DISTRICT HEATING MARKET ANALYSIS

The global District Heating market size was valued at US$ 50.8 Billion in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 1.5% from 2023 to 2030. The district heating market has grown steadily over the past few years due to a number of factors such as: B. Rising demand for energy efficient heating solutions is driving the adoption of new technologies. Boiler systems and combined heat and power (CHP) systems are also becoming increasingly popular. 

Global District Heating Market: Regional Insights

Based on geography, the global District Heating market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

At present, the Asia Pacific is expected to hold leading position in the global District Heating market over the forecast period. Factors such as rising disposable income, growing concern over carbon emissions, and higher consumption of heating and cooling systems are some of the major factors driving the growth of the studied Chinese market. 

At the same time, Europe District Heating market is exhibiting rapid growth. Germany is one of Europe's largest district heating and cooling markets. In German homes, district heating is mainly used for heating. Industrial heat consumption tends to be highly dependent on economic development. Manufacturing companies typically use district heating and cooling in place of industrial processes. 

Figure 1. Global District Heating Market 2023, By Region

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Global District Heating Market Drivers:

Augmented demand for energy-efficient and cost-effective heating systems

The growing global demand for energy efficient heating solutions is driving the use of new technologies. According to a 2019 U.S. survey by Johnson Controls, about 75% of surveyed companies plan to increase investment in energy efficiency, renewable energy and smart building technologies, up 16% from 2018. The survey also found that traditional energy efficiency measures top the list of future investments, with more than two-thirds planning to invest in energy education programs. In addition, home heating appliances account for the majority of energy consumption, driving up costs. Government regulations supporting the introduction of district heating systems are also having a positive impact on the market growth. 

Rising urbanization and industrialization

Rapid urbanization around the world is driving demand and driving a shift to renewable energy sources for central heating and cooling. This can help meet the city's growing energy demands, improve efficiency, reduce emissions, and enable cost-effective temperature control. For example, due to urbanization, China is rapidly increasing the use of centralized systems in its northern regions. Major cities in Europe and North America already have DHC solutions. In Denmark, for example, most of the heating demand is already met by district heating systems. Expansion slowed after dense urban center systems reached saturation. 

Global District Heating Market Opportunities:

By 2020, district heating and cooling should reduce 9.3% of CO2 emissions across Europe from district heating, according to the nonprofit EuroHeat. In addition, district cooling was expected to reduce CO2 emissions by 40-50 million tons per year and reduce primary energy consumption by 2.14 EJ per year. Furthermore, the introduction of district heating and district cooling solutions will lead to a fully CO2-neutral energy solution by 2050.

The Dutch government's climate law calls for a 49% reduction in greenhouse gas emissions by 2030 compared to 1930 levels, and a 95% reduction by 2050. Accompanied by these goals are strict guidelines for companies that provide heating and cooling systems, and there is a trend towards increasing installation of district heating and district heating systems cooling. Growing awareness of the benefits of district heating is expected to bring lucrative market growth opportunities. The main advantage of district heating is that it is very versatile and safe to use. They can be created in a variety of ways and are generally classified as natural or man-made. 

Global District Heating Market Trends:

District heating companies are projected to gain significantly from technological advancements and digitization. These Digitalization is driven further by the fast adoption of modern technology goods and solutions such as smart meters, demand-based heating systems, home automation, and smart infrastructure. Consumers may have a role in balancing future heating demand by utilizing these options. Rapid advancements swiftly reduce heating costs with increasing efficiency.

As new buildings require distributed heating systems, advanced infrastructure developments create considerable potential. Additionally, modern district heating networks are expected to play a critical role in enabling energy efficient district heating solutions. The procure heat from various sources, most notably excess heat from industrial processes and a variety of renewable energy sources, depending on their availability. The new infrastructures offer substantial thermal transfer surfaces and the potential for installing modern district heating systems.

Additionally, advanced district heating systems may synergize within existing heating networks to boost efficiency, dependability, and cost-efficiency. As a result, technical developments in the district heating sector are likely to generate considerable revenue for solution suppliers.

Figure 2. Global District Heating Market 2023, By Plant Type

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Global District Heating Market Segmentation:

The global District Heating market report is segmented into Plant type, Heat source, application, and region.

Based on Plant type, the market is segmented into Boiler plant and combined heat and power (CHP). Out of which, Combined heat and power (CHP) is expected to dominate the global market over the forecast period and this is attributed to their cost-effectives and are efficient for those who are allergic to natural District Heating . The Combined heat and power (CHP) segment was valued at USD 29.54 Bn in 2023 and is projected to register a 2.7% CAGR during the review period.

Based on Heat Source type, the market is segmented into Coal, Natural Gas, Renewables, Oil and Petroleum Products. Out of which, natural gas is expected to dominate the global market over the forecast period and this is attributed to their popularity.

End User segment is also expected to witness significant growth in the near future. Residential it is in high demand as it requires as there is an increasing population.

Global District Heating Market: Key Developments

In December 2021, Vattenfall and Cloud & Heat Technologies have teamed up to deliver fast, fossil-free and reliable computing power as part of a joint pilot project for sustainable data centers. This data center on the outskirts of Stockholm houses high-end servers for AI and high-performance computing applications. High performance, safe and designed to maximize sustainability by utilizing excess heat directly in the process of a nearby district heating power plant. 

In 2021 – Serbia signed a coal boilers replacement contract for a district heating system in Kragujevac with a consortium of local companies, Energotehnika, Reming, Jadran, and AG Institution.

In August 2021, trigeneration system was installed by Cummins in the Royal Children's Hospital of Australia. Diesel generators provide essential standby power, whilst natural gas generators supply electricity, heating, and cooling. Via the use of an absorption chiller, the trigeneration system provides baseload electricity, heating, and cooling.

Global District Heating Market: Key Companies Insights

The global District Heating market is attributed to launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global District Heating market are Vattenfall AB, SP Group, Danfoss Group, Engie, NRG Energy Inc., Statkraft AS, Logstor AS, Shinryo Corporation, Vital Energi Ltd, Göteborg Energi, Alfa Laval AB, Ramboll Group AS, Keppel Corporation Limited, FVB Energy

*Definition: District energy systems are used to provide heat for temperature monitoring in industrial, residential and commercial areas. Thermal energy is generated in a central heating plant and distributed through a well-developed district heating network consisting of insulated pipes. Heat generation is controlled by cogeneration plants, boilers or heat pumps. Because heat is generated in a central plant, these systems can meet the growing heat demand of a wide range of consumers, facilitating the reduction of greenhouse gas emissions.