Europe combined heat and power market is expected to grow at a CAGR of over 4% during the forecast period 2020-2025. Factors such as increasing demand for energy, lowering energy costs, integration of renewable energy, reducing carbon emission are driving the CHP market in Europe. Although many efforts have been made over the years to remove technical and regulatory barriers, and to promote wider adoption of CHP. However, grid interconnection, significant initial capital investment, a significant challenge for the CHP market in the region.
- Biomass-based CHP is expected to witness the fastest growth with the increase in demand for energy during the forecast period.
- Increasing investment in the development of small-sized manufacturing units in the region has augmented the business opportunity. This, in turn, is expected to create significant opportunities for the CHP system providers and plant developers in the near future.
- Germany is expected to dominate the combined heat and power market in Europe, with the majority of the demand coming from country in the European region.
Key Market Trends
Biomass Based CHP is to Witness Significant Growth in the Market
- Over the past few years, the biomass industry has grown significantly. Biomass combustion is a carbon-free process, as the resulting CO2 is previously captured by the plants being combusted. Biomass combined heat and power 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 mains gas grid, and where biomass fuel is readily available.
- Small- and medium-sized CHP plants are usually sourced with locally available biomass. Large CHP plants and coal/biomass co-firing power plants require biomass sourced from a wide region or imported wood and forestry residues.
- Cogeneration or combined heat and power currently provides 11% of Europe’s electricity and 15% of its heat, contributing up to 21% of the European Union’s CO2 reduction target and 15% of the EU’s energy efficiency target.
- By 2030, cogeneration is likely to provide 20% of electricity and 25% of heat in Europe, contributing up to 23% of the EU’s CO2 reduction target and 18% of the EU’s energy efficiency target. By 2050, the sector is likely to double the capacity of cogeneration in the EU energy mix by ensuring that cogeneration is prioritized for all thermally generated electricity and heat, in so doing avoiding wasting valuable energy.
- The contribution of CHP to the energy mix varies greatly among European countries, from less than 5% in Malta, Cyprus, and Greece, to more than 30% in Denmark, Finland, Latvia, Lithuania, and Slovakia. Overall at the European level, cogeneration has remained stable during the past few years.
- Europe’s CHP industry is found in industrial applications, providing power and steam to industries such as pulp and paper, aluminium, chemicals, ceramics, glass, textiles, food & drink to steel manufacturers.
Germany to Dominate the Market
- Germany, Europe’s largest economy, has set a clear ambition for CHP with a dedicated law and target of 120 TWh by 2025. The country has experienced real CHP growth, Germany derives 16% of its electricity from cogeneration, well above the European average of 11%.
- Throughout Europe, several high-profile CHP projects have come up, are under construction, or have been green-lighted. One of the largest is the municipal cogeneration project underway in the port city of Kiel, about 90 kilometers north of Hamburg, Germany.
- Germany upgraded its support scheme, introducing guaranteed premiums that spurred investments in large district heating networks. Key industries in refining and chemicals followed smaller retail businesses with suitable heat loads.
- Micro-CHP units for individual homes have also come on the market in the past few years, both in Germany and across Europe. Hence, with growing initiative for the promotion of CHP in the country, is expected to drive the demand for CHP market over the forecast period.
Europe combined heat and power market is moderately fragmented. Some of the key players in this market include 2G Energy AG, General Electric Company, Siemens AG, Mitsubishi Hitachi Power Systems Europe, Ltd., and Engie SA.
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1.2 Market Definition
1.3 Study Assumptions
4.2 Market Size and Demand Forecast in USD billion, till 2025
4.3 Recent Trends and Developments
4.4 Government Policies and Regulations
4.5 Market Dynamics
4.6 Supply Chain Analysis
4.7 Porters Five Force Analysis
4.7.1 Bargaining Power of Suppliers
4.7.2 Bargaining Power of Consumers
4.7.3 Threat of New Entrants
4.7.4 Threat of Substitute Products and Services
4.7.5 Degree of Competition
5.1.3 Industrial and Utility
5.2 Fuel Type
5.2.1 Natural Gas
5.2.5 Other Fuel Types
5.3.2 United Kingdom
5.3.4 Rest of Europe
6.2 Strategies Adopted by Leading Players
6.3 Company Profiles
6.3.1 2G Energy AG
6.3.2 General Electric Company
6.3.3 Siemens AG
6.3.4 Mitsubishi Hitachi Power Systems Europe, Ltd.
6.3.5 Engie SA