On-Grid Combined Heat and Power Market Size, Share & Trends Analysis Report By Capacity, By Application, By End-User, By Region And Segment Forecasts 2026 – 2035

On-Grid Combined Heat and Power Market Size, Share and Trends 2026 to 2035

According to MarketnReports, the global On-Grid Combined Heat and Power Market size was estimated at USD 25.74 billion in 2025 and is expected to reach USD 38.01 billion by 2035, growing at a CAGR of 3.97% from 2026 to 2035. On-Grid Combined Heat and Power Market is driven by increasing demand for energy efficiency and supportive government policies for cogeneration.

What are the Key Insights of the On-Grid Combined Heat and Power Market?

• The global On-Grid Combined Heat and Power Market was valued at USD 25.74 billion in 2025 and is projected to reach USD 38.01 billion by 2035.
• The On-Grid Combined Heat and Power Market is anticipated to grow at a CAGR of 3.97% during the forecast period from 2026 to 2035.
• The On-Grid Combined Heat and Power Market is driven by rising energy costs and regulatory incentives for efficient cogeneration.
• In the capacity segment, 5-10 MW dominates with a 32% share due to its balance of scalability and suitability for industrial and district heating applications.
• In the application segment, industrial dominates with a 55% share because of high heat demand in manufacturing processes.
• In the end-user segment, manufacturing industries dominate with a 60% share owing to the need for reliable on-site power and heat.
• Asia Pacific dominates the On-Grid Combined Heat and Power Market with a 40% share attributed to rapid industrialization and government support for energy efficiency in China and India.

What is the On-Grid Combined Heat and Power Market Industry Overview?

The On-Grid Combined Heat and Power Market involves the generation of electricity and useful thermal energy from a single fuel source, with the electricity fed directly into the public grid. This market focuses on cogeneration systems that achieve higher efficiency than separate heat and power production by capturing waste heat. Market definition refers to the global industry encompassing on-grid CHP plants and technologies, including natural gas turbines, reciprocating engines, and biomass systems, that supply power to the utility grid while providing heat for industrial or district applications, supporting energy security, cost savings, and reduced emissions through integrated energy production.

What are the Market Dynamics of the On-Grid Combined Heat and Power Market?

Growth Drivers

The On-Grid Combined Heat and Power Market is propelled by escalating energy costs and the push for higher efficiency, as CHP systems can achieve up to 90% efficiency compared to 30-50% for conventional power plants. Government incentives, tax credits, and mandates for reduced emissions encourage adoption, while industrial demand for reliable on-site power and heat supports grid stability. Additionally, integration with renewables and advancements in turbine technology lower operational costs, driving market expansion in both developed and emerging economies.

Restraints

High upfront capital costs for CHP installations, including equipment and grid interconnection, deter smaller users and slow deployment in cost-sensitive markets. Regulatory complexities and varying grid codes across regions complicate project approvals and feed-in tariffs. Moreover, competition from cheaper renewable alternatives and natural gas price volatility impact investment decisions, limiting growth in certain segments.

Opportunities

The shift toward decarbonization creates opportunities for biomass and hydrogen-blended CHP systems, aligning with net-zero goals and attracting green financing. Emerging markets offer potential through industrialization and district heating expansions, supported by policy frameworks. Furthermore, digitalization with AI for optimization and predictive maintenance can enhance performance, enabling new service models and higher returns.

Challenges

Ensuring reliable grid synchronization and compliance with evolving environmental standards requires ongoing technical upgrades. Supply chain disruptions for specialized components and skilled workforce shortages hinder project timelines. Additionally, public perception of fossil-based CHP as less sustainable necessitates education and hybrid renewable integrations to maintain relevance.

On-Grid Combined Heat and Power Market: Report Scope

Report Attributes	Report Details
Report Name	On-Grid Combined Heat and Power Market
Market Size 2025	USD 25.74 Billion
Market Forecast 2035	USD 38.01 Billion
Growth Rate	CAGR of 3.97%
Report Pages	220
Key Companies Covered	General Electric, Siemens AG, Mitsubishi Heavy Industries, Caterpillar Inc., 2G Energy AG, Veolia, and Others
Segments Covered	By Capacity, By Application, By End-User, and By Region
Regions Covered	North America, Europe, Asia Pacific (APAC), Latin America, and The Middle East and Africa (MEA)
Base Year	2025
Historical Year	2020 - 2024
Forecast Year	2026 - 2035
Customization Scope	Avail customized purchase options to meet your exact research needs.

What is the Market Segmentation of the On-Grid Combined Heat and Power Market?

The On-Grid Combined Heat and Power Market is segmented by capacity, application, end-user, and region.

By Capacity Segment. 5-10 MW emerges as the most dominant subsegment, followed by above 10 MW as the second most dominant. 5-10 MW leads due to its suitability for medium industrial and commercial loads, offering cost-effective efficiency; this dominance drives the market by balancing scale and flexibility for widespread adoption. Above 10 MW ranks second, ideal for large utilities, contributing to market growth through high-output applications in district energy.

By Application Segment. Industrial stands out as the most dominant subsegment, with commercial as the second most dominant. Industrial's dominance stems from continuous heat demand in processes; it propels the market by providing reliable on-grid power and waste heat recovery. Commercial follows, supporting buildings with combined needs, which advances the market by enabling energy cost savings.

By End-User Segment. Manufacturing industries is the most dominant subsegment, while power utilities ranks as the second most dominant. Manufacturing industries lead because of high energy intensity; fueling market growth through efficiency gains. Power utilities come second, integrating CHP for grid support, driving the market by enhancing stability.

What are the Recent Developments in the On-Grid Combined Heat and Power Market?

• In 2025, General Electric expanded its aeroderivative gas turbine portfolio for on-grid CHP applications, focusing on higher efficiency and lower emissions.
• In 2024, Siemens commissioned a new on-grid CHP plant in Europe using hydrogen-ready technology, supporting decarbonization goals.
• In 2025, Mitsubishi Heavy Industries introduced advanced micro-CHP systems for on-grid integration, targeting commercial sectors.
• In 2024, Caterpillar launched updated reciprocating engines for on-grid CHP with improved fuel flexibility.
• In 2025, 2G Energy secured multiple contracts for biogas-based on-grid CHP in Asia, expanding its global footprint.

What is the Regional Analysis of the On-Grid Combined Heat and Power Market?

Asia Pacific to dominate the global market.

Asia Pacific commands the largest share in the On-Grid Combined Heat and Power Market, driven by industrialization and energy demand. China, as the dominating country, leads with massive infrastructure investments and policies promoting efficient power generation.

North America follows with focus on reliability and emissions reduction. The United States dominates this region through incentives for industrial CHP and grid modernization.

Europe emphasizes sustainability under EU directives. Germany stands out as the dominating country, renowned for engineering excellence in CHP systems.

Latin America grows through resource-based industries. Brazil dominates, utilizing biomass for on-grid CHP in sugar and ethanol sectors.

The Middle East and Africa benefit from oil and gas diversification. Saudi Arabia leads as the dominating country, investing in CHP for industrial complexes.

What are the Key Market Players and Strategies in the On-Grid Combined Heat and Power Market?

General Electric. General Electric focuses on advanced turbine technology, investing in hydrogen-ready systems to meet decarbonization needs.

Siemens AG. Siemens AG emphasizes digital integration, expanding through service contracts for optimized CHP performance.

Mitsubishi Heavy Industries. Mitsubishi Heavy Industries prioritizes high-efficiency engines, targeting emerging markets for on-grid applications.

Caterpillar Inc. Caterpillar Inc. leverages global distribution, strategizing on fuel-flexible solutions for diverse end-users.

2G Energy AG. 2G Energy AG specializes in biogas CHP, pursuing partnerships for renewable on-grid projects.

Veolia. Veolia integrates CHP with waste-to-energy, focusing on district heating and industrial services.

What are the Market Trends in the On-Grid Combined Heat and Power Market?

• Increasing adoption of hydrogen and biogas for low-carbon on-grid CHP.
• Growth in digital monitoring for performance optimization.
• Expansion of micro-CHP in commercial and residential sectors.
• Focus on grid resilience and ancillary services from CHP.
• Rise in public-private partnerships for district energy.
• Emphasis on efficiency upgrades for existing installations.

What are the Market Segments and their Subsegments Covered in the Report?

By Capacity

• Up to 1 MW
• 1-5 MW
• 5-10 MW
• Above 10 MW
• Small-Scale
• Medium-Scale
• Large-Scale
• Micro-CHP
• Mini-CHP
• Others

By Application

• Industrial
• Commercial
• Residential
• District Heating
• Utilities
• Data Centers
• Hospitals
• Educational Institutions
• Government Buildings
• Others

By End-User

• Manufacturing Industries
• Commercial Buildings
• Residential Complexes
• Power Utilities
• Oil & Gas
• Chemical Plants
• Food Processing
• Hospitals & Healthcare
• Educational Facilities
• Others

By Region

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • UAE
  • South Africa
  • Rest of Middle East & Africa