The market for combined heat and power (CHP), which produces electricity and usable heat in a single, highly-efficient process, is set to increase its installed capacity from 755.2 Gigawatts (GW) in 2016 to 971.9 GW by 2025, at a compound annual growth rate of 2.8%, according to research and consulting firm GlobalData.
The company's latest report states that the increasing global demand for electrical power and the simultaneous rise in environmental concerns and legislation are major drivers of the CHP market, along with increasing government incentives and policies to promote it.
Anchal Agarwal, GlobalData's Analyst covering Power, notes: "CHP plants are attractive because they recover heat that is normally wasted in conventional power generation methods, which together have an efficiency of around 45%. CHP systems, however, can be up to 90% efficient, and are used in industrial, institutional, and large commercial applications. Utilities worldwide offer favorable policies, fiscal incentives, and related programs such as State Program Funding to encourage CHP.”
GlobalData's report also states that Asia-Pacific (APAC) had the largest regional share in 2015, with 45.9% of global CHP installed capacity, attributable to countries such as China, India, and Japan. The share is expected to reach 48.5% of global installed capacity by 2025.
Agarwal explains: "One of the reasons for APAC's dominance is that China and India are the top carbon emitters and largest polluter countries. Growing manufacturing, increasing electricity demand, and rising numbers of vehicles are the key contributors to pollution, and have forced governments to install CHP plants.
"The International Energy Agency established CHP installed capacity targets of 333 GW in China and 85 GW in India by 2030. These targets are expected to lead to the introduction of policy incentives, which will drive the growth of CHP installations. Favorable policies include those such as India's Tariff Policy and Integrated Energy Policy to support CHP plants, and Japan's cool earth innovative technology plan to boost installations in the country."