordable, and healthy living environment, potential energy savings, and a reliable power source. The growth of the residential segment in the market is attributed to several factors, including rapid urbanization, increasing demand for electricity & heat, and the shift towards low-carbon power generation, particularly in emerging markets. The demand for cost-effective and sustainable energy solutions in the residential sector is expected to continue its upward trend, driving the market in the years to come.

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Regional Outlook

In terms of region, the global micro combined heat & power (micro CHP) market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. Asia Pacific is expected to dominate the global market during the projection period, owing to the increasing demands of energy and rising awareness for sustainable energy solutions.

The advancements in technology are leading to the growing adoption of decentralized power generation methods. In addition, the strong presence of several key players in the market in countries such as Japan is expected to create profitable projections for the market during the forecast period.

The market in Europe is anticipated to expand at a staggering rate in the coming years, due to the increasing emphasis on energy efficiency and sustainability along with the supportive government policies promoting decentralized energy generation. The rising inclination towards effective environment-friendly energy solutions in this region is likely to propel the market during the forecast period.

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