European Cogeneration Market

Frost & Sullivan, December 2011, Pages: 120

Despite the high investment cost of cogeneration equipment and low payback periods of up to 5-7 years, Europe is quite well placed to rapidly expand cogeneration by 2020. The region is making gradual, though small, developments across technology, skills and supply chain to meet its targets of attaining energy efficiency through cogeneration. The European cogenration market will provide attractive growth prospects for all of the core technologies considered in this study (gas turbines, steam turbines, engines, electric generators, heat recovery steam generators and fuel-fired boilers) throughout the forecast period.

Market Overview

Favourable Policies and Government Support Encourage Long-term Investments in the European Cogeneration Market

The European Commissions’ Ambitious Environmental Targets Make a Robust Case for the Technology

High investments in equipment and low payback periods of up to 5 to 7 years notwithstanding, cogeneration is all set for a revival in Europe between 2014 and 2018. Most countries across Europe are expected to increase their cogeneration capacity, mainly in the combined cycle form. The region aims to meet its environmental and energy-efficiency targets through gradual developments in cogeneration technology, skills and supply chain. Power plants are particularly keen to invest in cogeneration because governments provide benefits for companies with higher cogeneration potential. “Investment in cogeneration units is also fairly dependent on the cost of generating electricity,” says the analyst of this research. “Stable energy prices are essential to convince end users to make the right energy investment decisions and assure them that it is a sound strategy to rebuild a cogeneration base.” Cogeneration is the solution of choice for end users that have a rising need for large-scale power and supporting heat. It is a cost-effective system; in addition, the technology and skill required for setting up a cogeneration project is commercially available.

The development of CHP is heavily influenced by energy supply-side policies and government regulations that are directed towards energy consumers. Policy, tax, electricity reforms and trading arrangements are necessary to nurture cogeneration. Tax benefits will be particularly useful in the current environment of economic uncertainty and unclear returns. The market will also be pegged back by the delays caused by interconnection issues. Nevertheless, rising concerns over climate changes and increasing consciousness about the environmental impact of fossil fuels offset all these issues. They have prompted the European Commission to plan for collective energy policies and promote energy efficiency directives. The combined heat and power (CHP) directive, emission credits and new emission reduction technologies are crucial to the success of cogeneration in Europe. Under the CHP directive, Germany, Italy and Spain have made considerable strides in building a policy framework to support cogeneration, while Germany has set itself a target to double cogeneration capacity by 2020.

“The effective implementation of CHP policies and a focus on creating favourable conditions for cogeneration development are likely to drive the market in Europe,” notes the analyst. “In 2011, the EU identified cogeneration as the energy application that can make the largest-single contribution to achieving the region's greenhouse gas reductions, giving a huge thrust to the market.”

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

By Fuel Type:

- Natural gas
- Coal and its products
- Heavy fuel oil
- Light oil and diesel
- Solid biomass
- Solid wastes
- Biogas

1. Executive Summary

2. Market Overview

3. Total Cogeneration Market
3.1 External Challenges: Drivers and Restraints
3.2 Market Life Cycle Assessment
3.3 Forecasts and Trends
3.4 Market Share and Competitive Analysis
3.5 Megatrends and Industry Convergence Implications

4. The CEO’s 360 Degree Perspective

5. Strategic Analysis—Five Forces Model

6. Market Forecasts by Prime Equipment

7. Market Forecasts by Plant Type

8. Market Forecasts by Fuel Type

9. Market Forecasts by Geography

10. Market Forecasts by Application

11. The Last Word (Conclusions and Implications)

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