Micro Combined Heat and Power (CHP) Market Size, Share & COVID-19 Impact Analysis, By Capacity (Up to 2 kW, 2 – 10 kW, and 10 – 50 kW), By Prime Mover (IC Engine, Stirling Engine, Fuel Cell, and Others), By Fuel (Natural Gas, Hydrogen, Renewable Resources, and Others), By Application (Residential and Commercial), and Regional Forecast, 2022-2029

The global micro combined heat and power (CHP) market size was valued at USD 3.62 billion in 2021. The market is projected to grow from USD 3.92 billion in 2022 to USD 8.16 billion by 2029, exhibiting a CAGR of 11.0% during the forecast period. Asia Pacific dominated the global market with a share of 87.01% in 2021.

The global COVID-19 pandemic has been unprecedented and staggering, with the global market experiencing lower demand across all regions than at pre-pandemic levels. Based on our study, the global market exhibited a low growth of 5.4% in 2021.

Micro CHPs, also known as cogeneration plants. This system produces electricity and available thermal energy in a single integrated system. These systems require less fuel to generate energy, are a cost-effective way to ensure efficient power generation, and minimize greenhouse gas emissions. Furthermore, favorable policies and technological advancements will propel it forward. The market is also driven by the growing demand for clean energy and an increase in the demand of micro CHPs. Further, the demand for the CHP is growing due to the rise in fossil fuel environmental issues and other industrial activities; rising renewable resources for power generation and adopting these types of units across various applications will support the global micro CHP market growth.

COVID-19 IMPACT

COVID-19 Disrupted the Manufacturing and Supply of the Product

The pandemic of COVID-19 has posed a threat to the product industries. The drastic action taken to reduce the spread of the virus has created challenges in working conditions for many sectors. Industries have suffered a significant loss of uptime due to the imposition of strict policies such as nationwide lockdowns to curb the spread of the virus. The COVID-19 outbreak has limited influence on this industry regarding reduced workforce and limited industrial operations.  However, a decrement in the number of infected cases resulted in increased industrial activities.

Furthermore, continuous commercial and public sector investments in worldwide clean energy sources will further fuel market growth. Following the pandemic, the demand for the market is expected to have a positive impact with increased preference to complete net-zero carbon emission and renewable energy targets. For instance, many governments worldwide set a target for net-zero carbon emissions and are working to achieve it by focusing and investing more in sustainable energy generation. Thus, CHPs are anticipated to be an attractive cogeneration system for many countries like Japan, the US, and European countries, which has led to nominal market growth during these years.

LATEST TRENDS

Energy-Saving and Technological Developments in Energy Sector To Support Market Growth

According to World Green Building Council (WGBC), approximately 28% of global CO₂ comes from building operations due to the energy used for cooling, heating, and power. Therefore, to reduce the emissions of CO₂ from buildings micro type of CHP systems are used owing to their energy-efficient technology. There is no transmission loss and the device provides additional power to the buildings received from the grid, helping to reduce power costs.

Overall, CHP systems generate power at a significantly lower cost than power from the grid. In context. Yanmar, a manufacturer of North American micro CHP systems, claims that the average combustion rate of the source connected to the grid is 33%. In comparison, the unit uses up to 87% of fuel consumption. The systems look forward to a broader range of applications as governments, energy companies, businesses, and consumers seek to reduce greenhouse gas emissions as well as be eenvironmentallyfriendly.

Emissions Of GHG From Fossil Fuels To lead Adoption In Residential And Commercial Sectors

Fossil fuels are considered an essential energy source for power generation. In the U.S., natural gas accounted for 40% of electricity generation in 2020, while coal is the third-largest fuel, accounting for about 19% of electricity generation in the U.S.. These fossil fuels produce greenhouse gas (GHG) emissions to the environment. Greenhouse gases have a wide range of impacts on the environment and health, causes climate change by trapping heat, and contribute to respiratory illness due to smog and air pollution. Therefore, the acceptance of micro CHP into power generation is increasing, and the adoption of cogeneration can reduce CO₂ emissions by up to 30% compared to the traditional generation through boilers and power plants.

It plays an essential role in the energy sector as they are commonly used to meet commercial and residential buildings' heating and power needs. In addition, the government is also aiming to introduce renewable energy as an additional boost to the market. For example, in 2021, Europe passed the European Climate Act to reduce Europe's greenhouse gas (GHG) emissions to zero by 2050. It can help the region reach the zero-emission goal by 2050 by reducing greenhouse gas emissions to the environment.

DRIVING FACTORS

Growing Demand for Clean Energy to Drive the Adoption of the Product

This market is mainly fueled by the increase in demand for clean energy and the growing attention to carbon emissions will affect the demand for micro CHP. Clean energy offers a variety of environmental and economic benefits, including reduced air pollution. A diverse clean energy supply also reduces dependence on imported fuels and associated financial and environmental costs. There is increased attention to the extensive availability of natural gas as a green fuel source and reducing carbon emissions. Improving efficiency, saving energy, and being environmentally friendly are some of the features that have a positive impact on product penetration. In addition, as the energy sector continues to grow, favorable policies and commitments to integrate renewable energy sources will drive product demand.

Government Initiative and Policies and Technology Development in Power Sector to Support the Market Growth 

Micro CHP is a technology that generates both available heat and electricity. This technique was developed to increase the energy used to burn fuel to produce electricity, thereby increasing the combustion process's efficiency. These features and technology will increase the market for micro CHP. In various areas apartment buildings, restaurants, hotels, shops, hospitals & clinics, factories, and others. The government is also focusing on this market. Countries such as Japan, Germany, South Korea, and the U.K. actively work to bring state-of-the-art micro CHP technology's economic and environmental benefits to the mainstream energy market.

For instance, The Government of Japan and the industry launched the ENE-FARM deployment program for residential fuel cell micro combined heat and power systems. Under this program, by 2021, Japan will have reached a milestone of 400,000 units deployed in the country. After a successful program in Japan, other countries are also looking into this market. These factors and government initiatives will boost the market in the forecast period.

RESTRAINING FACTORS

High Installation and Maintenance Costs of the Systems May Hamper Market Growth

Due to increasing urbanization and industrialization, micro CHP units are widely used in houses, factories, shops, malls, hospitals, and others to maintain their spaces and achieve a clean and renewable energy environment-friendly city. The device used in a combined heat and power plant is a motor that produces mechanical power. Reciprocating internal combustion engines, Stirling engines, and many micro CHP devices require maintenance and high cost. High initial and high maintenance costs of installing micro CHP can hinder the growth of the micro combined heat and power market. Consumers in developing countries do not want to spend large sums of money on maintaining equipment. These things increase the operating costs of the product.

In addition, customers are hesitant to switch from existing alternatives because of the different prices between different technologies. Governments worldwide are offering some incentives to facilitate the adoption of micro CHP systems to support the transition for the usage of micro combined heat and power system. Countries like Japan subsidize to cover almost half of the product cost, which will help consumers. These factors are impacting the development of this market in developing countries over the next few years. Although technological advances help reduce product prices to optimal levels.

SEGMENTATION

By Prime Mover Analysis

Fuel Cells Will Dominate The Market Owing To Their Zero Emission And Efficient Power Generation

The market is segmented into IC engines, Stirling engines, fuel cells, and others. The fuel cell segment dominates the markets during the forecast period. It is supported by benefits such as silent operation, zero emissions, and efficient power generation. Furthermore, fuel cell technology is having highest CAGR in all segments, as Fuel cells can achieve overall efficiencies in the range of 65-95%. According to the United States Environment Protection Agency, waste heat can be used primarily for domestic hot water applications and space heating.

By Capacity Analysis

Up to 2 kW capacity Segment to Dominate the Market Owing to Growing Number of Installations

Based on the capacity, the market is classified into up to 2 kW, 2-10 kW, and 10-50 kW. The up to 2 kW segment dominated the market owing to increasing installation targets and the high operating efficiency of micro CHP in homes compared to other capacities. The increasing applicability of GHG emission cogeneration units in residential and commercial infrastructure will accelerate the growth of the global market with a capacity of 2kW.

By Fuel Analysis

Hydrogen Segment Led The Market Upfront Owing to their Zero Greenhouse Gas Emissions

Based on fuels, the global market is categorized into natural gas, hydrogen, renewable resources, and others. Hydrogen fuel is expected to grow meaningfully as it can be quickly produced using various resources and is likely to have near zero greenhouse gas emissions. Uses of hydrogen will impact the environment and solve the global warming issue.

By Application Analysis

Residential Sectors Dominated the Market Owing to the Numerous Benefits to the Customers

By application, the market is segmented into residential and commercial sectors such as houses, shops, sports areas, factories, malls, hospitals, and others. Residential CHP systems can bring significant benefits to users and customers, such as an affordable, comfortable, healthy living environment, potential energy savings, and a reliable power source. In addition, Rapid urbanization, increasing demand for electricity and heat, and the shift to low-carbon power generation, especially in emerging markets, are some of the key factors behind the growth of the residential segment in the market.

REGIONAL INSIGHTS

Asia Pacific acquired the most significant micro combined heat and power market and is expected to remain so during the forecast period. Japan is the most dominant player in this region. At the same time, a few emerging countries, including China and South Korea, contribute to the market development in the region because they are energy-efficient, producing both heat and power CHP simultaneously and reliable energy delivery in the future.

Europe region to experience substantial growth in the forthcoming years. The region has established manufacturing, industrial and automotive sectors. The region aims toward zero-emission regulations for residential and commercial buildings, and focusing on less carbon-intensive processes is also driving the market's demand. In addition, the European government's stringent environmental protection policies state that a 20% improvement in energy efficiency and a 20% cut in greenhouse gas emissions is majorly focused. Thus, many European countries are accepting energy-efficient devices to arrest global warming.

The market in North America is relatively trivial if we compare it with the Asia Pacific or European market.  But is expected to grow at highest rate during the estimated period owing to favorable government policies and increasing preference for sustainable energy generation throughout the region. Furthermore, continued technical advances to improve energy efficiency and increase peak capacity demand across the grid will accelerate the business scenario.

The Rest of the World has limited potential for installing micro CHP owing to the slow adoption of the technology, limited awareness, and high initial investment for residential setups. In some countries like Brazil, Chile, and South Africa, the projects are in the initial phase that may take some time to evolve technology in these countries. Since a micro combined heat and power produces relatively high-temperature heat, it can quickly be executed in the heating systems of existing buildings. Furthermore, it fits nicely into the existing gas and electric infrastructure, making it the most suitable power-generating technology in residential and non-residential sectors.

KEY INDUSTRY PLAYERS

Dalkia Aegis EDF Group, to have a Long Standing Presence In Delivering Micro-Cogeneration Systems 

The company is a full-service provider of combined heat and power systems that generate heat and power using clean and highly efficient natural gas engines. These modular cogeneration systems will reduce your facility's reliance on expensive power supply, energy costs and carbon footprint. In addition, significant corporations aim to optimize device efficiency with heavy investments in research and development. Moreover, the companies aim to capture a substantial market share in a particular region, enhancing their ability to have a bigger footprint in the global market.

LIST OF KEY COMPANIES PROFILED:

• Yanmar (Japan)


• GE Power (U.S.)


• Siemens (Germany)


• Dalkia Aegis, EDF Group (U.S.)


• 2G Energy AG (Germany)


• Samad Power (U.K.)


• Vaillant Group (Germany)


• Viessmann (Germany)


• Axiom Energy Group (U.S.)


• Micro Turbine Technology B.V (Netherlands)


• Centrica Business Solutions UK & Ireland (U.K.)


• BDR Thermea Group (Netherlands)


• M-TriGen, Inc. (U.S.)


• EC POWER (Denmark)


• TEDOM a.s. (Czech Republic)


• Honda Motor Co., Ltd (Japan)


• GreenWatt Canada (Canada)

KEY INDUSTRY DEVELOPMENTS:

• January 2022 - Total Energy Systems, a provider of critical power solutions to the upper Midwest, announced it had been named an authorized distributor for Gridiron onsite power generation systems. Products from Houston, Texas-based Gridiron include the Power Plant H24 micro combined heat and power unit that runs on renewable natural gas, natural gas, or propane.


• March 2021- Yanmar Energy System Co., Ltd., a subsidiary of Yanmar Holdings, has signed an agreement with 2G Energietechnik GmbH (2G), a subsidiary of 2G Energy AG, for the sale of 2G's gas cogeneration systems as part of efforts decarbonization of Yanmar. Yanmar has recently signed a contract with 2G, a German company that is a pioneer in natural gas and biogas cogeneration systems and has commercialized a 100% hydrogen engine to distribute its products in Japan, Asia, the Middle East, and Africa. Also, in March 2021, Yanmar established the Carbon Neutral Business Promotion Office in Japan and Germany, focusing on the early commercialization of new fuels, such as hydrogen, to achieve decarbonization in Japan and abroad.


• March 2019 - Viessmann, a U.K.-based company, launched its micro CHP series Vitovalor CHP in 2014. As of today, Vitovalor has sold over 10,000 units combined with Vitovalor fuel cell technology worldwide.


• March 2019 - Yanmar Energy Systems, the Japanese energy solution provider with European headquarters in the Netherlands, introduced the premium Yanmar CP25EU CHP system. This new-performance-class micro-cogeneration unit has been developed in close cooperation with RMB/Energie, a German manufacturer of premium cogeneration systems. The new product will also be added to the RMB/Energie family as the neoTower M+.


• March 2019 - Viessmann has launched a new grant program called Viessmann FörderProfi or Subsidy Pro to support the affordability and installation of many technologies. It aims to provide customers hassle-free access to retrofit existing heating systems with new condensing boilers, fuel cell heaters, or heat pumps to qualify for government rebates.

REPORT COVERAGE

The global micro combined heat and power market report highlights leading regions worldwide to understand the user better. Furthermore, the market research report provides insights into the latest industry trends and analyzes technologies being deployed at a rapid pace globally. It further highlights some growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the industry.

Report Scope & Segmentation