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, 2022-2029

The global district cooling market size was valued at USD 26.15 billion in 2021. The market is projected to grow from USD 28.16 billion in 2022 to USD 51.01 billion by 2029, exhibiting a CAGR of 8.9% during the industry forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with district cooling systems witnessing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global district cooling market exhibited a lower growth of 5.6% in 2020 as compared to 2019.

District cooling is a centralized distribution system for cooling energy. It is mainly used for space cooling in offices, apartments, houses, and industries. Chilled water is distributed through insulated pipes to cool the indoor environment of buildings in an area. Increasing awareness of environmental protection and changing manufacturers' preferences from conventional to energy-efficient refrigeration technology are some factors driving the district heating market growth.

COVID-19 IMPACT

 Significant Drop in Cooling Demand Due to COVID-19 Challenged DC Providers

The COVID-19 pandemic has hit the global economy so hard that it has affected several economic sectors such as aviation, manufacturing, and hospitality. COVID-19 has placed a heavy burden on the industry, especially mega DC systems. A significant drop in demand for cooling systems from hotels and shopping malls has adversely affected the market. Due to reduced demand, these system suppliers face enormous challenges, further increasing production costs and resulting in a poor return on investment.

Several companies are focused on introducing innovative cooling methods to curb the spread of the disease. For example, in April 2020, Emirates Central Cooling Systems Corporation (Empower) ran a campaign to sanitize 79 units. The company confirmed the use of sustainable and environment-friendly sterilization methods to prevent the spread of coronavirus.

LATEST TRENDS

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 Highly Energy-efficient Systems Reduce Energy Consumption to Propel Market Growth

DC uses a thermal storage system that reduces cooling energy consumption by 50%. In terms of capacity design and installation, these systems are flexible and can store up to 30% of potential power by retaining chilled water in tanks. They can save 30% to 45% more energy than traditional air and water-cooled air conditioners. Therefore, the increasing demand for electric power and its characteristic features are expected to contribute to the district cooling market growth during the industry forecast period.

DRIVING FACTORS

Increasing Effect of Global Warming on Environment to Drive Market Growth

Global warming has a negative impact on the environment. Glaciers have shrunk, ice on rivers and lakes is breaking earlier, and trees are blooming earlier. The burning of fossil fuels, such as coal and oil, has increased atmospheric concentrations of carbon dioxide (CO2) over the past century.

Land clearing for agriculture and industrial, among other human activities has resulted in the increasing concentration of harmful greenhouse gases. This has resulted in temperature rise, causing the effects of global warming globally. According to the National Oceanic and Atmospheric Administration (NOAA), the average global temperature has increased by about 0.8°C over the past 100 years. The Intergovernmental Panel on Climate Change (IPCC), which includes more than 1,300 scientists from the U.S. and abroad, projects a temperature rise of 2.5°F to 10°F over the next century. Thus, increasing global warming is ultimately surging 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 hot climatic conditions with temperatures ranging between 35°C 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 this market in the Middle East. Integrated District Cooling Plant (IDCP) is the largest DC plant globally and was installed at the Pearl Qatar back in 2010. DC plant supplies more than 130,000 tons of refrigeration to more than 80 residential towers, beach villas, townhouses, shopping malls, commercial office spaces, schools, hotels, and other places, which include nearly 50,000 residents across the island.

In March 2022, Emirates Central Cooling Systems Corporation (Empower), one of the major providers of DC services, reported an increase in the number of buildings using its DC service to 1,413 buildings by the end of 2021, a growth of 13% compared to 2020.

RESTRAINING FACTORS

Lack of Awareness and High Initial Investments to Hamper Market Growth

Attracting customers is challenging as DC services are new and not widely known due to lack of awareness of the technology applications, benefits, and savings. Additionally, most potential customers are unaware of their existing refrigeration costs, making comparisons between existing refrigeration services and DC services difficult due to lack of data. Therefore, awareness of the product applications, corporate reputation, and cooperation with city planning play an important role in developing the DC market.

The initial costs of constructing facilities, laying multiple pipeline networks, and delivering new connections to customers are significant and require significant financial support. Therefore, lack of awareness of these systems in several developing countries and high initial investments will hamper the market growth.

SEGMENTATION

By Technology Analysis

Reliable Coefficient of Electric Chillers Propels Demand for the Product

Based on technology, the market is segmented into electric chillers, absorption chillers, and others. The use of various DC technologies can help organizations complete large-scale projects efficiently and on time. Electric chillers and absorption chillers are some of the well-known technologies. However, electric coolers are preferred due to their better coefficient performance. These chillers take up space, 50% less floor space than absorption chillers, increasing their acceptance.

The technology of absorption chillers helps to reduce the use of electrically operated cooling in the energy system and decrease carbon dioxide emissions at the same time.

By End-user Analysis

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Commercial Segment Held a Dominant Share of the Market in 2021 Owing to High Installation of DC Systems in Such Spaces

Based on end-user, the market is segmented into residential, commercial, and industrial. The commercial segment had a dominant market share in 2021. This system is mainly used in commercial buildings, including offices, shops, government, institutions, airports, and organizations. The system has become an important part of commercial structures due to increase in global temperature. In addition, Qatar is hosting the 2022 FIFA World Cup, and the Gulf nation is hosting such a mega-event for the first time. Consequently, massive investments in infrastructure expansion are expected, which should boost the district cooling market growth.

Demand for these systems has been spurred by the increasing need for air conditioning in residential buildings. It is estimated that a large number of residential construction projects and growing public awareness of renewable and efficient energy sources will drive the residential segment over the global industry forecast period.

REGIONAL INSIGHTS

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The global market has been analyzed in five key regions, including North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America. The Middle East & Africa dominated the global market, reaching USD 10.08 billion in value in 2021. The Middle East & Africa offers high market potential due to the hot climatic conditions in the region. Emirates Central Cooling Systems Corporation (EMPOWER), Emirates District Cooling (Emicool), Marafeq Qatar, and Tabreed are key service providers in the Middle East & Africa.

The UAE has a significant number of installed cooling systems in the Middle East & Africa. Various high-end luxury hotels and business centers in the UAE, such as shopping malls and restaurants, have implemented DC systems. Their private and industrial use has also increased. The UAE government has formed the Regulation and Supervision Bureau (RSB), which is studying methods of promoting and regulating DC in the country. It also formulated the Dubai Integrated Energy Strategy 2030 (DIES), which identified DC technology to promote energy efficiency.

In North America, there has been a wide range of policy and programmatic activities to address energy efficiency in existing and new buildings. According to TERI, guidelines for energy-efficient retrofits of existing buildings result in savings of 20% to 40% in building energy consumption, increased energy security, reduced emissions of harmful gases, and reduced need for new energy generation and distribution. According to the International District Energy Association (IDEA), nearly 400 systems serve cities and universities across North America.

Japan, China, Malaysia, Singapore, India, and South Korea are important markets in the Asia Pacific region. The Indian government has envisioned progressive projects, such as smart cities and smart grids, which are expected to boost the Indian market.

KEY INDUSTRY PLAYERS

Key Participants Focus on Increasing Production Capacity Owing to Increasing Demand Globally  

The market is fragmented due to a large number of players operating in the market. Currently, ENGIE, Emirates Central Cooling Systems Corporation (EMPOWER), and Emirates District Cooling (Emicool) are the market leaders and had a dominant share in 2021. These companies expand their production capacities by introducing new plants or expanding existing ones. For example,

• In March 2022, Emirates Central Cooling Systems Corporation (Empower), the world's major cooling service provider, announced that it awarded a contract worth approximately USD 52.6 million to construct a new generation DC system, targeting the Dubai Land Residence Complex (DLRC) region. Construction of the building on the site has already begun and the total production capacity of the new facility will reach 47,000 RT upon completion of all construction phases of the project.


• In March 2021, Emirates District Cooling (Emicool) LLC, a wholly-owned subsidiary of Dubai Investments, announced the completion of its state-of-the-art District Cooling (DCP) plant at Dubai Expo 2020. Phase 1 of the facility will provide chilled water cooling solutions to areas within the event, specifically the RTA Station, Conference & Exhibition Center, and EXPO Village.

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:

• February 2022: Emirates Central Cooling Systems Corporation (Empower), the world's major cooling service provider, contracted with Select Group to supply 10,915 RT (RT) of DC energy to the Peninsula, the largest mixed-use real estate development in Business Bay, Dubai.


• December 2021: ENGIE South East Asia announced that it had been selected by JTC Corporation (JTC) to design, build, and own an underground DC System (DCS) for the Punggol Digital District (PDD), Singapore's first smart enterprise and operate district that integrates a national university, business park, and community facilities. The DCS facility will have a cooling capacity of almost 30,000 refrigeration tons, equivalent to cooling 8,000 four-room HDB units.

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-user of the product. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market in recent years.

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