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

Market Overview

Global 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 refers to the segment of the energy industry focused on systems that simultaneously generate electricity and useful thermal energy from a single fuel source, with the electricity being supplied directly to the power grid. These systems are designed to achieve higher overall energy efficiency compared to conventional methods of separate heat and power generation. On-grid CHP systems are typically integrated into municipal, industrial, institutional, and commercial facilities where there is a consistent demand for both electricity and heat, such as in manufacturing plants, hospitals, universities, and large residential complexes.

Unlike off-grid CHP systems that operate independently, on-grid CHP solutions are connected to the main power distribution network, allowing excess electricity to be exported to the grid and ensuring a reliable backup supply during peak demand or maintenance. The core advantage of these systems lies in their ability to reduce fuel consumption and lower greenhouse gas emissions by utilizing waste heat that would otherwise be lost in traditional power generation. On-grid CHP installations often use natural gas, biogas, coal, biomass, or waste-derived fuels to drive turbines or engines, which generate power while capturing and repurposing heat for space heating, water heating, or industrial processes.

Key Market Drivers

Increasing Demand for Energy Efficiency and Decentralized Power Generation

The growing global focus on energy efficiency and decentralized energy systems is a primary driver for the on-grid combined heat and power (CHP) market. Governments, utilities, and industries are increasingly seeking integrated energy solutions that offer improved efficiency, reduced energy losses, and lower operational costs. On-grid CHP systems, which simultaneously generate electricity and useful thermal energy from a single fuel source, typically achieve total efficiencies exceeding 80%, compared to conventional systems that waste a significant portion of input energy as heat. This high efficiency is particularly valuable in urban areas and industrial zones where both electricity and heat are in high demand. As global electricity consumption rises, especially in emerging economies, grid-tied CHP systems offer a reliable and flexible alternative to large-scale centralized generation.

These systems can also relieve grid congestion and reduce transmission and distribution losses by generating power close to the point of use. Moreover, rising awareness among commercial and industrial end-users about the benefits of CHP, such as energy cost savings and enhanced resilience during grid outages, is further propelling adoption. Governments across developed and developing nations are supporting energy efficiency programs, offering incentives and policy frameworks to promote the installation of on-grid CHP systems. This aligns with broader global sustainability goals and climate action plans focused on reducing carbon emissions, improving energy access, and increasing the share of low-emission technologies in the energy mix. As more businesses and municipalities seek integrated energy strategies that reduce reliance on conventional power grids while maintaining connectivity for flexibility and backup, on-grid CHP systems are emerging as a preferred solution.

Their ability to serve as distributed energy resources (DERs) capable of grid support, load balancing, and even participating in demand response programs further enhances their appeal. The continued push for decarbonization, energy resilience, and efficiency is expected to accelerate the deployment of on-grid CHP systems across residential, commercial, and industrial sectors, establishing them as a cornerstone in the global transition toward smarter and more sustainable energy infrastructure. Global energy efficiency improvements could reduce energy demand by up to 30% by 2040. Decentralized power generation is expected to contribute over 40% of global electricity supply by 2030. Investments in energy-efficient technologies are projected to exceed USD 500 billion annually worldwide. More than 70 countries have national policies promoting energy efficiency and distributed energy systems. Global demand for decentralized energy solutions is growing at a CAGR of over 6%. Around 60% of new power capacity additions globally are expected to come from decentralized sources by 2030.

Supportive Government Policies and Incentives for Clean and Reliable Power Generation

Government support through policy frameworks, subsidies, and incentives plays a vital role in driving the adoption of on-grid combined heat and power systems. With increasing pressure to reduce greenhouse gas emissions and transition to low-carbon energy sources, many governments are introducing favorable policies that encourage the deployment of CHP technologies. These include tax credits, feed-in tariffs, low-interest financing schemes, grants, and regulatory support for grid interconnection. On-grid CHP systems are recognized for their ability to enhance energy security and reduce reliance on fossil fuel imports by efficiently utilizing local fuel sources, including natural gas and renewable biofuels.

In the face of aging grid infrastructure and rising electricity costs, CHP systems offer a resilient and cost-effective solution for end-users and utilities alike. Countries with ambitious climate targets are incorporating CHP technologies into their national decarbonization strategies, recognizing their role in reducing emissions while supporting grid stability. For example, regulatory mandates in some regions require utilities to purchase power generated from efficient CHP systems at favorable rates, which significantly boosts investment in this segment. Additionally, public-private partnerships and energy service companies (ESCOs) are increasingly promoting on-grid CHP projects by offering turnkey solutions to industries and municipalities.

Urban areas with district heating and cooling networks are particularly benefitting from on-grid CHP integration, as it allows for efficient and reliable energy distribution across dense populations. Moreover, in deregulated power markets, on-grid CHP systems provide operators the opportunity to sell excess electricity to the grid, creating a secondary revenue stream. These policy mechanisms not only improve project economics but also reduce the payback period, making CHP more accessible and financially attractive for a broad range of users. Governments are also promoting research and development initiatives to enhance CHP efficiency, reduce emissions, and integrate with renewable energy sources and smart grid technologies. As a result, on-grid CHP systems are gaining momentum as a strategic tool to achieve national energy objectives, attract investments, and foster technological innovation in clean and distributed power generation. Over 100 countries have introduced policies and incentives to promote clean and reliable power generation. Global government subsidies for clean energy exceed USD 250 billion annually. More than 70 countries have set net-zero or carbon neutrality targets by 2050, boosting demand for efficient power solutions. Feed-in tariffs, tax credits, and capital subsidies are available in over 80 nations to support combined heat and power (CHP) installations. Public funding for energy-efficient technologies is projected to grow at a CAGR of 6–7% globally through 2030. Clean energy transition plans are expected to attract over USD 4 trillion in global investments by 2040.

Rapid Industrialization and Growing Energy Demand in Emerging Economies

The accelerating pace of industrialization and urban development in emerging economies is a significant catalyst for the growth of the on-grid combined heat and power market. Countries across Asia-Pacific, Latin America, and parts of the Middle East and Africa are experiencing substantial increases in energy consumption driven by expanding manufacturing sectors, growing populations, and increasing urbanization. These trends are creating immense pressure on national grids and highlighting the need for efficient and reliable power solutions. On-grid CHP systems offer a compelling response to this demand by delivering both electricity and thermal energy at high efficiencies, which is especially valuable in energy-intensive industries such as chemicals, pharmaceuticals, pulp and paper, food processing, and textiles.

The ability to generate power on-site while maintaining connectivity to the grid provides operational flexibility and security, which is crucial for industries aiming to minimize downtime and improve productivity. Additionally, as many developing nations face challenges such as grid instability, peak demand shortfalls, and rising energy costs, on-grid CHP systems present an attractive alternative by reducing dependency on centralized generation and enabling local energy production. The scalability and modular nature of CHP units allow for tailored solutions that can meet varying energy demands across urban, semi-urban, and rural settings.

Governments in these regions are increasingly recognizing the strategic importance of decentralized power generation and are introducing initiatives to support CHP deployment through financial incentives, regulatory reforms, and public infrastructure investments. The shift toward industrial modernization, including automation and digitization, is also increasing energy intensity, which further underscores the value of integrated and efficient power systems like CHP. Furthermore, multinational companies operating in these regions are aligning with global sustainability targets and seeking energy-efficient solutions for their operations, boosting demand for on-grid CHP installations. As economic development continues to advance, the need for robust, clean, and cost-effective energy solutions will grow, positioning on-grid CHP systems as a vital enabler of sustainable industrial growth and energy access in emerging markets.

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Key Market Challenges

High Capital Investment and Long Payback Period

One of the primary challenges facing the on-grid combined heat and power (CHP) market is the substantial upfront capital investment required for system installation, integration, and maintenance. The implementation of CHP systems involves the deployment of sophisticated equipment such as gas turbines, reciprocating engines, heat recovery units, and grid integration mechanisms, all of which contribute to a significant initial financial burden for project developers, industries, and utilities. This challenge is particularly prominent in small and medium-sized enterprises (SMEs) and commercial facilities, where budgetary constraints often hinder the adoption of such technologies, even when long-term cost savings and energy efficiency gains are apparent.

Additionally, the payback period for on-grid CHP systems can extend over several years, which may deter investment, especially in regions or sectors that prioritize short-term returns. The return on investment (ROI) is highly dependent on fluctuating energy prices, fuel costs, local grid tariffs, and government incentives—factors that introduce financial unpredictability and discourage potential adopters. Moreover, the installation process is complex and requires skilled labor, careful planning, and system customization to ensure compatibility with existing infrastructure, which adds to the overall cost.

Even though the operational cost of CHP systems is generally lower compared to conventional systems, the initial capital outlay and slow ROI can result in reluctance among stakeholders to commit to long-term energy infrastructure upgrades. Furthermore, in markets where subsidies for conventional power generation are still in place, the relative financial advantage of on-grid CHP becomes less attractive. These economic barriers are compounded by limited access to financing options or lack of favorable lending terms in certain regions, particularly in developing economies. Financial institutions may view CHP projects as high-risk ventures due to technological complexity, regulatory uncertainty, and long amortization periods. In many cases, a lack of awareness or technical knowledge about the full economic and environmental benefits of CHP systems further hampers market penetration.

This financial challenge is not only slowing adoption but also limiting innovation and scale-up, particularly for smaller market participants. Without consistent policy support in the form of tax incentives, feed-in tariffs, or capital subsidies, the adoption rate of on-grid CHP solutions remains constrained. To overcome this challenge, there is a growing need for innovative financing models such as energy-as-a-service, leasing arrangements, or public-private partnerships that can reduce the financial burden on end users. However, until such mechanisms are widely adopted and integrated into national energy frameworks, high capital costs and long payback periods will continue to be a major restraint in the expansion of the on-grid combined heat and power market across various sectors and geographies.

Complex Regulatory Environment and Grid Integration Issues

Another significant challenge impeding the growth of the on-grid combined heat and power (CHP) market is the complex regulatory environment and the technical difficulties associated with grid integration. On-grid CHP systems require seamless coordination with utility infrastructure to ensure efficient energy dispatch, system reliability, and adherence to grid codes—tasks that are complicated by inconsistent or outdated regulations across different jurisdictions. The lack of a uniform regulatory framework for distributed energy resources often results in bureaucratic delays, permitting hurdles, and uncertain compliance requirements for project developers. These regulatory inconsistencies can discourage potential investments and create an uneven playing field for CHP deployment.

In many regions, utility companies exert considerable influence over energy policy and may be resistant to the integration of decentralized generation sources like CHP, especially when it threatens their traditional business models or revenue streams. Furthermore, grid codes in several countries are designed primarily for centralized energy systems and may not adequately accommodate the bidirectional power flow and dispatch flexibility offered by on-grid CHP units. This mismatch can result in operational inefficiencies, grid instability, or even technical rejections of CHP projects by transmission and distribution operators.

The technical challenge of synchronizing the output of CHP systems with grid demand also requires advanced control systems, load forecasting algorithms, and real-time monitoring infrastructure—all of which add complexity and cost to project implementation. In addition, limitations in local grid capacity or outdated electrical infrastructure can restrict the ability of CHP systems to feed power into the grid, thereby reducing the economic viability of such installations. Regulatory barriers related to interconnection standards, licensing procedures, metering policies, and revenue-sharing mechanisms further complicate the integration process. The absence of standardized procedures for grid access, especially for small and medium-sized CHP units, often deters new market entrants and hinders innovation.

Moreover, fluctuating policies related to energy tariffs, carbon pricing, and renewable energy credits can create uncertainty in long-term planning, making it difficult for stakeholders to assess the financial returns and operational feasibility of CHP projects. In regions where grid support or incentives are weak or nonexistent, the lack of regulatory clarity and integration support acts as a major bottleneck. This challenge is exacerbated in developing economies, where policy frameworks are still evolving and grid infrastructure is often underdeveloped. Addressing these barriers requires close collaboration between governments, regulators, utility providers, and technology developers to establish consistent, transparent, and supportive regulatory mechanisms. Until such harmonization occurs, the complexity of regulatory environments and the difficulty of integrating CHP systems into existing grids will remain a formidable challenge for the widespread adoption of on-grid combined heat and power solutions.

Key Market Trends

Increasing Integration of Renewable Energy with CHP Systems

A major trend reshaping the on-grid combined heat and power (CHP) market is the increasing integration of renewable energy sources with CHP systems to enhance energy efficiency and sustainability. Traditional CHP systems, which primarily operate on natural gas or other fossil fuels, are now being hybridized with solar thermal, biomass, and biogas technologies to create hybrid energy systems that are both cleaner and more cost-effective. This trend is gaining momentum as countries worldwide commit to net-zero emission targets and decarbonization strategies. The integration of renewables into on-grid CHP setups not only reduces dependency on fossil fuels but also improves grid stability by providing consistent base-load power and thermal energy.

These hybrid systems are increasingly being adopted in urban and industrial zones to meet rising energy demands while minimizing environmental impact. In addition, government incentives, subsidies, and policy frameworks supporting renewable energy adoption are accelerating this trend, making it economically attractive for industries and utilities to invest in integrated CHP solutions. Technological advancements in energy management systems, automation, and smart grids are further enabling seamless synchronization between renewable inputs and CHP units, optimizing performance and reducing energy losses. Moreover, the development of advanced thermal storage technologies allows CHP systems to store excess heat generated from renewable sources, improving flexibility and dispatchability of power.

The ability of CHP systems to operate alongside solar PV installations or use biogas from waste treatment facilities also presents a circular economy opportunity, enhancing energy security and resource utilization. This trend is expected to continue gaining traction, particularly in developed nations and regions with high renewable energy penetration, as energy producers and consumers alike seek more resilient, cost-effective, and low-carbon energy solutions that align with sustainability goals.

Growth of Decentralized Energy Networks and Smart Grid Compatibility

The on-grid CHP market is witnessing a strong trend toward decentralized energy generation, with increased emphasis on local energy systems that are highly efficient, flexible, and grid-compatible. As urbanization accelerates and energy demands become more localized and complex, decentralized CHP systems are being deployed closer to the point of consumption in industrial parks, residential complexes, hospitals, and commercial facilities. This shift is supported by the evolution of smart grid technologies, which allow CHP units to interact intelligently with the main grid, respond to real-time demand changes, and contribute to load balancing.

Unlike centralized power stations, decentralized CHP systems minimize transmission losses and enhance energy reliability, making them an integral part of modern power networks. These systems offer the ability to function in both grid-connected and islanded modes, providing backup during grid outages while contributing to overall grid resilience. The compatibility of CHP systems with advanced grid technologies, such as demand response programs, digital metering, and automated control systems, enhances operational efficiency and supports dynamic energy pricing models. Moreover, decentralized CHP solutions are increasingly being viewed as enablers of energy democracy, allowing communities, municipalities, and private entities to produce and manage their own energy.

This decentralization trend also aligns with national energy security strategies, as it reduces reliance on centralized fossil-fuel-based power plants and diversifies the energy mix. The scalability of modular CHP systems, combined with easier regulatory approvals and faster deployment timelines, makes them attractive in regions with rapidly growing energy needs or limited grid infrastructure. As digital technologies continue to improve system monitoring, predictive maintenance, and energy analytics, decentralized CHP networks are becoming smarter, more autonomous, and capable of seamlessly integrating with distributed renewable energy sources, creating a robust and adaptable power infrastructure for the future.

Rising Adoption in Commercial and Institutional Sectors

A prominent trend in the on-grid combined heat and power market is the growing adoption of CHP systems in commercial and institutional sectors such as universities, hospitals, data centers, and government buildings. These sectors require continuous and reliable energy supplies for heating, cooling, and electricity, making them ideal candidates for CHP deployment. Unlike industrial facilities, which traditionally dominated the CHP market, commercial and institutional buildings are increasingly recognizing the operational cost savings, energy efficiency, and environmental benefits of on-site power generation. With electricity prices rising and concerns over power outages and grid instability increasing, organizations are investing in CHP systems to ensure uninterrupted operations and energy resilience.

Hospitals and healthcare facilities, in particular, benefit from CHP’s capability to maintain critical operations during grid failures, while universities are leveraging CHP systems to support large-scale campus energy needs and meet sustainability targets. Additionally, data centers are turning to CHP as a solution for reducing carbon footprints while ensuring high availability and reliability of power. The economic feasibility of CHP in these sectors is also being improved by favorable government incentives, energy performance contracting models, and utility rebate programs. Moreover, advancements in compact, modular CHP units allow for easier integration into space-constrained urban environments, further broadening the scope of applications. Institutional users are also increasingly adopting CHP as part of their decarbonization roadmaps, with some integrating it alongside solar PV and energy storage systems to achieve a hybrid and resilient energy ecosystem.

The trend is also supported by growing environmental, social, and governance (ESG) pressures on public institutions and commercial enterprises to reduce carbon emissions and report on sustainable energy practices. As awareness of long-term energy cost stability, emission reductions, and grid independence grows, the demand for on-grid CHP systems in the commercial and institutional sectors is expected to rise significantly in the coming years, transforming the landscape of energy generation and consumption across non-industrial domains.

Segmental Insights

Technology Insights

The Internal Combustion Engine segment held the largest Market share in 2024. The On-Grid Combined Heat and Power (CHP) Market in the Internal Combustion Engine segment is experiencing robust growth, primarily driven by the rising global demand for decentralized and efficient energy generation solutions. Internal combustion engines (ICEs), particularly gas and diesel engines, are increasingly preferred in on-grid CHP systems due to their high operational efficiency, cost-effectiveness, and quick start-up capabilities. These engines provide a reliable source of both electricity and thermal energy, making them ideal for applications in industrial facilities, commercial complexes, and institutions where continuous and stable power supply is critical.

The on-grid configuration allows excess power to be fed back into the public electricity network, enhancing energy security and optimizing energy use. The growing emphasis on reducing carbon emissions and improving energy efficiency is compelling governments and industries to adopt technologies that lower fuel consumption and greenhouse gas output. Internal combustion engines, when integrated with CHP systems, contribute to these goals by utilizing the waste heat generated during combustion processes, significantly improving overall system efficiency, which can reach up to 80% compared to the lower efficiency of conventional separate heat and power generation systems. Moreover, advancements in engine technology, such as the development of lean-burn engines, dual-fuel engines, and improvements in combustion control systems, are further enhancing the performance, fuel flexibility, and environmental sustainability of ICE-based CHP systems.

The internal combustion engine segment also benefits from the global expansion of natural gas infrastructure, which facilitates the widespread adoption of gas-powered CHP units, known for their cleaner operation and lower maintenance requirements compared to traditional coal-based systems. In addition, industries across manufacturing, food processing, pharmaceuticals, and textiles are investing in on-grid CHP systems powered by ICEs to reduce energy costs, enhance operational resilience, and meet regulatory compliance standards. The scalability and modular nature of internal combustion engine systems allow for easy integration into existing grids, supporting small to mid-sized power generation applications with minimal infrastructural changes.

Furthermore, rising electricity tariffs and grid instability in several regions are encouraging businesses to deploy CHP systems as a means of achieving energy independence while maintaining grid connectivity for surplus energy monetization. The ICE segment also finds strong support from government incentives, feed-in tariffs, and carbon credit programs aimed at accelerating the adoption of cleaner distributed energy technologies. Additionally, as the world moves towards energy transition and the adoption of hybrid and renewable-integrated energy systems, internal combustion engine-based CHP units are being seen as a reliable bridge technology, capable of ensuring consistent energy supply while integrating with variable renewable energy sources like solar and wind.

The continued focus on improving energy access, reducing emissions, and optimizing industrial energy usage is expected to sustain the momentum of the internal combustion engine segment within the on-grid CHP market. With increasing awareness of its economic and environmental advantages, the deployment of ICE-based on-grid CHP systems is set to grow steadily across both developed and emerging markets in the coming years.

Application Insights

The Residential segment held the largest Market share in 2024. The On-Grid Combined Heat and Power (CHP) Market in the residential segment is experiencing robust growth, primarily driven by the increasing demand for efficient and reliable energy solutions that reduce electricity bills while enhancing energy security. As residential energy consumption continues to rise due to population growth, urbanization, and the proliferation of energy-intensive appliances, homeowners and housing developers are seeking advanced technologies that offer both economic and environmental benefits. On-grid CHP systems, which simultaneously generate electricity and capture usable heat, present a highly efficient alternative to conventional power generation methods by utilizing fuel more effectively and reducing transmission losses.

These systems help residential users lower their dependence on the grid during peak demand, enabling better load management and energy optimization. The integration of smart grid technologies and net metering policies in many urban areas allows residential CHP owners to feed excess power back into the grid, providing economic incentives and enhancing the attractiveness of on-grid configurations. Additionally, growing concerns over rising energy costs and the desire for energy independence are pushing consumers to adopt micro-CHP systems, particularly in multi-family buildings, gated communities, and residential complexes. Government initiatives and subsidies aimed at promoting decentralized energy production and reducing greenhouse gas emissions are further accelerating adoption, especially in regions with supportive regulatory frameworks.

The push for sustainable living and the increasing awareness of carbon footprints are also influencing homeowners to invest in eco-friendly energy systems like CHP that contribute to a greener lifestyle. Advancements in compact, noise-reduced, and fuel-flexible CHP technologies are making them more suitable for space-constrained urban residences, while innovations in system design and automation have improved user experience and maintenance efficiency. Moreover, the ability of residential on-grid CHP systems to provide uninterrupted heating and power during grid outages enhances their appeal in areas prone to power instability or extreme weather events. The ongoing transformation of the residential energy landscape, combined with rising environmental consciousness and favorable policy support, is creating a favorable ecosystem for CHP deployment.

As building codes and energy efficiency standards become more stringent, integrating CHP systems into new residential developments is increasingly seen as a cost-effective and compliance-friendly solution. Furthermore, the synergy between residential CHP systems and renewable energy technologies, such as solar PV and battery storage, offers enhanced operational flexibility and energy resilience, encouraging more integrated energy models in smart home developments. Overall, the rising demand for cleaner, more efficient, and grid-integrated power solutions in residential settings is expected to remain a significant driver for the on-grid CHP market, positioning it as a key component of the future decentralized energy infrastructure.

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Regional Insights

Largest Region

The North America region held the largest market share in 2024. The On-Grid Combined Heat and Power (CHP) Market in the North America region is experiencing robust growth, primarily driven by the increasing emphasis on energy efficiency, grid stability, and the need for sustainable power generation solutions. As utilities and industries across the United States and Canada face growing pressure to reduce greenhouse gas emissions and transition to low-carbon technologies, on-grid CHP systems are emerging as a viable solution due to their ability to simultaneously produce electricity and useful thermal energy from a single fuel source.

This dual-generation capability significantly enhances overall system efficiency, often reaching levels above 80%, compared to conventional methods, thereby reducing fuel costs and energy waste. The North American market is also witnessing strong support from both federal and state-level governments through incentive programs, tax credits, and clean energy policies that encourage the adoption of distributed energy resources like CHP systems. Additionally, the aging power grid infrastructure in the region is prompting investments in more resilient and decentralized energy solutions, where on-grid CHP systems can contribute to local grid reliability and reduce transmission losses.

The industrial sector, particularly in chemicals, pulp and paper, food processing, and manufacturing, is increasingly adopting on-grid CHP systems to meet high thermal and electrical demands efficiently, while commercial establishments such as universities, hospitals, and data centers are utilizing CHP for enhanced energy security and cost savings. With rising electricity prices and fluctuating natural gas costs, the economic attractiveness of CHP installations has improved, especially in regions with favorable utility rate structures. The growing trend of decarbonization is also pushing utilities to integrate CHP into broader energy strategies that include renewable energy sources and grid modernization efforts.

Furthermore, technological advancements in CHP systems, including microturbines, fuel cells, and gas engines, are making on-grid deployment more feasible across a wider range of applications and capacities. These innovations, combined with digital monitoring and control systems, are enabling smarter, more efficient CHP networks that can operate in coordination with utility grids. North America’s focus on energy independence and grid resilience, especially in the wake of extreme weather events and power outages, is also contributing to a heightened interest in on-grid CHP installations, which can offer backup power and support demand response programs.

Additionally, large corporate players and public institutions are setting ambitious sustainability goals, which include lowering carbon footprints and adopting cleaner energy technologies—objectives that align closely with the benefits of CHP systems. The ongoing push for electrification of heating and cooling systems in buildings, paired with CHP’s ability to supply both power and heat efficiently, further cements its value proposition in the North American energy landscape. As regulatory frameworks continue to evolve in favor of cleaner, more efficient energy infrastructure, and as end-users prioritize long-term cost savings and energy resilience, the on-grid CHP market in North America is expected to maintain strong momentum and expand across various sectors in the coming years.

Emerging region:

South America is the emerging region in On-Grid Combined Heat and Power Market. The On-Grid Combined Heat and Power (CHP) Market in the emerging South American region is gaining momentum due to the growing need for efficient, reliable, and cost-effective energy solutions to support expanding industrialization and urban infrastructure. Countries like Brazil, Argentina, and Chile are witnessing increased demand for electricity and heat, driven by rapid economic development, industrial growth, and urban population expansion. The on-grid CHP systems offer an optimal solution by simultaneously generating electricity and thermal energy from a single fuel source, leading to improved energy efficiency and reduced operational costs—key advantages in regions facing power reliability issues and high energy prices.

Governments across South America are increasingly recognizing the potential of CHP technology to strengthen energy security and reduce dependence on centralized power grids that often struggle with transmission losses and outages. In addition, the region’s growing emphasis on reducing carbon emissions and promoting sustainable energy systems aligns well with the adoption of on-grid CHP, which utilizes cleaner fuels such as natural gas and biomass, offering significant environmental benefits. The modernization of industrial facilities and public infrastructure, particularly in sectors like food processing, chemicals, manufacturing, and healthcare, is also driving the need for distributed generation technologies that ensure uninterrupted energy supply while maintaining lower energy costs.

Moreover, favorable regulatory reforms, including incentives for energy-efficient technologies and infrastructure upgrades, are further accelerating the deployment of CHP systems across commercial and municipal sectors. The push for decentralized power generation, coupled with the rising share of renewable energy in national grids, creates an ideal environment for CHP systems that can provide grid stability, load balancing, and heat recovery—especially during peak demand periods. Technological advancements, increased availability of compact and modular CHP units, and growing awareness about the long-term economic benefits of combined heat and power solutions are also contributing to market growth. Furthermore, collaboration with international energy firms and technology providers is facilitating knowledge transfer and investment in modern CHP infrastructure, enhancing operational capabilities in both urban and remote areas.

As South American economies strive to improve energy access, cut down on import costs of power, and boost industrial competitiveness, the integration of on-grid CHP systems is becoming a strategic priority. The increasing focus on energy diversification and grid resilience, particularly in the wake of climate change-related disruptions and energy transition policies, positions the CHP market as a critical enabler of future energy systems. With rising energy demands, an urgent need for infrastructure efficiency, and favorable government initiatives, the on-grid CHP market in South America is expected to witness robust growth, transforming the region’s energy landscape through more sustainable, decentralized, and resilient power generation solutions.

Recent Developments

• In July 2024, GE Vernova Inc. announces the successful commencement of commercial operations at the Guangdong Huizhou Combined Heat and Power (CHP) plant, powered by two of its hydrogen-ready 9HA.01 combined-cycle power generation units. Operated by the Chinese state-owned utility Guangdong Energy Group Co., Ltd., the plant supplies up to 1.34 gigawatts (GW) of electricity to the grid and provides steam for industrial processes at the adjacent chemical complex in Huizhou, Guangdong Province. GE Vernova’s turbines are designed to co-fire with up to 10% hydrogen blended with natural gas, with this capability expected to be utilized within the next two years. 
• In July 2025, Brenmiller Energy Ltd. , a global leader in Thermal Energy Storage (TES) solutions for industrial and utility-scale customers, announced the development of a new version of its bGen TES platform, tailored specifically for nuclear small modular reactors (SMRs). SMRs, which generate up to 300 MW(e), are much smaller than conventional nuclear power plants and are built with modular components that offer increased flexibility and potentially lower costs. However, while SMRs are dependable for continuous baseload power generation, they often fall short in adapting to rapidly changing grid demands—a challenge the bGen system is designed to address. .
• In July 2024, Panasonic Corporation announced the launch of a demonstration project that uses heat generated by pure hydrogen fuel cell power as an energy source for an absorption chiller (air conditioning system). The experiment is being conducted at H2 KIBOU FIELD in Kusatsu City, Shiga Prefecture, where renewable energy powers production operations at the company’s hydrogen fuel cell factory.

Key Market Players

• 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.

Report Scope:

In this report, the Global On-Grid Combined Heat and Power Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• On-Grid Combined Heat and Power Market, By Technology:

o   Internal Combustion Engine

o   Gas Turbine

o   Microturbine

o   Fuel Cell

o   Stirling Engine  

• On-Grid Combined Heat and Power Market, By Application:

o   Residential

o   Commercial

o   Industrial  

• On-Grid Combined Heat and Power Market, By Fuel Type:

o   Natural Gas

o   Biomass

o   Coal

o   Renewable Energy

o   Waste Heat  

•  On-Grid Combined Heat and Power Market, By System Configuration:

o   Single-Heat

o   Dual-Heat

o   Multi-Heat  

• On-Grid Combined Heat and Power Market, By Region:

o   North America

§  United States

§  Canada

§  Mexico

o   Europe

§  France

§  United Kingdom

§  Italy

§  Germany

§  Spain

o   Asia-Pacific

§  China

§  India

§  Japan

§  Australia

§  South Korea

o   South America

§  Brazil

§  Argentina

§  Colombia

o   Middle East & Africa

§  South Africa

§  Saudi Arabia

§  UAE

§  Kuwait

§  Turkey

Competitive Landscape

Company Profiles: Detailed analysis of the major companies presents in the Global On-Grid Combined Heat and Power Market.

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Company Information

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