“Combined heat and power applications provide an opportunity for end users to generate electricity and heat on a highly distributed and localized basis, reduce energy expenses, and ensure reliable power,” says research analyst Anissa Dehamna. “Moreover, in some cases, CHP can be integrated into smart grids.”

However, adds Dehamna, several market conditions must coincide in order to make CHP units a reasonable alternative to the grid or even other self-generation technologies. These conditions include appropriate matching of thermal and electrical output to the customer’s needs, cooperation of utilities for interconnection and other implementation requirements, classification of CHP as “renewable energy” for inclusion in government programs (not necessary, but helpful), relatively high thermal requirements (compared to electrical requirements), and high or volatile spark spreads.

Pike Research’s analysis indicates that the right factors are aligning in the market to create a significant growth opportunity for CHP over the next decade, and the firm forecasts strong growth in unit shipments and revenues between 2011 and 2021. Of the 8.5 million units forecast to be shipped during that period, Pike Research anticipates that more than 95% of the total unit volume will be micro CHP units for residential markets. However, due to the much higher average unit costs in the commercial, institutional, and industrial sectors, the revenue segmentation among the four major market sectors will be much more evenly distributed. Commercial market growth will be robust and will follow a similar pattern to the residential market, albeit at much lower volumes. The two most developed application groups for CHP are institutional and industrial, but growth in these groups will be moderated by high project costs and long lead times.


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