The North American power industry faces challenges of increased electricity demand, aging equipment and more stringent environmental standards. Frost & Sullivan, a marketing consulting and training company, is reporting an increased use of cogeneration or combined heat and power production (CHP)

To promote CHP system installation, governments are rolling out numerous incentives, subsidies, favorable emissions legislation and loan programs.

New analysis from Frost & Sullivan, the North American Cogeneration Market, finds the installed capacity of cogeneration systems will grow at a compound annual growth rate of 0.7 percent from 2008 to 2015, reaching 134,022 MW in 2015. The gas turbine segment anticipates higher growth compared to the steam turbine segment, as restrictions are likely to be imposed by federal global warming legislation.

The market also has received a boost from the increasing price of most fuels used in generating electricity. This increase, in turn, inflates the cost of production and electricity. This situation has spawned a need for a technology that offers greater efficiency of fuel conversion.

“The higher efficiencies and potential cost savings linked to cogeneration equipment encourage greater long-term investment in the market,” said Georgina Benedetti, Frost & Sullivan analyst.

However, the volatile price of natural gas that results in poor spark spread has caused several end-users to withhold investments in cogeneration equipment, such as gas turbines, until a more favorable politico-economic climate is achieved. To offset the influence of price fluctuations, vendors can invest in research and development to advance cogeneration systems that can use biomass as the fuel without compromising efficiency levels.

“In doing so, the vendors can enter the markets where there is plenty of biogas supply, high power demand and government incentives,” Benedetti said.