India Combined Heat & Power System Market is Expected to Register a 6.69% CAGR Through 2031
Growing Industrial Energy Demand & Efficiency Needs
and Increasing Emphasis on Decarbonization & Climate Goals are likely to
propel the market during the forecast period.
According to
TechSci Research report, “India Combined Heat & Power System
Market – By Region, Competition, Forecast and Opportunities, 2021-2031F”, India Combined Heat & Power System Market was
valued at USD 515 Million in 2025 and is expected to reach USD 766 Million by
2031 with a CAGR of 6.69% during the forecast period.
. Government
support plays a pivotal role in shaping energy markets, and in India, a range
of policies and programs have been introduced to promote energy efficiency and
clean technology—making Combined Heat and Power systems increasingly viable.
The Indian government recognizes the value of CHP in enhancing energy security,
improving efficiency, and supporting environmental goals, and has designed
frameworks that encourage its adoption across various sectors.
One of the most influential mechanisms
is the Perform, Achieve, and Trade (PAT) scheme under the Bureau of Energy
Efficiency (BEE). This market-based mechanism incentivizes large
energy-intensive industries to improve energy performance. CHP systems offer a
cost-effective solution to help meet or exceed energy-saving targets under PAT,
with the added benefit of earning Energy Saving Certificates (ESCerts) that can
be traded on the market.
Financial incentives also play a vital
role. The Ministry of New and Renewable Energy (MNRE) and other agencies have
provided capital subsidies for biomass-based and bagasse-based cogeneration
systems. These incentives lower the upfront cost barriers, making CHP
installations more attractive to investors and project developers.
Beyond financial support, regulatory
approvals and policy directives are evolving to be more favorable toward
decentralized power generation. The Draft National Energy Efficiency Policy and
the National Bio-Energy Mission include cogeneration as a priority area.
Additionally, policies that allow for net metering, open access, and renewable
energy obligations indirectly benefit CHP systems that integrate with renewable
fuels.
State governments also play a key role,
with many offering additional support such as VAT exemptions, interest
subsidies, or special tariffs for cogeneration projects. In industrial states
like Maharashtra, Gujarat, and Tamil Nadu, proactive energy policies have
contributed to a growing base of CHP installations.
Capacity building and awareness programs
conducted by the government and industry associations further help in
demystifying CHP technology and improving investor confidence. These efforts
bridge knowledge gaps and encourage adoption among small and medium enterprises
(SMEs), which often lack access to technical expertise.
To summarize, the Indian government's
multi-faceted support—ranging from market-based incentives to regulatory reform
and financial aid—is a critical driver for the CHP market. It lowers barriers
to entry, enhances economic feasibility, and aligns the interests of industry,
environment, and energy policy.
Browse over XX Market
data Figures spread through XX Pages and an in-depth TOC on " India Combined Heat & Power System Market.”
Based
on End User, The industrial sector dominates the Combined Heat and Power (CHP)
system market in India due to its substantial and continuous demand for both
electricity and thermal energy, making CHP an ideal and efficient solution.
Industries such as chemicals, cement, paper, textiles, food processing, and
sugar manufacturing require large amounts of steam and electricity
simultaneously for their operations. CHP systems can efficiently meet these
dual energy needs by generating electricity and capturing the waste heat for
process heating or steam production, resulting in significant energy savings
and operational cost reductions.
One
of the primary reasons for CHP dominance in the industrial sector is the
economic advantage it offers. Industrial facilities typically operate around
the clock and have predictable energy requirements, which allow CHP systems to
run continuously and achieve high utilization rates. This consistent operation
improves the overall efficiency and financial returns of CHP investments.
Additionally, by generating power onsite, industries reduce their dependence on
the unreliable national grid, which can suffer from frequent outages and
voltage fluctuations. This on-site generation capability ensures enhanced
energy reliability and continuity, critical for industrial productivity and
minimizing downtime.
Many
Indian industries face high electricity tariffs and rising fuel costs, which
incentivizes them to adopt CHP systems that can reduce overall energy expenses
through improved fuel utilization. The government’s focus on energy efficiency
and emission reduction also encourages industrial adoption, offering incentives
under schemes like Perform, Achieve, and Trade (PAT). These regulatory
frameworks motivate industries to improve energy performance, with CHP systems
playing a key role in achieving those targets.
Based
on Region, North India is emerging as the fastest-growing region in the
Combined Heat and Power (CHP) system market due to several strategic economic,
infrastructural, and policy factors. This region encompasses key industrial and
commercial hubs such as Delhi, Haryana, Punjab, Uttar Pradesh, and Rajasthan,
which collectively contribute significantly to India’s manufacturing and
service sectors.
One
of the primary drivers of CHP growth in North India is the high concentration
of energy-intensive industries. Sectors like textiles, chemicals,
pharmaceuticals, food processing, and sugar mills have a strong presence here.
These industries require both reliable electricity and process heat, making CHP
systems an attractive option to enhance energy efficiency and reduce
operational costs. The region’s large industrial base creates sustained demand
for cost-effective, on-site energy solutions.
Another
factor is the expansion of natural gas infrastructure in North India. The
government has prioritized the development of city gas distribution networks
and gas pipeline connectivity in this region, providing industries with
improved access to cleaner and more affordable fuel sources essential for
operating CHP units. This expanded fuel availability supports the economic
viability of cogeneration projects.
Policy
support and incentives from state governments in North India have encouraged
investments in energy efficiency and renewable energy technologies, including
CHP. These include capital subsidies, favorable tariffs, and streamlined
regulatory approvals that reduce barriers for project developers and industrial
users.
The
region also benefits from power supply challenges and grid constraints, which
motivate industries to adopt decentralized energy solutions. CHP systems
provide enhanced energy reliability and resilience by generating power and heat
on-site, reducing dependence on the often unstable grid.
Major companies
operating in the India Combined Heat & Power System Market are:
- Caterpillar
Inc.
- General
Electric Company
- Siemens AG
- Cummins Inc.
- Mitsubishi
Heavy Industries, Ltd.
- ABB Ltd.
- MAN Energy
Solutions SE
- Wartsila
Corporation
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“The Combined Heat & Power system
market in India presents a significant opportunity driven by rising industrial
energy demand, increasing focus on energy efficiency, and supportive government
policies. With growing emphasis on decarbonization and sustainable practices,
CHP systems offer a reliable solution for reducing energy costs and carbon
emissions. Expanding natural gas infrastructure and the integration of
renewable fuels further enhance the market potential. Additionally, the
emergence of modular and decentralized CHP technologies opens avenues across
commercial, residential, and institutional sectors. As industries seek
resilient, cost-effective power solutions, the Indian CHP market is poised for
robust long-term growth.” said Mr. Karan Chechi, Research Director of TechSci
Research, a research-based global management consulting firm.
“India Combined Heat
& Power System Market, By Prime Mover (Gas &
Steam Turbine, Reciprocating Engine, Fuel Cell, Microturbine), By Capacity (30
kW to 1 MW, 1.1 MW to 5 MW, 5.1 MW to 10 MW, Above 10 MW), By End User
(Industrial, Utilities, Commercial, Others) By Region, Competition, Forecast
& Opportunities, 2021-2031F”,
has evaluated the future growth potential of India Combined Heat & Power
System Market and provides statistics & information on 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 India Combined Heat & Power
System Market.
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