The external combustion engine industry is anticipated to record moderate but steady growth from 2025 to 2035, driven by various factors such as growing investments in sustainable energy systems, increased adoption of industrial waste heat recovery systems, and increased use of Stirling engines for renewable power generation. The market is modelled to be worth USD 677.8 million in 2025 and is expected to reach USD 956.1 million by 2035, growing at a CAGR of 3.5% during the forecast period.
External combustion engines, like Stirling engines, steam engines, and closed-cycle gas turbines, burn fuel outside the combustion chamber to heat a working fluid. They also offer very high fuel flexibility, low emissions, and low operational noise. The use of such systems is limited for large-scale transport yet they remain extremely valuable in niche industrial, power generation, and micro-CHP combined heat and power applications, where systems are steadily more adopted.
Market Metrics
| Metric | Value (USD) |
|---|---|
| Industry Size (2025E) | USD 677.8 million |
| Industry Value (2035F) | USD 956.1 million |
| CAGR (2025 to 2035) | 3.5% |
Notable trends are external combustion engines being integrated into biomass and solar thermal energy systems, greater deployment in waste-to-energy plants and growing R&D in closed-loop Stirling engines for remote and off-grid power applications. Hybrid systems combining external combustion with battery storage or photovoltaics are also showing some traction to decentralized solutions.
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North America ranks highest for adoption with government incentives promoting clean energy systems and investment into energy-efficient industrial processes. Solar concentrators and waste heat recovery systems are seeing a resurgence in the USA, especially in off-grid military and rural installations, mostly based on Stirling technology.
The European market is driven by its ambitious decarbonisation targets, preference for low-emission technologies, and the development of micro-CHP installations. EU-funded pilot projects support the deployment of external combustion technologies in district heating and industrial cogeneration across various countries, including Germany, Sweden, and the Netherlands.
The industrial growth, energy diversification initiatives, and the requirement for effective and low-emission energy systems are major factors driving growth in Asia-Pacific. China and India are pouring resources into waste-to-energy infrastructure, whereas Japan and South Korea are pursuing potential Stirling engine roles among small-range renewable energy appliances capable of being used for domestic and light commercial use.
Challenges
Low Thermal Efficiency, High Initial Cost, and Technological Complexity
External combustion engines often have lower thermal efficiency than internal combustion systems, and their large footprint and initial cost have limited widespread adoption. More their heat transfer systems are relatively complex, requiring precise engineering and regular maintenance, which presents additional operational challenges.
Opportunities
Waste Heat Recovery, Renewable Integration, and Industrial Sustainability
With global climate initiatives and goals to decarbonize industries accelerating to decarbonize, external combustion engines have the potential for waste heat utilization, biofuel and solar integration, and off-grid power solutions. Their capacity to leverage a wide variety of heat sources including biomass, geothermal, and solar gives them an edge in the green energy transitions. New opportunities are cropping up in hybrid power plants, low-emission rural electrification, and modular clean-tech applications.
Between 2020 and 2024, the external combustion engine market (primarily steam turbines and Stirling engines) grew at a slow pace, buoyed mainly by specialty use in coal power generation, waste heat recovery, and remote energy systems. There was continued demand in industrial sectors and off-grid power solutions, especially where fuel flexibility or silent operation was a must.
And yet, most powertrains were dominated by internal combustion and electric propulsion technologies, relegating external combustion engines to niche or legacy applications. Environmental pressures and decarbonisation movements started to shift industry focus toward more efficient, cleaner-burning designs that could draw on biomass or solar thermal energy.
The external combustion engine market is expected to see a revival between 2025 and 2035, though in specialized applications, owing to progress in waste heat-to-energy systems, off-grid renewable integration and the use of hydrogen-compatible Stirling engines. These engines will further be applied in hybrid systems, industrial heat recycling and decentralized energy supply. Material, automation, and energy management innovations will also reinvent the efficiency and adaptability of external combustion technologies.
Market Shifts: A Comparative Analysis (2020 to 2024 vs. 2025 to 2035)
| Market Shift | 2020 to 2024 Trends |
|---|---|
| Regulatory Landscape | Compliance with conventional emission standards for industrial boilers and power plants. |
| Technological Innovation | Focus on basic steam turbines and legacy heat engines; minimal new material adoption. |
| Industry Adoption | Used in thermal power plants, biomass incineration systems, and educational or research models. |
| Smart & AI-Enabled Solutions | Limited automation in engine monitoring and thermal management. |
| Market Competition | Dominated by Babcock & Wilcox, General Electric (steam), and niche Stirling engine developers. |
| Market Growth Drivers | Dependence on thermal energy cycles, demand for remote and low-noise power systems. |
| Sustainability and Environmental Impact | Efforts focused on cleaner fuels and improved boiler performance. |
| Integration of AI & Digitalization | Manual monitoring of pressure, temperature, and flow; basic SCADA integration. |
| Advancements in Product Design | Bulky designs with fixed operation parameters; suited for large-scale installations. |
| Market Shift | 2025 to 2035 Projections |
|---|---|
| Regulatory Landscape | Adoption of zero-emission benchmarks, integration into carbon-credit frameworks, and alignment with net-zero industrial goals. |
| Technological Innovation | Development of advanced Stirling engines, solar-thermal integration systems, and heat-exchanger innovations using smart alloys. |
| Industry Adoption | Expansion into hybrid renewable installations, hydrogen-powered remote units, and modular industrial energy recycling platforms. |
| Smart & AI-Enabled Solutions | AI-controlled thermal balancing, predictive maintenance for turbines, and integration with digital twin models for energy systems. |
| Market Competition | Rising activity from thermal efficiency startups, hybrid engine innovators, and government-backed renewable technology alliances. |
| Market Growth Drivers | Demand for energy circularity, decarbonized industrial heating, thermal storage-linked engines, and emission-free rural electrification. |
| Sustainability and Environmental Impact | Full lifecycle energy recovery, hydrogen-fueled external engines, zero-waste energy loops, and eco-certification of waste-heat systems. |
| Integration of AI & Digitalization | AI-optimized combustion cycles, real-time heat-to-power conversion analytics, and autonomous energy dispatch in micro grids . |
| Advancements in Product Design | Compact modular units, transportable external combustion modules, and lightweight composite designs for flexible energy networks. |
The USA external combustion engine market is not the most significant segment, many niche applications exist in industrial heating, power generation, and renewable energy systems. Renewed interest in Stirling engines, which can use a variety of fuels and run quietly, is especially significant in remote power applications as well as low-emission energy projects.
Federal incentives that support clean energy tech and efficient cogeneration systems are keeping a lid on demand in an otherwise mature segment. Thermal storage innovations and hybrid integration are also starting to enable new use cases.
| Country | CAGR (2025 to 2035) |
|---|---|
| USA | 3.7% |
External combustion engines are receiving renewed attention in the UK thanks to research and sustainable energy efforts, particularly as a means to decarbonize industrial heat. Biomass-powered systems, waste-to-energy setups, and academic prototyping are seeing niche adoption.
Net-zero emissions by governments along with their funding for R&D of alternative power systems are creating growth opportunities, particularly for Stirling and Ericsson engine variants. But overall growth is weak because of competition from more established internal combustion and electric alternatives.
| Country | CAGR (2025 to 2035) |
|---|---|
| UK | 3.1% |
Within the EU, a few countries, like Germany, Sweden and the Netherlands, are leading the push for sustainable energy applications using external combustion engines. Active interest in renewable integration particularly in CHP (combined heat and power) systems and biomass-based power generation is stimulating a favourable environment for the advancement of external combustion technology.
Low emission, thermally efficient systems are being revolutionised with the support of EU’s Green Deal and Horizon Europe programmes. In rural electrification, micro grid solutions are also getting the attention of innovators.
| Region | CAGR (2025 to 2035) |
|---|---|
| EU | 3.6% |
Japan's market for external combustion engines is relatively niche, but growing due to the country's focus on energy diversification and disaster-resilient power systems. Stirling engines have seen testing in compact cogeneration units for residential and institutional backup applications.
And a growing need for more efficient and flexible power units reflects the country’s technological edge and aging energy infrastructure. Moreover, demand for low-noise and low-emission systems supports implementation in both urban and off-grid settings.
| Country | CAGR (2025 to 2035) |
|---|---|
| Japan | 3.2% |
High-growth market opportunities are arising with external combustion engines in South Korea, but investment in clean energy technology and high-efficiency power systems may present a situation of moderate growth. Stirling engines are being explored in government-funded pilot projects for use in district heating and smart energy projects.
Market is further characterized by technology-driven engineering firms which a experimenting with compact and high efficiency combustion systems for industrial application. Another course that shows potential is integration with thermal solar systems.
| Country | CAGR (2025 to 2035) |
|---|---|
| South Korea | 3.4% |
Engine Type Market Share (2025)
| Engine Type | Value Share (%) |
|---|---|
| Steam Engine | 46.3% |
Steam engines are projected to capture 46.3% of the global external combustion engine market value by 2025. Steam engines can dominate over others due to their proven track record of reliability and versatility in being able to run on various fuels and their relevance to a number of sectors that involve any form of industrial activity including agricultural and transport.
Steam engines are still used in limited applications, particularly in heritage railways, thermal power plants and special marine propulsion systems in which torque and constant power output are more important than speed. The external combustion process enables them to burn low-grade fuels like biomass and waste materials, which has spurred renewed interest as part of global decarbonisation initiatives.
Recent technological refinements to boiler efficiency, waste heat recovery, and low-emission designs will help further solidify the relevance of steam engines, especially in areas with a long-term strategy toward sustainable energy transitions and off-grid generating options.
End Use Application Market Share (2025)
| Application | Value Share (%) |
|---|---|
| Industrial | 39.8% |
Industrial sector and commercial sector industries are expected to be the biggest end-use segments for the external combustion engine market, accounting for 39.8% and 29.7% of the market value in 2025, respectively. Such engines find broad applications in industries that need constant and regulated power, including power production, mining, cement production, and biomass energy conversion.
External combustion engines can use a wide range of fuels, including coal, biomass, or even industrial waste, making them a cost-effective and versatile solution in energy-intensive contexts. Their high-efficiency operation over long periods with minimal maintenance also makes them ideal for remote or off-grid industrial facilities.
Increasing investments in the renewable energy infrastructure and thermal recycling processes are expected to spur the externally fired engine market, due to their ability to utilize sustainable fuel sources. Consequently, the industrial segment is projected to continue benefiting from this global transition towards cleaner and more decentralized modalities of power generation.
There is a resurgence momentum of the external combustion engine market worldwide, owing to the transition towards sustainable, low-emission power generation. Examples here include Stirling engines and steam turbines operating by externally heating a working fluid, which is beneficial as these engines can be used with any number of heat sources biomass, solar thermal, and industrial waste heat.
The increasing demand for renewable energy, off-grid power solutions, and improvements in external combustion technologies are further solidifying the growth of the market. Plus, they are quieter, fuel agnostic and require less maintenance than other internal combustion engines, making them ideal for specialized industrial, aerospace and combined heat and power (CHP) applications.
Market Share Analysis by Key Players
| Company/Organization Name | Estimated Market Share (%) |
|---|---|
| Qnergy Inc. | 16 - 20% |
| Siemens Energy | 13 - 17% |
| FlexEnergy Inc. | 10 - 13% |
| Aisin Corporation | 7 - 10% |
| Genoastirling AB | 5 - 8% |
| Others | 32 - 39% |
| Company/Organization Name | Key Offerings/Activities |
|---|---|
| Qnergy Inc. | In 2024, Qnergy introduced next-gen Stirling engines for off-grid power and remote industrial sites, leveraging waste heat recovery systems with minimal servicing needs. |
| Siemens Energy | Expanded its portfolio in 2025 by integrating high-efficiency steam turbine systems into renewable hybrid setups, supporting utility-scale decarbonization projects. |
| FlexEnergy Inc. | In 2023, FlexEnergy launched scalable external combustion modules designed for combined heat and power (CHP) in commercial and institutional applications. |
| Aisin Corporation | In 2024, Aisin developed compact Stirling engine systems optimized for residential micro-CHP, combining solar thermal and natural gas inputs. |
| Genoastirling AB | Swedish-based manufacturer known for its high-performance Stirling engines used in marine, military, and remote energy sectors; expanded R&D in 2025 for solar thermal integration. |
Key Market Insights
Qnergy Inc. (16 - 20%)
Market front-runner in Stirling engine technology, Qnergy is recognized for rugged, maintenance-free external combustion solutions ideal for critical infrastructure and oil & gas field operations.
Siemens Energy (13-17%)
Global leader in steam-based external combustion systems, Siemens focuses on high-efficiency turbines and renewable energy integration, particularly in utility and industrial CHP markets.
FlexEnergy Inc. (10-13%)
FlexEnergy’s modular systems are designed for fuel versatility and emissions reduction, enabling custom-built external combustion engines for institutional and industrial power systems.
Aisin Corporation (7-10%)
Aisin specializes in micro-CHP solutions, offering quiet, efficient Stirling engine units suitable for distributed residential and light commercial power generation.
Genoastirling AB (5-8%)
Known for its precision-engineered Stirling systems, Genoastirling serves high-demand applications requiring silent operation, thermal efficiency, and fuel flexibility, especially in off-grid scenarios.
Other Key Players (Combined Share: 32-39%)
Numerous regional firms and niche manufacturers contribute to market diversity through innovations in hybrid systems, waste heat recovery, and solar thermal integration, including:
The overall market size for the external combustion engine market was USD 677.8 million in 2025.
The external combustion engine market is expected to reach USD 956.1 million in 2035.
Demand will be driven by rising interest in sustainable energy systems, increased adoption of biomass and solar thermal energy, advancements in Stirling and steam engine technologies, and growing deployment in remote power and combined heat and power (CHP) applications.
The top 5 countries driving the market are the United States, Germany, China, Japan, and the United Kingdom.
The Steam engine segment is expected to command a significant share over the assessment period.
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