Globally increasing electricity demand coupled with rising application in renewable energy is anticipated to drive cogeneration equipment market over the next seven years. The market is expected to grow at an estimated CAGR of 9% over the next seven years. Rising energy prices is expected to remain a key driving factor for market growth.
Cogeneration or combined heat and power (CHP) systems are used to simultaneously generate both electricity and heat energy from a single fuel source such as natural gas, biomass, wood, coal, waste heat, or oil. CHP systems can operate at levels as high as 77% to 81% as compared to around 46% efficiency of conventional systems and they can reduce carbon emissions by up to 29% as compared to conventional systems.
Increasing renewable energy projects in developing regions of Asia Pacific and Latin America is expected to fuel demand over the forecast period. Natural gas is the most widely used fuel in combined heat and power (CHP) systems. It is available in abundant quantity, particularly in Russia, the U.S., Canada, Iran and Qatar. Decreasing price and abundant availability of natural gas, supportive government policies along with aging infrastructure are expected to drive CHP equipment demand in the near future.
CHP is commonly used across a wide variety of applications including residential buildings, oil & gas production facilities, small and large scale industries, and commercial applications such as hospitals, universities and shopping complexes. Cogeneration systems have applications in both the industrial and commercial sector, and even in smaller residential applications. The heat generated from cogeneration plants is used in a wide range of applications including industrial processes and space and water heating
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CHP equipments include gas turbines, steam turbines, electric generators, heat recovery steam generators (HRSG), boilers and reciprocating engines. These systems are segmented on the basis of micro or small-scale and large-scale systems depending on the requirement of the customers.
Increasing application scope of CHP systems in end-use industries such as paper, food, chemical, oil and refining industry owing growing electricity demand is anticipated to compliment equipment demand over the forecast period. It is gaining wide popularity owing to benefits such as low operational cost by replacing higher priced electricity and boiler fuels with low cost power and heat energy.
High initial investment requirement along with difficulty in proper utility connection are some of the major restraints for this market. In the long term, these systems are beneficial but due to their complex technological requirements, its initial cost is very high as compared to conventional systems and many small and medium sized organizations and institutions find it difficult to afford them.
Europe is expected to exhibit highest growth rate over the forecast period owing to wide natural gas availability in countries such as Germany and Russia. Cost and space restraints in major cities along with stringent environmental regulations are anticipated to drive demand in the region over the next seven years.
Asia Pacific is expected to witness significant growth over the forecast period owing to increasing CHP systems demand from industrial sector in countries such as China, India and South Korea. Growing power sector in India to meet rapidly rising energy demand is expected to drive demand in the Asia Pacific region.
North America is expected to witness surge in demand owing to factors such as strict environment norms regarding electricity consumption coupled with shift towards renewable energy. Middle East and Africa are expected to grow at a moderate growth rate over the forecast period.
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