Cogeneration Equipment Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Technology (Gas Turbine-based Cogeneration, Steam Turbine-based Cogeneration, Reciprocating Engine-based Cogeneration, Fuel Cell-based Cogeneration), By Fuel Type (Natural Gas, Coal, Biomass, Others), By Application (Industrial, Commercial, Residential), By Region & Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 33.81 Billion
CAGR (2026-2031)	10.72%
Fastest Growing Segment	Biomass
Largest Market	North America
Market Size (2031)	USD 62.29 Billion

Market Overview

The Global Cogeneration Equipment Market is expected to grow from USD 33.81 Billion in 2025 to USD 62.29 Billion by 2031 at a 10.72% CAGR. Cogeneration equipment, often referred to as Combined Heat and Power, is defined as an integrated system that simultaneously generates electricity and useful thermal energy from a single fuel source to maximize operational efficiency. The primary drivers supporting market growth include the escalating global demand for energy conservation and rigorous government regulations mandated to lower industrial carbon emissions. These factors act as fundamental economic pillars for expansion, distinct from transient technological trends. Illustrating the robust development of renewable infrastructure often utilizing this technology, according to the 'World Bioenergy Association', in '2025', global biopower capacity reached 151 GW in 2024.

Despite the positive growth trajectory, the market faces a substantial impediment regarding the high initial capital investment required for deployment. The significant upfront costs associated with procuring and integrating these systems can prove prohibitive for cost sensitive industries. Additionally, navigating the technical and regulatory intricacies of interconnecting decentralized units with existing national power grids remains a formidable challenge that often delays project implementation and hinders broader adoption across emerging economies.

Key Market Drivers

The increasing demand for energy efficiency and grid resilience is a primary force propelling the global cogeneration equipment market. Industrial facilities and commercial institutions are aggressively adopting on-site power generation to mitigate rising electricity costs and protect operations against grid instability. This surge in implementation is evident in the financial performance of key market players who focus on clean energy infrastructure and distributed generation. For instance, according to Ameresco, August 2024, in the 'Second Quarter 2024 Financial Results', the company's total project backlog increased by 36% year-over-year to a record $4.4 billion, underscoring the robust appetite for comprehensive energy efficiency solutions. Manufacturers are continually scaling production to meet this heightened requirement for reliable, decentralized power systems that ensure operational continuity while reducing overall energy expenditure.

Simultaneously, the market is being reshaped by the accelerated adoption of renewable and low-carbon fuels driven by stringent environmental regulations. As governments enforce tighter emission limits, operators are transitioning from traditional fossil fuel-based combined heat and power (CHP) systems to units capable of utilizing hydrogen, biogas, and biomass. This structural shift towards decarbonization is significantly altering the fuel mix within the installed base. According to COGEN Europe, April 2024, in the 'Snapshot Survey', renewable energy sources currently account for more than 25% of all the primary energy used in cogeneration plants throughout the European Union. Reflecting the positive outlook for these adaptable technologies, according to 2G Energy AG, April 2024, in the 'Corporate News' release, the company raised its sales guidance for 2024 to between €360 million and €390 million, anticipating continued growth in the decentralized generating sector.

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Key Market Challenges

The high initial capital investment required for deployment constitutes a severe restriction on the "Global Cogeneration Equipment Market." Procuring the core prime movers, such as gas turbines or reciprocating engines, alongside the necessary heat recovery units, demands heavy upfront expenditure. This financial burden is further compounded by the substantial costs associated with balance-of-plant systems, engineering studies, and site preparation. Consequently, many industrial facilities and small-to-medium enterprises defer adoption, as they prioritize short-term liquidity over long-term energy savings, especially when facing extended payback periods and high interest rates.

This economic barrier directly stifles market expansion, particularly in cost-sensitive regions where securing financing for decentralized energy projects is difficult. The inability to overcome these steep entry costs prevents the technology from achieving its widespread potential despite its operational efficiency benefits. Highlighting this trend of restrained market penetration, according to the 'COGEN World Coalition', in '2024', the share of cogeneration in total global electricity generation remained stagnant at approximately 15%. This statistic underscores how financial impediments continue to limit the broader scalability of combined heat and power systems relative to other energy generation methods.

Key Market Trends

The emergence of hybrid cogeneration systems is rapidly developing as a dominant trend, characterized by the strategic coupling of combined heat and power units with renewable energy technologies and battery storage. This integration addresses the intermittency of solar and wind power by creating versatile microgrids that ensure continuous energy supply while optimizing fuel usage. Manufacturers are increasingly designing engines specifically for this balancing role, allowing facilities to switch between stored renewable energy and gas-based generation instantaneously. Highlighting the accelerating momentum of this technological synergy, according to Wärtsilä, February 2025, in the 'Financial Statements Bulletin 2024', both thermal balancing and battery energy storage experienced their highest levels of market activity to date in 2024, driven by the need to support renewable-led power systems.

Simultaneously, the rising utilization of trigeneration solutions is reshaping the market, particularly within the data center and healthcare sectors where cooling demands are critical. Unlike traditional cogeneration which focuses solely on heat and power, Combined Cooling, Heat, and Power (CCHP) systems utilize waste heat to drive absorption chillers, providing essential air conditioning and refrigeration without additional electricity consumption. This capability is becoming indispensable for managing the immense thermal loads of modern digital infrastructure while controlling operational costs. Underscoring the expanding scale of this sector which necessitates such efficient thermal management, according to the COGEN World Coalition, November 2024, in the report 'Meeting the energy needs of Data Centres: What role for cogeneration?', North American data centre inventory grew by 24.4% between Q1 2023 and Q1 2024.

Segmental Insights

The biomass segment represents the fastest growing category in the global cogeneration equipment market, driven by the intensifying global focus on carbon neutrality and circular economy principles. Industrial operators are increasingly adopting biomass-fired systems to convert agricultural and forestry waste into usable heat and power, thereby reducing reliance on conventional fossil fuels. This expansion is further supported by supportive frameworks from entities such as the European Commission, which incentivize the integration of sustainable bioenergy technologies to meet stringent environmental targets and ensure long-term energy security across the manufacturing sector.

Regional Insights

North America maintains a leading position in the global cogeneration equipment market, driven by the widespread availability of natural gas and a strong industrial focus on energy efficiency. The region benefits from established infrastructure in the manufacturing and chemical sectors, which utilize combined heat and power systems to lower operational costs. Additionally, stringent emissions standards set by the Environmental Protection Agency incentivize the adoption of cleaner energy technologies. This combination of favorable resource availability and regulatory support creates a stable environment for continued market expansion across the United States and Canada.

Recent Developments

• In November 2024, Caterpillar Energy Solutions signed a key account agreement with RSE s.r.o., a manufacturer of distributed cogeneration power plants based in the Czech Republic. This collaboration is designed to intensify the cooperation between the companies in the Central and Eastern European markets by utilizing MWM gas engines in RSE’s power plant solutions. The agreement aims to leverage the technical strengths of MWM engines to enhance the performance and reliability of distributed energy generation systems in the region. This partnership reflects the growing demand for flexible and efficient cogeneration equipment across European industrial sectors.
• In September 2024, Siemens Energy and the engineering group Sener were selected by Uniper to conduct a feasibility study for the decarbonization of the Scholven 1 combined heat and power (CHP) plant in Gelsenkirchen, Germany. The collaboration focuses on evaluating the technical transformation of the existing gas-fired facility to operate using hydrogen for its gas turbines and boilers. This research is a critical step in adapting the plant to future green energy standards while ensuring a reliable supply of district heating and electricity. The project underscores the industry's shift toward retrofitting established cogeneration assets for low-carbon operations.
• In August 2024, INNIO Group and its authorized distributor Clarke Energy announced a strategic partnership with Elsaco Electronic to modernize two major combined heat and power (CHP) plants in Romania. The project involves the deployment of eight Jenbacher J920 FleXtra engines, which are engineered to operate on natural gas with the capability to transition to hydrogen in the future. These units are set to deliver a total of 85 megawatts of electrical output and 80 megawatts of thermal energy to district heating networks in Arad and Constanța. This initiative aims to replace outdated infrastructure, significantly improving the efficiency and sustainability of the region's energy supply.
• In March 2024, Kawasaki Heavy Industries, Ltd. secured two consecutive orders for its gas turbine cogeneration systems from Sime Darby Energy Solutions Sdn. Bhd. in Malaysia. The new high-efficiency systems, which include a 5 MW class GPB50D and an 8 MW class GPB80D, were selected for installation at Intercontinental Specialty Fats Sdn. Bhd.’s production facilities in Selangor. By generating both electric power and steam on-site, the equipment is designed to reduce energy costs and lower carbon dioxide emissions for the factories. This collaboration highlights the continued expansion of Japanese cogeneration technology in the Southeast Asian industrial market.

Key Market Players

• BDR Thermea Group
• Mitsubishi Heavy Industries, Ltd.
• 2G Energy Inc.
• Clarke Energy Ltd.
• Capstone Turbine Corporation
• Innovative Steam Technology, Inc.
• Aegis Energy Services Inc.
• Kawasaki Heavy Industries, Ltd.

By Technology	By Fuel Type	By Application	By Region
Gas Turbine-based Cogeneration Steam Turbine-based Cogeneration Reciprocating Engine-based Cogeneration Fuel Cell-based Cogeneration	Natural Gas Coal Biomass Others	Industrial Commercial Residential	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Cogeneration Equipment Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Cogeneration Equipment Market, By Technology:

• Gas Turbine-based Cogeneration
• Steam Turbine-based Cogeneration
• Reciprocating Engine-based Cogeneration
• Fuel Cell-based Cogeneration

• Cogeneration Equipment Market, By Fuel Type:

• Natural Gas
• Coal
• Biomass
• Others

• Cogeneration Equipment Market, By Application:

• Industrial
• Commercial
• Residential

• Cogeneration Equipment Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE