Press Release

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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