On-Grid Combined Heat and Power Market is expected to Grow with a CAGR of 4.21% through 2030

The On-Grid Combined Heat and Power Market is driven by increasing demand for energy efficiency, reduced carbon emissions, and reliable power supply across industrial and commercial sectors connected to national grids.

According to TechSci Research report, “On-Grid Combined Heat and Power Market – Global Industry Size, Share, Trends, Competition Forecast & Opportunities, 2030F”, the On-Grid Combined Heat and Power Market was valued at USD 25.61 Billion in 2024 and is expected to reach USD 33.09 Billion by 2030 with a CAGR of 4.21%. The On-Grid Combined Heat and Power (CHP) Market is experiencing robust growth, driven by the rising demand for energy-efficient and cost-effective power generation solutions across industrial, commercial, and institutional sectors. One of the primary factors fueling this growth is the increasing need to enhance energy security and reduce dependency on centralized grid systems, especially in regions with high electricity prices and aging infrastructure.

On-grid CHP systems provide a dual advantage by generating both electricity and useful thermal energy from a single fuel source, significantly improving overall system efficiency, often reaching efficiency levels of 70–80% compared to conventional power-only generation. This makes CHP highly attractive for facilities that have a consistent and substantial demand for electricity and heat, such as manufacturing plants, universities, hospitals, and district heating systems. The ability to connect to the grid enables these systems to export excess electricity, providing an additional revenue stream and enhancing grid reliability and flexibility. Furthermore, increasing pressure to reduce greenhouse gas emissions and adhere to stringent environmental regulations is pushing both private and public entities to adopt cleaner technologies, and CHP systems—particularly those utilizing natural gas, biogas, or hydrogen—are viewed as effective transitional solutions toward a low-carbon energy future.

Governments and regulatory bodies in several countries are offering incentives, tax benefits, and supportive policies to promote CHP adoption, which is further accelerating market penetration. The growing emphasis on sustainable energy strategies and carbon neutrality commitments is encouraging industries to invest in on-site, grid-connected CHP systems that not only reduce energy costs but also support environmental compliance. Technological advancements are also contributing to market growth, with newer CHP units offering better efficiency, reduced emissions, lower maintenance requirements, and seamless integration with existing energy infrastructure. Additionally, the rise of digital energy management platforms and smart grid technologies is enabling real-time monitoring, optimization, and control of CHP operations, thereby improving performance and reliability.

The market is also benefiting from the shift toward decentralized energy generation models, where on-grid CHP serves as a stable and resilient power source capable of supporting local energy needs while balancing grid supply and demand. In regions facing frequent grid instability or energy shortages, on-grid CHP systems act as a dependable backup, further solidifying their value proposition. The industrial sector, in particular, is recognizing the long-term cost advantages of CHP, especially in energy-intensive industries like chemicals, food processing, pulp and paper, and metallurgy, where continuous thermal and electrical loads are prevalent.

As global economies continue to recover and expand, the demand for reliable and efficient energy infrastructure will only intensify, positioning on-grid CHP systems as a vital component of future energy strategies. With increasing awareness of energy efficiency, environmental responsibility, and economic performance, the on-grid combined heat and power market is expected to witness sustained growth and widespread adoption across diverse end-user segments in the coming years.

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Based on the Fuel Type, Natural Gas segment held the largest Market share in 2024. The On-Grid Combined Heat and Power (CHP) Market in the natural gas segment is experiencing robust growth, driven by the increasing global emphasis on efficient energy utilization and the rising demand for cleaner, cost-effective power generation solutions. Natural gas, being a low-emission and high-efficiency fuel, has emerged as the preferred choice for on-grid CHP systems, particularly in urban and industrial environments where reliability, energy efficiency, and environmental compliance are critical.

Governments and regulatory bodies across various countries are promoting the adoption of cleaner fuels through policy support, subsidies, and incentives, making natural gas-based CHP systems more economically attractive. Additionally, the global transition toward sustainable energy is encouraging industries and utilities to shift away from coal and oil toward natural gas, further driving adoption. The flexibility of natural gas CHP systems to operate efficiently in both base load and peak shaving applications enhances grid stability and supports distributed generation models, making them ideal for integration with existing power infrastructure. Moreover, technological advancements in gas turbine and reciprocating engine design have significantly improved system performance, operational life, and emissions control, making modern natural gas CHP units more efficient and reliable.

The rapid expansion of gas pipeline networks and liquefied natural gas (LNG) infrastructure globally is improving access to natural gas, even in previously underserved regions, enabling wider deployment of CHP systems connected to the grid. In urban centers, natural gas CHP systems are increasingly being used for district heating and cooling, helping municipalities achieve their energy efficiency and climate goals. Industrial sectors such as chemicals, food processing, pulp and paper, and pharmaceuticals are also adopting on-grid natural gas CHP to lower their energy costs, reduce carbon emissions, and ensure uninterrupted power supply. Furthermore, rising electricity prices and the growing need for energy security are encouraging commercial and institutional facilities like hospitals, universities, and data centers to invest in CHP solutions powered by natural gas.

These systems not only provide substantial cost savings through cogeneration but also enhance power reliability, which is crucial for operations where downtime is unacceptable. In regions with mature power infrastructure, on-grid natural gas CHP systems serve as a resilient supplement to centralized grids, enabling load balancing and minimizing transmission losses. The convergence of environmental, economic, and technological factors is thus positioning natural gas as a cornerstone of on-grid CHP development. As global efforts to decarbonize the energy sector accelerate, the strategic role of natural gas in bridging the gap between traditional fossil fuels and renewable energy sources is expected to become even more prominent. This will continue to fuel the demand for on-grid CHP systems that can efficiently convert natural gas into electricity and thermal energy, offering a practical, scalable solution for clean and reliable power generation in both developed and developing economies.

Based on region, Asia Pacific is the fastest growing region in the On-Grid Combined Heat and Power (CHP) Market, driven by rapid industrialization, expanding urban infrastructure, and growing energy demand across countries like China, India, Japan, and South Korea. Governments in the region are actively promoting energy-efficient technologies and offering policy support for low-emission power solutions, creating a favorable environment for CHP adoption. Increasing investments in smart grid infrastructure and the availability of natural gas are further accelerating market growth. The region’s focus on sustainable development, energy security, and modernization of existing power systems positions it as a key growth hub for on-grid CHP systems.

Major companies operating in the Global On-Grid Combined Heat and Power Market are:

• Siemens Energy AG
• General Electric (GE)
• Caterpillar Inc.
• Mitsubishi Power, Ltd.
• MAN Energy Solutions SE
• Clarke Energy
• 2G Energy AG
• Bosch Thermotechnology
• Capstone Green Energy Corporation
• ABB Ltd.

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“The Global On-Grid Combined Heat and Power Market is expected to rise in the upcoming years and register a significant CAGR during the forecast period. The On-Grid Combined Heat and Power (CHP) Market is poised for robust growth, supported by the rising global emphasis on energy efficiency and low-emission power generation. Increasing urbanization and industrial expansion are driving demand for reliable on-grid electricity and thermal energy, particularly across commercial and industrial sectors. Regulatory support through decarbonization targets, financial incentives, and grid integration policies is accelerating CHP adoption. Additionally, the global shift toward decentralized energy infrastructure and efforts to modernize aging power grids are creating favorable market dynamics. Advances in turbine and engine technologies, coupled with improved access to natural gas, are further unlocking scalable deployment opportunities for on-grid CHP systems. Therefore, the Market of On-Grid Combined Heat and Power is expected to boost in the upcoming years.,” said Mr. Karan Chechi, Research Director of TechSci Research, a research-based global management consulting firm.

“On-Grid Combined Heat and Power Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented, By Technology (Internal Combustion Engine, Gas Turbine, Microturbine, Fuel Cell, Stirling Engine), By Application (Residential, Commercial, Industrial), By Fuel Type (Natural Gas, Biomass, Coal, Renewable Energy, Waste Heat), By System Configuration (Single-Heat, Dual-Heat, Multi-Heat), By Region, By Competition, 2020-2030F”, has evaluated the future growth potential of Global On-Grid Combined Heat and Power Market and provides statistics & information on the Market size, structure, and future Market growth. The report intends to provide cutting-edge Market intelligence and help decision-makers make sound investment decisions., The report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities in the Global On-Grid Combined Heat and Power Market.

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