CNG COMPRESSORS MARKET SIZE & SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The CNG Compressors Market size is expected to reach USD 5.92 billion by 2030, from USD 3.46 billion in 2023, at a CAGR of 8% during the forecast period. CNG compressors are mechanical devices used to pressurize natural gas to the optimum pressure levels for efficient storage and transportation as compressed natural gas (CNG). CNG is used as a clean and economical alternative fuel for vehicles like buses, trucks, taxis and personal cars. CNG compressors enable fast and reliable refueling at CNG stations for natural gas vehicles. Key drivers of the CNG compressors market include increasing adoption of natural gas vehicles, expansion of CNG refueling infrastructure and stringent emission control regulations.

The CNG Compressors Market is segmented by type, lubrication method and end user. By type, the market is segmented into reciprocating, rotary screw, rotary centrifugal and other types. Reciprocating compressors account for the largest share as they provide suitability for small to medium flow capacity applications in CNG stations involving multiple short frequent refueling events.

Global CNG Compressors Market Regional Insights

• North America is expected to be the largest market for CNG Compressors Market during the forecast period, accounting for over 38% of the market share in 2023. The growth of the market in North America is attributed to shale gas availability and growing adoption of NGVs like transit buses and waste collection trucks.
• The Asia Pacific market is expected to be the second-largest market for CNG Compressors Market, accounting for over 32% of the market share in 2023. The growth of the market in APAC is attributed to large vehicle population and government initiatives to expand CNG infrastructure.
• The Europe market is expected to be the fastest-growing market for CNG Compressors Market, with a CAGR of over 9% during the forecast period. The growth of the market in Europe is attributed to emission reduction targets and incentive schemes for purchasing NGVs.

Figure 1. Global CNG Compressors Market Share (%), by Region, 2023

Global CNG Compressors Market Drivers

Natural gas demand growth:

• Natural gas demand has been increasing steadily over the past few years driven by its clean burning properties and abundance as an energy source. Many countries are shifting their energy mix towards natural gas which is driving growth for natural gas vehicles and infrastructure. For instance, natural gas demand grew by 4.6% in 2018 as per EIA. This is leading to rapid development of CNG stations and rise in CNG vehicle sales globally. More CNG vehicles on road directly uplifts the need for CNG compressors at refueling stations. With forecast of strong natural gas demand growth ahead, the CNG compressors market outlook remains positive.
• The global natural gas demand is projected to grow at a CAGR of 1.6% from 2018 to 2024 as per International Energy Agency (IEA). This steady demand growth of natural gas will necessitate the expansion of downstream infrastructure including CNG stations and associated compressors. The abundant natural gas reserves and supply due to rising production capacity also favors the natural gas demand outlook. Moreover, natural gas scores over other fossil fuels in terms of lower carbon and particulate matter emissions. Many governments are expanding their natural gas infrastructure and promoting use of natural gas as transportation fuel. With natural gas positioned as the transition fuel before the world moves to zero emission energy system, the demand growth potential remains robust. This will continue to provide impetus to CNG compressor sales globally.

Stringent emission regulations:

• Government regulations on emissions from automobiles are getting stricter each passing year. Emission norms like Euro 6, BS-VI mandate steep cut downs in permissible NOx and particulate matter emissions from diesel and gasoline engines. This is leading OEMs to explore alternative fuel options for meeting the challenging emission targets. Natural gas scores on emission reduction and can enable automakers meet the tightening vehicle emission regulations.
• Natural gas combustion results in 25% lower greenhouse gas emissions than diesel or gasoline as per NGVA Europe. CNG vehicles can reduce particulate emissions by up to 90% compared to diesel while NOx emissions are also lowered drastically. This makes natural gas powered vehicles an effective tool for reducing urban air pollution. The superior emission performance is driving demand for NGVs and this transition necessitates growth in CNG refueling infrastructure.
• Government bodies like the European Commission are targeting deployment of natural gas vehicles as a priority area. The EC aims to deploy 1,000 CNG refueling points for trucks across Europe by 2025 under its Alternative Fuels Infrastructure Directive. Such favorable regulations and incentive programs for NGVs indirectly boost the market potential for CNG compressors. With BS VI in India, EU Stage V in Europe and stringent norms in North America, the outlook on natural gas vehicle adoption and associated CNG station infrastructure remains strong.

Preference over gasoline and diesel:

• Natural gas is increasingly being preferred as a greener and more economical alternative to traditional gasoline and diesel fuels. With volatile crude oil prices, natural gas provides relative price stability for running automotive engines. The global abundance of shale gas and expanding production capacities have also helped natural gas cement its position as a viable alternative fuel.
• CNG offers comparable power, torque and cruising range to gasoline engines at a lower running cost. The pricing dynamics tilt favorably towards natural gas with governments also promoting NGVs by way of tax incentives. The lower total cost of ownership is thus driving adoption of CNG vehicles. For instance, in the US around 40% of new garbage trucks run on CNG. Transit and school buses are also transitioning to natural gas as fuel. This transition will drive the need for more CNG fueling infrastructure and compressors. Service providers are also targeting fleet owners to convert their fleets to NGVs or dual fuel systems. The economics and abundance of natural gas make it an attractive automotive fuel globally. This will continue to provide growth opportunities to CNG compressors market over the coming decade.

Supportive government initiatives:

• Many governments especially across Asia, Europe and Americas are undertaking initiatives to develop natural gas infrastructure and promote use of natural gas vehicles. Under India's City Gas Distribution (CGD) initiative, the government aims to expand CNG infrastructure to cover 70% of the population. The impetus on NGVs is also visible in target setting for automakers whereby a certain fraction of their portfolio must be NGVs.
• The New Alternative Fuel Vehicle Credit in the US provides tax incentives for purchasing NGVs and setting up refueling equipment. 25C tax credit per GGE (gasoline gallon equivalent) of CNG is extended as incentive. There are also preferential policies on parking and tolls in cities like London and Berlin for NGVs. The Alternative Fuel Vehicle Participation program by Canadian Government provides C$10,000 incentive per new NGVs added to a commercial fleet. Such favorable regulations and incentive mechanisms focused on higher NGV penetration support growth of CNG station infrastructure and allied compressors.

Global CNG Compressors Market Opportunities

Shale gas boom across North America:

• The shale gas revolution has dramatically increased natural gas production capacities, especially in the US and Canada. As per EIA estimates, shale gas accounts for around 40% of total natural gas production in North America. The massive natural gas reserves present an opportunity to position natural gas as a mainstream transportation fuel in the continent. Abundant gas availability helps provide price stability in the long run.
• The weakly oil-linked natural gas prices in North America provide cost competitiveness against gasoline and diesel fuels. This makes the economics work favorably for CNG vehicle adoption. More natural gas use in transportation can be promoted leveraging the shale gas boom. Automakers are already launching pickups and SUVs factory fitted with CNG fuel systems eyeing this opportunity. The initiative of major corporations to switch their fleets to NGVs is also gathering steam. As more vehicles switch to natural gas, the refueling infrastructure must keep pace. This will drive substantial demand for gas compressors at the rapidly expanding CNG stations tapping into the shale gas potential.

Development of small scale LNG infrastructure:

• While CNG addresses natural gas use for vehicles with city and regional movement, LNG is being targeted as the fuel for long haul trucks. LNG provides higher energy density and thus larger operational range making it suitable for heavy duty trucks. The liquefaction process enables optimized storage and transportation of natural gas as well. Building large centralized LNG terminals requires substantial investments, thus the focus has shifted to small scale liquefaction plants.
• These mini LNG facilities located close to natural gas pipelines can serve as hubs for LNG distribution to truck terminals and direct fleet refueling. It requires just 20% of the capital costs incurred for large terminals. The small scale plants also help optimize logistics and development of LNG refueling points along key trucking routes. This decentralized approach for kickstarting LNG infrastructure provides a shot in the arm for natural gas demand as trucking fuel. It will drive adoption of gas compressors as LNG needs to be regasified before being dispensed to vehicles. As small scale LNG plans proliferate globally, it provides an excellent revenue stream for CNG compressor manufacturers.

Leveraging biogas potential through upgrading:

• Biogas produced from organic waste streams like agricultural residue, distillery wastewater or municipal waste provides a renewable source of methane. Biomethane can be produced by removing impurities like CO2 and H2S from biogas in a process called biogas upgrading. The resulting biomethane has properties similar to natural gas and hence can directly substitute it as a transportation fuel. Biomethane usage also provides additional environmental benefits related to waste management and reduction in GHG emissions.
• Many European countries like Germany, Sweden and France have formulated policies to actively promote biogas and biomethane production. The gas distribution infrastructure has also been upgraded in parts of Europe to handle injection of renewable biomethane. As much as 97% of the biomethane produced in Europe is used as transportation fuel. Biogas upgrading plants require gas compressors for compression of raw biogas feed as well as pressurization of biomethane output. There is potential for CNG compressor manufacturers to consolidate their share in the biogas value chain. The gradually expanding biogas production and upgrading industry provides an additional growth avenue for compressors on top of conventional natural gas demand.

Integration of IoT and Industry 4.0:

• CNG compressors are mission critical elements of refueling infrastructure requiring high uptime and reliability. Unplanned outages or suboptimal performance has substantial cost implications. This has led manufacturers to integrate IoT and data analytics into compressor systems for real-time monitoring and predictive maintenance. Sensors track key parameters like vibration, temperature and flow in real-time. Cloud connectivity enables data transmission for diagnostics using AI algorithms.
• OEMs are increasingly offering such smart compressors with compression-as-a-service business model rather than just selling the asset. Compressor performance data coupled with operator inputs helps predictive analysis that forecasts maintenance needs. Overhaul planning thus becomes driven by actual condition rather than arbitrary time-based schedules. Such digitalization solutions unlock significant potential for optimizing efficiency and minimizing downtime. This opens up opportunities for aftermarket services and long term revenue streams via performance based contracts for OEMs. With the Industry 4.0 wave accelerating, smart compressors present an important evolution opportunity.

CNG Compressors Market Trends

High pressure compressor systems:

• Conventional CNG refueling stations operate compressors at 250 to 350 bar pressure levels. But with advancement in composite storage cylinders, onboard storage pressure in vehicles has increased. OEMs are deploying Type IV cylinders capable of 500 bar storage pressure. High pressure storage enables faster refueling and increases onboard CNG capacity. This has led to demand for higher capacity compressors that can support fast fill applications.
• Manufacturers are developing compressor systems designed for stable 500 bar fast fill compressed natural gas (FF-CNG) dispensing. The higher flow capacity cuts down refueling time to achieve par with liquid fuels. Some of these ultra-high pressure units also feature advanced connectivity and automation features. Adoption of such high pressure compressors aligns the CNG refueling experience closer to conventional fuels. This can help address consumer perception issues regarding refueling time for CNG vehicles. The trend of developing FF-CNG solutions will accelerate with more natural gas vehicles adopting high pressure cylinders.

Oil-free and magnetic bearing compressors:

• Conventional lubricated compressors used in gas refueling applications pose contamination risks from oil carryover. This necessitates additional investment in specialized filters to remove oil aerosols from the CNG stream. Oil-free compressors eliminate this capital intensive filtration need while also providing reliability benefits. Magnetic bearings present another enhancement opportunity replacing maintenance intensive mechanical bearings.
• Magnetic bearings employ magnetic levitation that avoids metal-to-metal contact seen in traditional bearings. It eliminates need for lubrication while also enabling high speed operation. The inexhaustible life of magnetic bearings results in drastic reduction in downtime costs. Compressor manufacturers are increasingly deploying these technologies in their portfolio to better serve the exacting demands of gas refueling infrastructures. Oil-free and magnetic bearing compressors will be an integral part of next-gen refueling stations.

Emergence of hydrogen-natural gas blends:

• As the hydrogen economy gains traction, blending hydrogen in natural gas pipelines is seen as a transition strategy. Blending low fractions of hydrogen (5-20%) with natural gas is a safe, pragmatic starting point for introducing hydrogen. This can accelerate clean hydrogen utilization until dedicated hydrogen infrastructure develops.
• Gas utilities in Europe and North America are piloting hydrogen-natural gas blends for establishing technical feasibility. The blended fuels can then directly use the existing natural gas infrastructure including storage, pipelines and refueling stations. This prevents the need for immediate and massive investment into full-fledged hydrogen value chain. However, the impact of hydrogen blending on the durability and performance of compressors needs to be evaluated. This opens up an R&D opportunity for CNG compressor firms. The gradual move to hydrogen-natural gas blends will emerge as a notable trend in coming times.
• Development of game changing technologies: While positive displacement and dynamic compressors dominate the current landscape, research efforts are ongoing on potential step change technologies. For instance, electrochemical compression employs a hydrogen pump that pressurizes gas without moving parts. It combines an electrolyzer with a fuel cell in the same enclosure enabling high pressure gas output. Such revolutionary concepts can help overcome reliability challenges and high compression costs.
• Researchers are also working on trying to separate methane from natural gas without mechanical compression. This relies on complex materials like metal-organic frameworks (MOFs) that exploit unique molecular sieving behavior. While such innovations have only been demonstrated at laboratory scale currently, the potential exists for radically advancing the state of the art. CNG compressor incumbents are ramping up their R&D budgets to tap into such promising concepts that could disrupt status quo in the long term. But in the short to medium term existing technologies still present abundant growth run way.

Global CNG Compressors Market Restraints

• High compression costs: The gas compression process for CNG applications requires large, high-powered motors and robust industrial grade compressors. This entails considerable upfront capital expenditure which is a barrier for wider CNG infrastructure proliferation. The power consumption of these compressors running day and night is also substantial adding to operating costs.
• Lack of standardization: There is a high degree of fragmentation seen across geographies in terms of governing specifications for CNG fueling stations. Countries follow different standards regarding gas composition, fuel quality parameters, flow meter accuracy, storage tank design etc. Even pressure rating within regions like APAC vary widely from 250 bar to 500 bar limiting interoperability.
• Emergence of battery powered electric vehicles: Battery technology innovation has enabled wider adoption of electric vehicles globally. Many governments are also setting aggressive e-mobility targets and promoting EVs through financial incentives. EVs provide certain consumer benefits like acceleration, low maintenance and convenience of home charging. The perception of EVs aligning more closely with sustainability goals has also aided their cause.

Figure 2. Global CNG Compressors Market Share (%), By Type, 2023

Recent Developments:

New product launches

• Atlas Copco unveiled its GHS VSD+ range of oil-free screw compressors in April 2022 suited for CNG dispensing applications. The VSD+ series provides up to 8% higher free air delivery along with connectivity features.
• Ingersoll Rand introduced its enhanced Nirvana oil-free rotary screw compressor range in 2021. It uses a specialized carbon fiber composite rotor coating enabling increased reliability in natural gas compression.
• Siemens Energy acquired JVS, a provider of rotating equipment solutions in October 2022. The acquisition strengthens Siemens' portfolio including integrally geared turbo compressors for midstream oil & gas industry.

Acquisition and partnerships

• In July 2022, Baker Hughes signed an MoU with Apollo DX to explore deployment of Baker Hughes’ turbomachinery and compression technologies for CNG mobility applications in India.
• Black & Veatch formed an alliance with compressor OEM Hanwha Power Systems in May 2021 to provide fully integrated CNG solutions for fueling stations in North America.
• Siemens Energy signed an agreement with Clean Energy Fuels in March 2022 to provide equipment & services for Low NOx CNG stations across the US. This encompasses compressors, dispensers and maintenance.

Top companies in CNG Compressors Market:

• Atlas Copco
• Ariel Corporation
• Siemens Energy
• Galileo Technologies
• Bauer Compressors
• Ingersoll Rand
• ANGI Energy Systems
• Bauer Group
• Clean Energy Compression
• CIMC Enric Group

*Definition: The CNG compressors market refers to the industry and ecosystem around equipment that compresses natural gas to high pressures for efficient storage and transportation as compressed natural gas (CNG). CNG is used as a clean automotive fuel alternative to gasoline and diesel, especially for buses, taxis, trucks, pickups and personal cars in cities. CNG compressors are mechanical devices installed at natural gas vehicle refueling stations and terminals to pressurize natural gas to optimal levels (3000 to 3600 psi) for dispensing into vehicle fuel cylinders. Major types of compressors used are reciprocating, rotary screw, rotary centrifugal and others. Key companies involved manufacture compressors tailored to meet the flow rate, pressure rating and reliability demands of CNG applications.