Executive Report: Combined Heat and Power (CHP) Market and its Contribution to Sustainable Development Goals
The Combined Heat and Power (CHP) market is undergoing a significant transformation, driven by global imperatives for energy efficiency and the reduction of carbon emissions. As a decentralized energy solution, CHP technology is critical for achieving several United Nations Sustainable Development Goals (SDGs), particularly in power-intensive sectors. This report analyzes the market’s trajectory, drivers, and segmentation, with a specific focus on its alignment with SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation, and Infrastructure), SDG 11 (Sustainable Cities and Communities), SDG 12 (Responsible Consumption and Production), and SDG 13 (Climate Action).
Market Overview and Growth Projections
Market Valuation and Forecast
The global Combined Heat and Power (CHP) market is projected to grow from a valuation of USD 289.0 million in 2025 to USD 479.5 million by 2032. This expansion represents a compound annual growth rate (CAGR) of 7.5% during the forecast period.
Contribution to SDG 7 and SDG 13
The growth of the CHP market is intrinsically linked to global sustainability targets. By generating electricity and capturing otherwise wasted heat for use, CHP systems significantly increase energy efficiency. This directly supports:
- SDG 7 (Affordable and Clean Energy): By improving the efficiency of energy conversion, CHP reduces fuel consumption, making energy more affordable and sustainable.
- SDG 13 (Climate Action): The enhanced efficiency leads to a substantial reduction in greenhouse gas emissions compared to conventional separate heat and power generation, directly addressing climate change mitigation.
Key Market Drivers and Strategic Developments
Supply-Side Dynamics and Technological Advancement
Strategic actions on the supply side are enhancing market readiness and contributing to SDG 9 (Industry, Innovation, and Infrastructure) by fostering sustainable industrial technologies.
- Increased Production Capacity: Manufacturers expanded CHP plant setups by approximately 12% in 2024, with significant capacity additions (over 30 MW) in the Asia Pacific region, notably China and India.
- Competitive Pricing: Technological advancements have led to an average system cost reduction of nearly 8% in 2024, improving accessibility for mid-sized enterprises and accelerating the adoption of efficient infrastructure.
Demand-Side Trends and Sectoral Adoption
Surging demand across various sectors underscores the market’s role in promoting SDG 12 (Responsible Consumption and Production).
- Industrial Sector Dominance: Industries such as chemicals, textiles, and food processing accounted for over 40% of total market revenue in 2024, reflecting a shift towards more responsible and efficient production patterns.
- Growth in Micro-CHP Systems: A 20% year-over-year sales growth for micro-CHP units in North America indicates a rising preference for decentralized energy generation in residential and small commercial buildings, contributing to SDG 11 (Sustainable Cities and Communities).
Market Segmentation Analysis
By Product Type
- Gas Turbine CHP
- Steam Turbine CHP
- Reciprocating Engine CHP
- Fuel Cell CHP
- Others
By End-User Industry
- Industrial
- Commercial
- Institutional
- Residential
- Others
By Application
- Power Generation
- Heating
- Cooling
- Combined Applications
Regional Market Analysis and Opportunities
Regional Coverage
- North America: U.S., Canada
- Latin America: Brazil, Argentina, Mexico, Rest of Latin America
- Europe: Germany, U.K., Spain, France, Italy, Benelux, Denmark, Norway, Sweden, Russia, Rest of Europe
- Asia Pacific: China, Taiwan, India, Japan, South Korea, Indonesia, Malaysia, Philippines, Singapore, Australia, Rest of Asia Pacific
- Middle East & Africa: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates, Israel, South Africa, North Africa, Central Africa, Rest of MEA
High-Impact Opportunities and Alignment with SDGs
Specific segments and regions present significant opportunities for growth that align with key SDGs.
- Industrial Sector: The chemical manufacturing segment offers a prime opportunity for CHP systems to increase energy efficiency by 30-40%, directly advancing SDG 9 and SDG 12.
- Commercial and Residential Buildings: Investment in micro-CHP solutions is growing, with a 22% installation growth rate in North America in 2024, supporting the development of sustainable infrastructure under SDG 11.
- Asia Pacific Region: Rapid industrialization and clean energy programs in countries like China and India are driving over 15% annual increases in CHP adoption, fostering sustainable industrial growth (SDG 9) and cleaner energy systems (SDG 7).
Competitive Landscape and Corporate Strategies
Leading Market Participants
- Wärtsilä
- Siemens
- GE
- 2G Energy
- Aegis Energy Services
- Bosch Thermotechnology
- Kawasaki Heavy Industries
- Viessmann Werke
- FuelCell Energy
- Veolia
- Clarke Energy
- CAPSTONE TURBINE
- Caterpillar
- Yanmar
- ABB
- Edina
- Wolf GmbH
- Atlas Copco
- Tecogen Inc.
- Innovate Steam Technologies
Strategic Initiatives and Innovation
Leading companies are adopting strategies that advance SDG 9 by investing in research and development for sustainable technologies. For instance, Siemens’ use of AI-based predictive maintenance has reduced operational costs by 25%, while Wärtsilä’s development of flexible fuel solutions, including biofuels, expanded its market share in Asia Pacific by approximately 10% in 2024, promoting cleaner fuel use in line with SDG 7.
Emerging Trends and Future Outlook
The CHP market is evolving with several key trends that further strengthen its alignment with global sustainability goals.
- Integration with Renewables: A significant shift towards integrating CHP with renewable energy sources like biomass and biogas, which accounted for nearly 18% of new capacity in 2024, directly supports SDG 7.
- Smart Grid Compatibility: The move towards smart grid integration allows CHP units to optimize energy output, enhancing grid stability and creating more resilient and sustainable energy systems for cities (SDG 11).
- Decentralization and Digitalization: The adoption of decentralized energy models improves energy resilience, while digitalization and predictive analytics enhance operational efficiency, both of which are key components of building resilient infrastructure under SDG 9.
Analysis of Sustainable Development Goals in the Article
1. Which SDGs are addressed or connected to the issues highlighted in the article?
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SDG 7: Affordable and Clean Energy
The article is centered on Combined Heat and Power (CHP) systems, which are presented as a key technology for “increasing energy efficiency” and promoting “decentralized and sustainable energy production.” It discusses the integration of CHP with “renewable energy sources” and the growth of the market for these technologies, directly aligning with the goal of ensuring access to affordable, reliable, sustainable, and modern energy for all.
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SDG 9: Industry, Innovation, and Infrastructure
The article highlights the adoption of CHP systems in “power-intensive sectors such as manufacturing, commercial buildings, and district heating.” It emphasizes “technological advancements,” “enhanced R&D investments,” and the retrofitting of industries to be more sustainable. This connects to building resilient infrastructure, promoting inclusive and sustainable industrialization, and fostering innovation.
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SDG 11: Sustainable Cities and Communities
The text refers to the use of CHP in “district heating” and the growth of “micro-CHP systems in residential and small commercial buildings.” It also points to the role of “decentralized energy models” in improving “energy resilience,” particularly where grid infrastructure is unreliable. These points relate to making cities and human settlements more sustainable and resilient.
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SDG 12: Responsible Consumption and Production
The core benefit of CHP technology discussed in the article is its ability to improve energy efficiency, which directly supports sustainable consumption and production patterns. By reducing “industrial energy wastage” and increasing “overall energy efficiency by 30-40%,” CHP systems promote the efficient use of natural resources (fuels).
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SDG 13: Climate Action
A primary driver for the CHP market, as stated in the article, is the need to address climate change through “stringent carbon emissions regulations globally” and the “rising impetus on lowering carbon emissions.” The adoption of high-efficiency CHP technology is presented as a direct response to these climate-related regulatory frameworks, such as the “European Green Deal.”
2. What specific targets under those SDGs can be identified based on the article’s content?
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SDG 7: Affordable and Clean Energy
- Target 7.2: Increase substantially the share of renewable energy in the global energy mix. The article supports this by noting the market shift “towards integration with renewable energy sources such as biomass and biogas, which accounted for nearly 18% of new CHP capacity globally in 2024.”
- Target 7.3: Double the global rate of improvement in energy efficiency. The entire article focuses on CHP as a technology that improves energy efficiency. It explicitly states that CHP systems have the “scope… to increase overall energy efficiency by 30-40%” in the industrial segment.
- Target 7.a: Enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure and clean energy technology. The article mentions “government incentives and subsidies” and “enhanced R&D investments” as key factors accelerating the deployment of CHP technology.
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SDG 9: Industry, Innovation, and Infrastructure
- Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies. The article provides a direct example: “a 15% increase in CHP retrofitting projects across European manufacturing clusters.”
- Target 9.5: Enhance scientific research, upgrade the technological capabilities of industrial sectors. This is supported by mentions of “technological innovation, particularly in fuel cells and micro-CHP systems,” and strategic initiatives like “Siemens’ integration of AI-based predictive maintenance solutions.”
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SDG 11: Sustainable Cities and Communities
- Target 11.6: Reduce the adverse per capita environmental impact of cities. The adoption of CHP in “commercial buildings” and for “district heating” helps reduce the energy footprint and carbon emissions in urban areas.
- Target 11.b: Increase the number of cities and human settlements adopting and implementing integrated policies and plans towards… mitigation and adaptation to climate change, resilience to disasters. The article points to the adoption of “decentralized energy models” to enable “improved energy resilience” where grid infrastructure is weak, which is a key aspect of climate adaptation and resilience.
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SDG 12: Responsible Consumption and Production
- Target 12.2: Achieve the sustainable management and efficient use of natural resources. CHP technology directly contributes to this target by significantly increasing energy efficiency, thereby reducing the amount of fuel (a natural resource) needed to produce heat and power.
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SDG 13: Climate Action
- Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article cites “Regulatory frameworks such as the European Green Deal” and “stringent carbon emissions regulations” as primary market drivers, showing the integration of climate goals into policy.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
Yes, the article provides several quantitative and qualitative indicators that can be used to measure progress:
- Share of renewable energy in new capacity: The article states that renewable sources like “biomass and biogas… accounted for nearly 18% of new CHP capacity globally in 2024,” which can serve as a proxy for Indicator 7.2.1 (Renewable energy share).
- Improvement in energy efficiency: The potential for CHP systems to “increase overall energy efficiency by 30-40%” in industrial settings is a direct measure of progress towards Target 7.3.
- Market growth and adoption rates: The article provides several metrics that indicate the adoption of sustainable technology, including:
- The market size projection to “reach USD 479.5 million by 2032” with a “CAGR of 7.5%.”
- Expansion of CHP plant setups “by approximately 12% in 2024.”
- “Over 15% annual increases in CHP adoption” in countries like China and India.
- A “20% year-over-year growth” in micro-CHP sales in North America.
- Investment in technology and retrofitting: The “15% increase in CHP retrofitting projects” and “enhanced R&D investments” by leading companies serve as indicators for Target 9.4 and 9.5.
- Cost reduction of clean technology: The “average system cost” for CHP units reducing “by nearly 8% in 2024” due to technological advancements is an indicator of increasing accessibility of sustainable technology.
- Reduction in operational costs and emissions: The mention of a “25% reduction in operational costs” from AI-based solutions implies greater efficiency and indirectly, lower emissions, which relates to Indicator 9.4.1 (CO2 emission per unit of value added).
4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article.
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 7: Affordable and Clean Energy |
7.2: Increase share of renewable energy.
7.3: Double the rate of improvement in energy efficiency. |
Share of new CHP capacity from renewable sources (stated as “nearly 18%… in 2024”).
Potential increase in overall energy efficiency (stated as “30-40%” in industrial segment). |
| SDG 9: Industry, Innovation, and Infrastructure |
9.4: Upgrade infrastructure and retrofit industries to make them sustainable.
9.5: Enhance scientific research and upgrade technological capabilities. |
Increase in industrial retrofitting projects (stated as “15% increase in CHP retrofitting projects”).
Investment in R&D and adoption of advanced solutions (e.g., “AI-based predictive maintenance”). |
| SDG 11: Sustainable Cities and Communities | 11.b: Increase adoption of plans for climate change mitigation and resilience. | Adoption of decentralized energy models to improve energy resilience. |
| SDG 12: Responsible Consumption and Production | 12.2: Achieve sustainable management and efficient use of natural resources. | Reduction in industrial energy wastage through high-efficiency CHP systems. |
| SDG 13: Climate Action | 13.2: Integrate climate change measures into policies and planning. | Market growth driven by regulatory frameworks (e.g., “European Green Deal,” “stringent carbon emissions regulations”). |
Source: openpr.com
