Boosted by growing electricity demand and increasing environmental awareness, Europe’s Combined Heat and Power (CHP) installed capacity will climb from an estimated 202 Gigawatts (GW) in 2014 to 245 GW by 2020, at a Compound Annual Growth Rate (CAGR) of 3.2%, forecasts research and consulting firm GlobalData.

According to the company’s latest report*, steam turbines dominated Europe’s CHP installed capacity with a share of 66% in 2013, while gas turbine power plants accounted for 10%.

The European steam turbine market value is now set to increase further over the forecast period, from $1.72 billion in 2013 to $1.75 billion by 2020, at a CAGR of 0.3%, says GlobalData. Meanwhile, the gas turbine market value will enjoy higher growth, from $862 million in 2013 to $1.47 billion by 2020, at a CAGR of 3.5%.

Sowmyavadhana Srinivasan, GlobalData’s Senior Analyst covering Power, says: “With its strict emission and carbon savings targets, coupled with its focus on decentralized energy, Europe is comfortably the biggest market for CHP installations. Russia alone boasts a huge CHP installed capacity and depends on this technology to meet a large share of its heat requirements.”

As electricity prices continue to rise, GlobalData believes that an increasing number of industries are considering CHP as an alternative for power generation, due to the option of using both natural gas and biomass as fuel.

“The waste heat collected in CHP plants can also be used for district heating, which will lead to significant long-term cost savings. This is expected to fuel the ongoing growth of Europe’s CHP market in the coming years,” Srinivasan concludes.