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North American Combined Heat/Power to Grow Through 2020, Report Says

With strong governmental support, natural gas- and steam-based combined heat/power (CHP) systems are expected to continue to increase their share of the power generation market, replacing retired coal-fired CHP generation on the grid.

The installed capacity of CHP in North America is expected to increase from an estimated 93.5 GW this year to 115.9 GW in 2020, representing a compound annual growth rate of 3.6%, according to a report from GlobalData, a market research/consulting firm.

Natural gas turbines continue to have the majority share of CHP at 61%, with steam turbine technology representing the remaining 39%. However, GlobalData's analysis predicts that the gas share will lessen, although it should continue to represent the majority of the CHP market in 2020.

Gas turbine CHP systems are projected to increase in market value from $486 million to $1.21 billion by 2020, representing a compound annual growth of 13.5%, while steam turbine CHP will grow at a 15.3% annual compound rate ($314 million to $827 million).

"Both the United States and Canada have been pushing for the use of clean energy sources and CHP technology," said GlobalData Senior Analyst Sowmyavadhana Srinivasan. "The U.S. government set a target to increase the total CHP installed capacity by 40 GW by 2020, while Canada has been providing many incentives at the provincial level for heat and energy conservation, making investments in CHP very attractive."

The United States is promoting the use of CHP for renewable installed capacity as a number of coal-based CHP power plants are being decommissioned or shifted to biomass technology to reduce the use of coal-fired generation plants.

Last year, a report commissioned by the American Gas Association (AGA) projected that CHP growth could boost gas demand up to 4.42 Tcf annually based on the U.S. government's goal of adding 40 GW of CHP (see Daily GPI, June 3, 2013). Consulting firm ICF International completed the study for AGA.

In September, the U.S. Department of Energy (DOE) and Environmental Protection Agency (EPA) jointly published a guide for more CHP use in the nation's building stock. It said that following Hurricane Sandy a year earlier, CHP enabled a number of "critical infrastructure and other facilities to continue their operations when the electric grid went down.

"Time and again, CHP has proved its value as an alternative source of power and thermal energy during emergencies." DOE/EPA called CHP a means of making the national power grid "more resilient in the wake of extreme weather events."

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