The micro combined heat & power (CHP) market is expected to grow at a CAGR of more than 4.5% during the forecast period. Factors such low natural gas prices and increasing concern towards carbon emissions along with supportive government policies are expected to drive the number of installations of micro CHP systems across the world. Although several efforts have been made over the years to remove technical and regulatory barriers and to have higher adoption of micro CHP systems, factors such as higher installation cost compared to conventional heating systems are likely to hinder the market growth during the forecast period.
- Biogas based micro CHP systems are expected to witness significant growth during the forecast period.
- The Office of Fossil Energy, under the US Department of Energy, has announced nearly USD 30 million in federal funding for cost-shared research and development projects for small-scale solid oxide fuel cell (SOFC) systems and hybrid energy systems. The funding seeks to develop advanced technologies for the SOFC hybrid system using solid oxide electrolyze cell technologies. Such steps to develop fuel cell technology is likely to be adopted in the fuel cell micro CHP systems and would create an opportunity for the market to grow in the near future.
- North America is likely to dominate the market during the forecast period, with the majority of the demand coming from the United States and Canada.
Key Market Trends
Biogas-based CHP Systems to Witness Significant Growth
- Over the past few years, the biogas industry has grown significantly. Biogas combustion is a carbon-free process, as the resulting CO2 is previously captured by the plants being combusted. Biogas micro CHP can be a very useful technology for sites that have a constant demand for both heat and electricity, particularly when the site is off the primary gas grid, and where biomass fuel is readily available.
- With growing consciousness and government initiatives, facilities such as biogas micro CHP are increasing significantly. Considering the fuel mix in CHP plants, the share of renewable and waste (including biogas) has grown over the years and is estimated to have a share of around 30% in the year 2018.
- Biogas has multiple sources of production such as crop residues, animal manure, municipal solid waste, municipal wastewater, and woody biomass. As of 2018, crop residue in the Asia-Pacific region has the highest production potential of around 80 Mtoe.
- Moreover, abundant resources and supportive government policies are enabling the biogas market to expand in Northern Europe, the United States, and countries producing sugarcane bagasse (e.g., Brazil). The proliferation of small projects, including digesters for off-grid applications, is recorded in both OECD and emerging economies. This, in turn, is expected to have high biogas production and would support having a broader biogas based micro CHP market in the near future.
North America to Dominate the Market
- North America has dominated the micro CHP market in 2018 and is expected to continue its dominance in the coming years.
- As the United States’ demand for energy is growing over the years, with rigid policies of having cleaner energy, renewable, and waste energy are getting high importance for electricity generation. Moreover, to have independent and economic power and heating sources, the end-users are moving towards micro CHP systems.
- Micro CHP technologies can help commercial buildings, institutional facilities, and communities reduce energy costs and emissions, and provide more resilient and reliable electric power and thermal energy. Combined heat and power systems (including micro CHP) save the United States 1.8 quads of fuel each year, avoiding 241 million metric tons of CO2 emissions annually.
- As of August 2018, 81.3 GWs of combined heat and power were installed at more than 4,400 sites around the United States and its territories. There were 111 new combined heat and power installations in the country, representing 554 megawatts of new capacity in 2017. The states with the newest combined heat and power installations were New York (53), New Jersey (10), California (5), and Pennsylvania (5). Among the installed CHP facilities, more than 39% were small CHP systems like microturbines.
- In March 2019, the United States Department of Energy announced the Advanced Manufacturing R&D Projects that is set to focus on improving the energy and material efficiency, productivity, and competitiveness of manufacturers across the industrial sector. The development of CHP systems is one of the technical areas on which the project is expected to roll, which is likely to have highly efficient and advanced technology micro CHP systems in the coming years.
The micro CHP market is moderately fragmented. Some of the key players in the market include Vaillant Group, Viessmann Group, Yanmar Holdings Co. Ltd, M-Trigen Inc., EC Power A/S, TEDOM A.S, 2G Energy Inc., BDR Thermea Group, Marathon Engine Systems, and SOLIDpower Group.
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