CHP – Creating Electric and Thermal Power
Published on : Tuesday 06-06-2023
Combined Heat and Power (CHP) is a productive and clean way to deal with creating electric power and thermal power from a solitary fuel source.
The global combined heat and power (CHP) systems market, valued at US$ 28,412.4 Mn in 2022, is forecast to grow at a CAGR of 4.7% to be valued at US$ 45,123.5 Mn from 2022 to 2032, according to a recent report by Future Market Insights, Inc. Growth is attributed to the increasing demand for electricity and power.
Cogeneration – also known as combined heat and power systems (CHP) – is a cluster of technologies primarily used for the concurrent generation of electricity and useful heat. This combined generation of heat and electricity is much more effective than a separate generation of electricity and useful heat in a way that CHP systems offer improved energy efficiency, reduced managing cost, low CO2 emission, and others.
CHP is a productive and clean way to deal with creating electric power and thermal power from a solitary fuel source. CHP produces power creation at or close to the end user's site so that the heat released out of power generation can be utilised to meet the user's heat necessities while the power produced meets all or a part of the site's energy needs. Applications with consistent electricity and thermal energy demand are great monetary focuses for CHP deployment.
Growing data center capacity as businesses operate more processes, handle complex analytics with increasing storage requirements for customer data and employ rich media. Handling such large data requires a continuous supply of reliable power making cogeneration systems of primary importance.
The high initial capital cost required for the installation of the CHP systems is one of the major factors that is expected to hamper the growth of the market over the analysis period.
Prominent drivers
The unprecedented economic growth around the world gives remarkable opportunities to the CHP Systems Market. Energy is quintessential for paving the way for nurturing economies. CHP units are deployed in many IT parks, schools, universities, hospitals, airports, malls, and commercial spaces to economically generate the electricity and power to be independent energy producers. The growing commercial sectors owing to economic inflation may increase the demand for electricity and power, which in turn, is expected to accelerate the CHP Systems market over the analysis period.
Regions with high electricity costs are readily adopting CHP systems primarily to save on their energy cost to provide base load power and use such systems to provide absorption cooling for the facility. Moreover, government initiatives to install CHP systems in data center facilities, due to low CO2 emissions, is also expected to increase its adoption rate thereby increasing the adoption of CHP systems in data centers.
Low economic life of data center IT equipment results in consumer reluctance towards the adoption of CHP systems for data centers since these systems have an equipment life of around 10-15 years in comparison to the economic life of IT equipment which is only 2-3 years.
Enormous carbon emission has adversely affected the overall ecology causing a rise in sea level and temperature. Several governments and private entities are persistently working to mitigate rising carbon emissions by adopting highly efficient, clean, and sustainable energy technology, which is anticipated to augment the market. Combined heat and power market units are highly efficient in terms of overall performance. It can achieve an efficiency of over 85% to meet the rising demand for space heating and cooling and hot water while providing electricity to supplement the grid.
For instance, in February 2018, the United Kingdom Government’s Department of Business, Energy & Industrial Strategy updated that the utilisation of cogeneration systems can reduce carbon discharge by up to 30% in contrast with other conventional technologies
Challenges faced by CHP systems industry
CHP project implementation requires considerable capital investment, which is not feasible without any government funds or assistance that may hinder the combined heat and power market growth. Varying prices between different prime mover technologies create reluctance among customers to shift from existing alternatives. Furthermore, prime mover technologies operating on other fuels, such as natural gas, diesel, and hydrogen, may also inhibit the market pace.
Another biggest challenge for installing a CHP plant is the high initial capital cost required for installation. In addition to the power generation equipment such as prime mover, generator systems, and others, CHP plants also require additional equipment such as heat exchangers, absorption chillers, boilers, and other equipment. The cost of a conventional CHP plant can be almost 240% more than that of a power generation plant of the same capacity and prime mover, making it a major restraint for the CHP market.
Maintenance costs of CHP systems are also high due to the complex assembly of the system, which includes different components such as prime mover, heat recovery system, and heat and steam pipes. Regular maintenance of all the components is needed to achieve the high efficiency of the CHP, which raises the overall maintenance costs.
CHP systems in Asia-Pacific region
According to Future Market Insights, Asia-Pacific is expected to grow with lucrative growth opportunities for CHP Systems Market and is expected to reach a significant share of 14.2% in 2022. The Asia-Pacific market is expected to grow due to rapid industrialisation, urbanisation, and economic growth in the region, leading to the installation of new CHP systems in various emerging economies.
The CHP market is expected to grow in countries such as China and India due to infrastructural expansions, ongoing power generation projects, and technological innovations. Investments in large new gas-fired cogeneration plants and large coal-fired plants, along with rising demand for electricity, are expected to drive the growth of the Asia Pacific CHP market over the next five years.
The region is the largest energy consumer globally, with China and India leading the growth in power generation and consumption. CHP has tremendous potential in the Asia Pacific, mainly due to the rapid economic growth in China and the transition from coal-based generation to gas-fired power generation.
Role of start-ups
There are many prominent market players in the market such as ClearCell Power, H3CHP, Enexor Bioenergy, Lerta, and RESET, among others, that are working hand-in-hand to provide the best-in-class CHP systems for enhancing the global arena. However, there are many global start-ups, which are stepping forward in matching the requirements of the CHP Systems domain.
Founded in 2015, ClearCell Power offers combined heat and power systems that enable the onsite generation of electrical and thermal energy. The technology improves energy efficiency as it requires less fuel while eliminating transmission and distribution losses. It further minimises the emission of greenhouse gases (GHGs). Energy startups are working on CHP fuel cells that utilise a range of sources, including natural gas, coal, hydrogen, and biomass.
Established in 2016, Canadian startup H3CHP develops cogeneration solutions for the energy industry. The startup’s biomass gasification technology converts wood waste, biosolids, solids, and other organic feedstocks into syngas. For greenhouse owners, the solution provides an ideal disposal method for biomass that also generates carbon dioxide to enhance crop growth. The residual heat is captured and redirected to the site for heating or processing needs.
(Based on a report on Combined Heat and Power Systems Market by Future Market Insights)