District Heating Market – Global Industry Size, Share, Trends, Opportunity, and Forecast Segmented By Heat Source (Coal, Natural Gas, Renewables, Oil & Petroleum Products, and Others), By Plant Type (Boiler, CHP, and Others), By Application (Residential, Commercial, and Industrial), By Region, Competition 2018-2028

Market Overview

Global District Heating Market was valued at USD 160.11 billion in 2022 and is anticipated to project robust growth in the forecast period with a CAGR of 4.0%through 2028. On the bright side, renewable energy sources have gained the upper hand in energy production during the lockdown period. As per the study conducted by the International Renewable Energy Agency (IRENA) on the impact of COVID-19 on the renewable energy sector, the existing renewable energy projects in operation have witnessed higher utilization rates than ever before. In Europe, during the first quarter of 2020, renewables accounted for 41% of total energy production, which indicates an increase of 16% compared to the first quarter of previous years.The COVID-19 crisis has considerably affected the entire power sector across the world. Throughout the COVID-19 pandemic, several countries have imposed nationwide lockdowns to prevent the further spread of the deadly virus, which has interrupted many activities, including construction, new infrastructure development, installation of turbines, and others. This resulted in government organizations and personal corporations concerned about the construction of heating networks delaying many District Heating projects due to the inaccessibility of the workforce to complete the project in an exceedingly specified time along with disruptions in supply chains due to travel bans across several states and countries. India has pushed sooner than the deadlines for the 3GW star installation. This can damage future investments in heating networks as the economies of assorted countries face a rough patch.

Key Market Drivers

Rising Need to Diminish the Carbon Emission will Augment Growth in the Market

Population across the globe has risen at an exponential rate in recent years, which led to increased urbanization being witnessed across different regions. This has directly increased the demand for energy from various end-use sectors. District heating is capable of producing a large amount of energy at a central plant, and further transmitting it to different end-use industries acts as an effective solution for sufficing the heat demand.The world is struggling with threats due to unprecedented carbon emissions and global warming, resulting in an increased inclination toward renewable energy resources. The U.K. has proclaimed an incentive package of USD 2 billion investment for the heating sector from 2015-to 2025. Germany has announced an investment of around 1 billion by 2030. Similar packages are expected in Denmark, Netherlands, and China in the coming years. Poland has broadcasted an investment of USD 5 billion from 2018 to 2028 in the heating sector.

Flexibility in the Source of Heat Generation and Cost-effectiveness to Propel Growth

District heating provides the choice of heat generation using numerous sources such as coal, renewables, gas, oil & crude product, and alternative accessible sources. Recent trends witnessed renewables and gas to be progressively employed in district heating systems as these resources directly facilitate reducing gas emissions and serve in achieving energy targets. These operational advantages will drive the district heating market growth in the coming years.

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Key Market Challenges

High Initial Capital Investment for Infrastructure May Restrict Market Growth

The setting up of a district heating capacity requires an initial hefty capital investment as installing a safe transmission and distribution lines network is very costly. The insulated pipes and their underground laying require a considerable investment, which is a major obstacle for investors. Also, lack of required infrastructure and availability of other economical options for space heating and water heating may hamper the growth of the market in the coming years.

Key Market Trends

High Initial Capital Investment for Infrastructure May Restrict Market Growth

District heating systems promote the deployment of renewable biomass, municipal waste, industrial waste, and waste from CHP for energy production using those sources. This, in the long run, will drive the market growth rate as the demand for renewables increases with a growing emphasis on bringing down the carbon footprint. Currently, Europe leads the district heating industry, owing to extensive installation being carried out in the region. Other countries in the region also have planned installations in the coming years that will cater to the market growth. The population throughout the world has grown at a sudden rate in recent years, which has led to augmented urbanization being perceived across various regions. This has unswervingly amplified the demand for energy from numerous end-use sectors. District heating is able to produce a huge amount of energy at a central plant, and further transmitting it to diverse end-use industries acts as an efficient solution for serving the heat demand. District heating systems are known for their energy efficiency as they centralize heat production, enabling the utilization of waste heat from industrial processes or power generation, which would otherwise be wasted.

The increasing urban population leads to higher demand for heating solutions, and district heating offers an efficient way to provide heat to densely populated areas.

District heating facilitates the integration of renewable energy sources such as solar, geothermal, and biomass, helping to diversify the energy mix. During the COVID-19 pandemic, numerous nations imposed a country-wide lockdown to avert the further spread of this fatal virus, which has disrupted numerous activities involving construction, novel infrastructure development, installation of turbines, and others. This led to the government organizations and personal companies being worried about the construction of heating networks postponing numerous District Heating (DC) projects. This is due to the unapproachability of the workforce to finish the project in an exceptionally definite time along with disturbances in supply chains on account of travel bans throughout various states and nations.

Segmental Insights

Heat Source Insights

The renewables segment is projected to dominate the market in the coming years. Power utilities are upgrading to clean energy from fossil fuel to increase power generation capacity as the awareness concerning environmental safety is increasing among folks, and thus the government is imposing strict regulations for emissions and pollution. This will increase the installation of renewable sources for heat generation around the world. The benefits of the conception, such as higher potency and negligible carbon emissions, have driven the expansion of this section.The gas section is likely to expand considerably throughout the forecast period. Exploration activities are rising around the world, and gas plants are significantly efficient and have less harmful effects on the surroundings in contrast to fossil fuels. Gas is extravagantly accessible, and the installation of such plants is increasing globally.

Plant Type Insights

Based on plant type, the market is segmented into boilers, Combined Heat and Power Plants (CHP), and others. CHP systems modify electricity generation alongside heat being created for the heating systems. This can be the most important considering the expansion of the CHP segment’s market share in recent years. The other factor contributing to the growth of this segment is the increasing electricity demand across the world. Further, CHP systems have higher efficiency as compared to normal boilers and diminish the prices as they avoid distribution and transmission losses. Also, support from governments in promoting the use of the CHP systems has power-assisted the expansion of the market.The boiler section is projected to witness growth throughout the forecast period as a result of increasing demand for electricity around the world. The installation of various energy plants is additionally increasing around the world.

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Regional Insights

Europe has led the district heating market share as the region has low-temperature circumstances for most of the year. Europe comprises large industries and power plants from which heat is created that goes to waste.

North America is anticipated to grow considerably during the forecast period. The demand for heating and electricity is expanding in the region. The region even experiences low temperatures for a long time in a year, which raises the demand for heating water and residential, commercial, and industrial spaces.

Asia Pacific ranks as the most lucrative DC market. China is increasing its investments in heating networks. Europe has dominated the market as the region has low-temperature conditions for most of the year. Europe consists of large industries and power plants from which heat is generated that goes to waste. Such heat is utilized to meet all heating demands within the region. The installation of renewable sources of energy is also increasing, and the waste heat from such plants is widely used for heating purpose only due to extreme weather conditions. This drives the market growth in Europe during the forecast period.North America is projected to grow significantly during the forecast period. The demand for heating and electricity is increasing widely in the region. The region even faces low temperatures for a long time in a year, which increases the demand for heating water in residential, commercial, and industrial spaces. The U.S. holds a dominant district heating market share in this region. Asia Pacific positions as the most lucrative market for district heating. China is increasing investments in heating networks. China, which experiences low temperatures, has witnessed maximum deployment of heating plants. The installation of renewable heating plants is also increasing in this region, and along with China, other countries, including South Korea, are also increasing their heating capacities.

Recent Developments

• 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 Institut.
• In 2020 – Savosolar Plc won a contract to supply two systems of solar heating to NewHeat SAS in France. After purchasing heating systems, the company will sell the heat generated by such systems to the DH companies of Pons and Narbonne.
• March 2021 – SWEP signed a multi-year contract with Kvitebjørn Varme AS. Under the contract, the company will provide Energy Transfer Stations (ETS) to progress the expansion of DH from an energy supplier based in Norway.
• February 2020 – Deutsche Telekom and Vattenfall AB signed an energy supply contract that is based on solar power for ten years. The electricity will come from a new 60 MW solar park, which will be built in 2021 in Mecklenburg-Western Pomerania.

Key Market Players

• Danfoss Group (Denmark)
• Ramboll (Denmark)
• Dall Energy (Denmark)
• Veolia (France)
• Helen (Finland)
• Alfa Level (Sweden)
• GE (U.S.)

Report Scope:

In this report, the Global District Heating Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

·         Global District Heating Market, By Heat Source:

o   Coal

o   Natural Gas

o   Renewables

o   Oil & Petroleum Products

o   Others

·         Global District Heating Market, By Application:

o   Residential

o   Commercial

o   Industrial

·         Global District Heating Market, By Plant Type:

o   Boiler

o    CHP

o   Others

·         Global District Heating Market, By Region:

o   North America

§  United States

§  Canada

§  Mexico

o   Asia-Pacific

§  China

§  India

§  Japan

§  South Korea

§  Indonesia

o   Europe

§  Germany

§  United Kingdom

§  France

§  Russia

§  Spain

o   South America

§  Brazil

§  Argentina

o   Middle East & Africa

§  Saudi Arabia

§  South Africa

§  Egypt

§  UAE

§  Israel

Competitive Landscape

Company Profiles: Detailed analysis of the major companies presents in the Global District Heating Market.

Available Customizations:

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Company Information

• Detailed analysis and profiling of additional market players (up to five).

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