According to the TechSci Research report, “On-Grid Combined Heat and Power Market – Global Industry Size, Share, Trends, Competition Forecast & Opportunities, 2030F”, the global On-Grid Combined Heat and Power (CHP) Market was valued at USD 25.61 billion in 2024 and is projected to reach USD 33.09 billion by 2030, growing at a CAGR of 4.21% during the forecast period. The market is experiencing significant growth due to increasing demand for reliable, efficient, and low-emission power solutions across a wide range of end-user industries including industrial, commercial, and institutional sectors.

Growing Focus on Energy Efficiency and Grid Reliability

The primary factor driving the market is the rising global emphasis on energy efficiency and the need to modernize aging power infrastructure. On-grid CHP systems are gaining popularity because they simultaneously generate electricity and useful thermal energy from a single fuel source—often natural gas—with system efficiency levels reaching up to 70–80%. This is substantially higher than traditional power generation methods that rely solely on electricity production. As a result, these systems reduce fuel consumption, operational costs, and greenhouse gas emissions.

CHP systems connected to the grid also provide operational flexibility and economic benefits by allowing excess electricity to be sold back to the grid. This not only creates an additional revenue stream but also helps stabilize electricity supply during peak demand. For industries and institutions such as universities, hospitals, data centers, and district heating plants, the value proposition of on-grid CHP is enhanced by the assurance of uninterrupted power and thermal energy availability.

Regulatory Support and Decarbonization Goals

Governments and regulatory agencies around the world are supporting the transition to cleaner energy systems by offering tax incentives, rebates, and subsidies for CHP adoption. The inclusion of CHP in energy efficiency and renewable energy policies reflects its strategic role in national energy strategies, particularly as countries work toward meeting their carbon neutrality targets.

As public and private sector organizations increasingly align their energy strategies with sustainability goals, CHP emerges as a cost-effective and practical transitional solution that bridges the gap between fossil fuels and renewable energy. Systems powered by natural gas, biogas, or hydrogen are particularly attractive for their relatively low emissions and high efficiency, making them suitable for integration into long-term clean energy planning.

Technological Innovation Enhancing Market Appeal

Technological advancements in CHP components—such as gas turbines, reciprocating engines, heat recovery systems, and smart control platforms—are significantly enhancing the reliability, efficiency, and cost-effectiveness of on-grid systems. Modern CHP solutions are now more compact, easier to install, and capable of seamless integration with existing infrastructure.

The incorporation of digital monitoring and energy management systems allows real-time performance tracking, predictive maintenance, and dynamic energy optimization, which further improves operational outcomes. These digital enhancements also support better grid coordination, allowing CHP systems to provide ancillary services such as frequency regulation and load balancing.

Decentralized Energy and Energy Security

The global shift toward decentralized energy generation is further propelling demand for on-grid CHP systems. These units act as resilient, localized energy hubs that not only fulfill on-site electricity and heating needs but also support the broader grid network. In areas facing frequent blackouts, energy instability, or high electricity tariffs, CHP systems provide a dependable alternative to traditional grid reliance.

Industries with continuous energy requirements—such as chemicals, food processing, pulp and paper, and metal manufacturing—are increasingly adopting on-grid CHP to reduce energy expenses and minimize disruptions. As economies worldwide continue to grow and energy demand intensifies, CHP will remain a key enabler of industrial competitiveness and energy resilience.

Natural Gas Leads as the Dominant Fuel Type

In terms of fuel type, the natural gas segment held the largest market share in 2024 and is expected to maintain its dominance through 2030. The widespread availability of natural gas, coupled with its clean-burning properties and high efficiency, makes it the preferred choice for on-grid CHP systems. Governments in several countries are actively promoting the switch from coal and oil to natural gas through favorable regulations, carbon pricing mechanisms, and infrastructure investments.

Natural gas-based CHP systems offer operational flexibility, serving both base load and peak load applications while maintaining high energy efficiency. They are particularly well-suited for urban environments, industrial parks, and institutional facilities where both electricity and heat are required consistently.

Additionally, advancements in gas engine and turbine design have significantly improved fuel conversion efficiency, system durability, and emissions control, making natural gas CHP systems more viable for long-term, large-scale deployment. The global expansion of liquefied natural gas (LNG) infrastructure and regional gas pipeline networks is also enhancing accessibility in previously underserved areas, further fueling growth in this segment.

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Asia Pacific Emerges as Fastest-Growing Regional Market

Regionally, Asia Pacific is projected to be the fastest-growing market for On-Grid Combined Heat and Power systems during the forecast period. Rapid industrialization, urbanization, and growing energy demand in emerging economies such as China, India, Indonesia, and Vietnam are key drivers of growth.

Governments across the region are investing heavily in energy infrastructure modernization and promoting energy-efficient technologies through national policies and incentive programs. The increasing focus on decarbonization and air quality improvement is encouraging the replacement of outdated power systems with high-efficiency CHP units.

Furthermore, the expanding availability of natural gas via domestic production, LNG imports, and cross-border pipeline networks is facilitating the wider adoption of CHP systems in the region. Countries like Japan and South Korea, which have mature infrastructure and strong sustainability agendas, are also leveraging CHP as part of their broader energy transition strategies.

Outlook

The global On-Grid Combined Heat and Power Market is poised for steady growth in the coming years, driven by a combination of environmental, economic, and policy factors. The rising emphasis on energy efficiency, coupled with growing concerns over energy security and carbon emissions, will continue to propel the adoption of CHP systems across industrial, commercial, and institutional segments.

As technologies advance and regulatory frameworks mature, on-grid CHP systems—particularly those powered by natural gas—will play an increasingly central role in shaping a more efficient, resilient, and sustainable global energy landscape.

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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