District Cooling Market Size, Share, and COVID-19 Impact Analysis, By Technology (Electric Chillers, Absorption Chillers, and Others), By End User (Residential, Industrial, and Commercial), and Regional Forecast, 2021-2028

The global district cooling market size was USD 24.63 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with district cooling systems witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, this market has shown a stagnant growth of 5.6% in 2020. The market is projected to grow from USD 26.50 billion in 2021 to USD 47.64 billion in 2028 at a CAGR of 8.7% during the 2021-2028 period. The sudden rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

District cooling is a centralized distribution system of cooling energy. It is majorly used for space cooling across offices, apartments, houses, and industries. The chilled water is distributed through insulated pipes to cool the indoor environment of buildings in an area. Increasing awareness about environmental protection and changing the preference of manufacturers from conventional to energy-efficient cooling technology are some factors fuelling the growth of the market.

COVID-19 Impact: Reduced Cooling Demand to Create Considerable Challenges for Service Providers

The COVID-19 pandemic struck the world economy so hard that it impacted several business sectors, such as aviation, manufacturing, hospitality, etc. The impact of this pandemic on this industry is no different from others. The COVID-19 has imposed a heavy burden on the industry, especially on mega-district cooling plants. A substantial drop in cooling systems demand from hotels and shopping malls has been detrimental to the market. Due to this reduced demand, these system providers face huge challenges, which further increases the cost of production and results in a low rate of return on investment.

Several companies are focusing on introducing innovative cooling methods to contain the spread of the disease. For instance, in April 2020, the Emirates Central Cooling Systems Corporation (Empower) conducted a campaign to disinfect 79 plants. The firm confirmed using sustainable and eco-friendly sterilization methods to prevent the spread of the novel coronavirus.

LATEST TRENDS

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Reduced Cooling Energy Consumption is the Latest Trend

District cooling utilizes a thermal storage system, which substantially diminishes cooling energy consumption by 50%. In terms of capacity design and installation, these systems are flexible and can store up to 30% of potential output by retaining chilled water in the tanks. They can save 30% to 45% more energy than the conventional air-cooled and water-cooled air-conditioning systems. Therefore, the increasing demand for electrical power and its characteristic features is expected to contribute to the global district cooling market growth during the forecast period.

DRIVING FACTORS

Increasing Effect of Global Warming to Drive Market Growth

Global warming is adversely affecting the environment. Glaciers have shrunk, ice on rivers and lakes is breaking earlier, and trees are flowering sooner. Burning fossil fuels such as coal and oil has increased atmospheric carbon dioxide (CO2) concentration over the last century. Clearing of land for agriculture, industry, and other human activities has increased the concentrations of greenhouse gases. One of the most immediate and obvious effects of global warming is the increase in temperatures globally. According to the National Oceanic and Atmospheric Administration (NOAA), the average global temperature has increased by around 1.4° F (0.8° C) over the past 100 years. The Intergovernmental Panel on Climate Change (IPCC), which comprises more than 1,300 scientists from the United States and other countries, forecasts a temperature rise of 2.5 to 10° F over the next century. Thus, increasing global warming is ultimately propelling the demand for cooling.

High Number of Installations in the Middle East to Augment Growth

The Middle East, especially the GCC, is expected to be a prominent region for the market due to the hot climatic conditions with temperatures ranging between 35 and 55 °C. According to the UAE Government, Dubai air conditioning represents over 70% of electricity consumption due to extreme weather conditions. The city aims to meet 40% of its cooling requirements through DC systems by 2030. Power plants in the city are expected to use 50% less electricity than standard air conditioning.

Policy-imposed targets and rapidly increasing demand for energy-efficient cooling technology are major drivers of the market in the Middle East. The world’s largest DC plant, Integrated District Cooling Plant (IDCP), was installed in The Pearl-Qatar in the year 2010. IDCP serves over 80 apartment towers, townhouses, shopping complexes, offices, hotels, and schools across the island, thus supplying over 130,000 tons of refrigeration to nearly 50,000 residents. In January 2021, National Central Cooling Company PJSC (Tabreed) announced the signing of an agreement with Miral to provide DC services to SeaWorld Abu Dhabi. The company would connect the new SeaWorld Abu Dhabi development to its existing Yas Island scheme and deliver a cooling capacity of 7,500 refrigeration tons with a total concession capacity of 15,000 refrigeration tons (RT).

RESTRAINING FACTORS

Lack of Awareness and High Initial Investment to Hinder Market Growth

Attracting customers is challenging as DC services are new and not generally known due to a lack of awareness about the technological applications, benefits, and savings. Furthermore, most potential customers are not aware of their existing cooling costs, making comparisons between existing cooling services and DC services challenging due to lack of data. Therefore, awareness about the product applications, the reputation of the company, and cooperation with city planning play an important role in developing the DC market.

The initial cost of constructing plants, laying multiple pipeline networks, and supplying new connections to customers is significantly high and requires substantial financial support. Thus, the lack of awareness about these systems in several developing countries and the high initial investment will hamper the market growth.

SEGMENTATION

By Technology Analysis

Electric Chillers Segment to Grow at Highest Growth Rate during 2021-2028

Based on technology, the district cooling market is segmented into electric chillers, absorption chillers, and others.

Adoption of different DC technologies can help organizations to complete large-scale projects efficiently and on time. Electric chillers and absorption chillers are some of the familiar technologies. However, electric chillers are preferred more owing to their better co-efficient performance. These chillers occupy space, i.e., 50% lesser floor space than absorption chillers, thereby increasing their adoption.

The absorption chillers technique helps to reduce the use of electrically driven cooling in the energy system and similarly reduces carbon dioxide emissions.

By End-user Analysis

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Commercial Segment Held a Dominant Share of the Market in 2020

Based on the end-user, the market is segmented into residential, commercial, and industrial.

The commercial segment held a dominant share of the market in 2020. This system is primarily used in commercial buildings, including offices, shops, government, institutions, airports, and organizations. This system has become a vital part of commercial structures owing to the rise in global temperature.

The demand for these systems has been spurred by the increasing need for air-conditioning in residential buildings. A high number of residential construction projects and growing public awareness about renewable and efficient energy sources are estimated to drive the residential segment during the forecast period.

REGIONAL INSIGHTS

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The global market has been analyzed across five key regions, including North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America.

The Middle East & Africa stood at USD 9.28 billion in 2020. The Middle East offers high potential for the market due to the hot climatic conditions in the region. In terms of installed capacity, the UAE is a major country in the Middle East & Africa market. The rising awareness about net-zero energy (NZE) buildings and the increasing number of countries with NZE buildings drive the market in this region.

In Qatar, the market is growing owing to the economic diversification for the FIFA World Cup 2022. The government is heavily funding to build top-notch facilities for the upcoming World Cup in Qatar. Such initiatives are expected to drive global market growth in the forthcoming years. Emirates Central Cooling Systems Corporation (EMPOWER), Emirates District Cooling (Emicool), Marafeq Qatar, and Tabreed are major service providers in the Middle East & Africa

In North America, there has been a wide range of policy-related and programmatic activities to address energy efficiency in the existing and new buildings. Policies for energy-efficient retrofits for the existing buildings result in 20%–40% savings of the use of building energy, increased energy security, lower harmful gas emissions, and lower demand for new energy production and distribution. According to the International District Energy Association (IDEA), nearly 400 systems serve cities and campuses across North America.

Japan, China, Malaysia, Singapore, India, and South Korea are major markets in the Asia Pacific. The Government of India has chalked out ambitious projects such as Smart Cities and Smart Grid, which are estimated to drive the market in the country in the next few years.

KEY INDUSTRY PLAYERS

Key Participants Focus on Increasing Production Capacity

The market is fragmented owing to the large number of market players operating. Currently, ENGIE, Emirates Central Cooling Systems Corporation (EMPOWER), and Emirates District Cooling (Emicool) lead the market, accounting for a dominant share in 2020. These companies are expanding their production capacities by inducing new plants or expanding the existing ones. For instance, in March 2021, Emirates District Cooling (Emicool) LLC, completed its state-of-art DCP at Dubai Expo 2020. Phase 1 of this plant will offer chilled water-cooling solutions at different areas, especially at the RTA station, EXPO village, and Conference & Exhibition Centre. In October 2019, Emirates Central Cooling Systems Corporation (Empower) announced a new plant in Dubai Production City. The company said that the 47,000 refrigeration tonnes (RT) plant would be implemented in two phases.

LIST OF KEY COMPANIES PROFILED:

• ENGIE (France)


• National Central Cooling Company PJSC (Tabreed) (UAE)


• Emirates Central Cooling System Corporation (Empower) (UAE)


• Emirates District Cooling LLC (Emicool) (UAE)


• Marafeq Qatar (Qatar)


• Stellar Energy (U.S.)


• ADC Energy Systems LLC (UAE)


• Shinryo Corporation (Japan)


• Logstor A/S (Denmark)


• Danfoss (Denmark)


• Veolia (France)


• Enwave Energy Corporation (Canada)


• Keppel Corporation Limited (Singapore)


• Ramboll Group (Denmark)


• Singapore Power Ltd. (Singapore)


• Vattenfall (Sweden)


• SNC-Lavalin (Canada)

KEY INDUSTRY DEVELOPMENTS:

• October 2020 - Emirates Central Cooling Systems Corporation (Empower) won a set of contracts worth AED190 million for constructing its fourth district cooling plant in Business Bay, Dubai.  The new plant will have the capacity to deliver 50,000 refrigeration tons (RT) and add up to the total cooling capacity of Empower Business Bay project, the largest globally with a total capacity of 350,000 RT six cooling plants upon completion.


• February 2019 - The Capital Region Development Authority of Andhra Pradesh, India, and the National Central Cooling Company in the United Arab Emirates engaged in a joint venture for building a cooling system for the state capital, Amravati.

REPORT COVERAGE

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The market research report includes a detailed industry analysis and focuses on key aspects such as leading companies, technology, and leading end-users of the product. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors as mentioned above, the report encompasses several factors that have contributed to the growth of the advanced market over recent years.

REPORT SCOPE & SEGMENTATION