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, 2020-2027

The global district cooling market size was USD 23.34 billion in 2019 and is projected to reach USD 45.61 billion by 2027, exhibiting a CAGR of 9.4% during the forecast period.

District cooling (DC) 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 preference of manufacturers from conventional to energy-efficient cooling technology are some factors fuelling the growth of the market.

District Cooling Providers Face Huge Challenges due to COVID-19 Pandemic

The COVID-19 pandemic struck the world economy so hard. Its impact on several business sectors, such as aviation, manufacturing, hospitality, and others have been explicit and unprecedented. The impact of this pandemic on the district cooling 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. Owing to this reduced demand, system providers are facing huge challenges, which further increases the cost of production and results in a low rate of return on investment.

Recently, the Emirates Central Cooling Systems Corporation (Empower) has conducted a campaign to disinfect 79 plants. The firm confirmed the use of sustainable and eco-friendly sterilization methods to prevent the spread of the novel coronavirus.

 LATEST TRENDS

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Decreased Cooling Energy Consumption to Positively Influence the Market Growth

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, increasing demand for electrical power and their characteristic features are factors driving the market.

DRIVING FACTORS

Global Warming to Drive the Market

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 the concentration of atmospheric carbon dioxide (CO2) 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. Therefore, increasing global warming can subsequently enrich the demand for cooling systems, which, in turn, will boost the market.

High Number of Installations in the Middle East is Propelling Growth of the Market

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 in the region. According to the UAE Government, Dubai air conditioning represents over 70% of electricity consumption due to the extreme weather condition; therefore, 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, technological advancements, and rapidly increasing demands 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 2010. IDCP serves more than 80 apartment towers, beachfront villas, townhouses, shopping complexes, offices, schools, and hotels across the island, thus supplying more than 130,000 tons of refrigeration to nearly 50,000 residents. Recently in 2018, Emirates Central Cooling Systems Corporation (Empower) signed a contract to design two new cooling plants, currently named Business Bay 3 and Business Bay 4.

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 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 the development of the DC market. Furthermore, the initial cost of constructing plants, laying multiple pipeline networks, and supplying new connections to customers is significantly high and thus requires substantial financial support. Thus, the lack of awareness about these systems in several developing countries as well as the high initial investment is hampering the global market growth.

SEGMENTATION

By Technology Analysis

Electric Chillers Segment to Grow at Highest Growth Rate during 2020-2027

Based on technology, the market is segmented into electric chillers, absorption chillers, and others. The 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 as compared to 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 2019

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 2019. This system is mostly used in commercial buildings, which include 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 the usage of renewable and efficient energy sources are estimated to drive the residential segment during the forecast period.

REGIONAL INSIGHTS

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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. In Dubai, the government has planned to use DC systems to meet 40% of its cooling capacity. The objective would be accomplished by 2030. Rising awareness about net-zero energy (NZE) buildings and the increasing number of countries with NZE buildings are driving the district cooling market in the Middle East & Africa.

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 the 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 some of the major markets in Asia Pacific. The Government of India has chalked out ambitious projects such as ‘Smart Cities’ and ‘Smart Grid’, which are estimated to drive the district cooling market in the country in the next few years

KEY INDUSTRY PLAYERS

Key Players are Focused on Inaugurating New Plants to Increase Production Capacity

The global district cooling market is fragmented owing to the large number of players operating in the market. Currently, Emirates Central Cooling Systems Corporation (EMPOWER), Emirates District Cooling (Emicool), and ENGIE lead the market, accounting for a dominant share in 2019.

The companies are expanding their production capacities by inducing new plants or expanding the existing ones. Recently in October 2019, Emirates Central Cooling Systems Corporation (Empower) announced that the construction of a new plant in Dubai Production City has started. The company said that the 47,000 Refrigeration Tonnes (RT) plant would be implemented in two phases, with the first phase expected to be complete by the end of 2020.

In April 2018, Empower announced expansion at its DC plant in Dubai International Financial Centre (DIFC) at the cost of AED 60 Mn. This expansion is intended to meet the continuously rising demand for cooling services, which is attributable to the growth of Empower’s projects across Dubai.

LIST OF KEY COMPANIES PROFILED:

• ENGIE (France)


• National Central Cooling Company (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)


• Petronas (Malaysia)


• Keppel Corporation Limited (Singapore)


• Ramboll (Denmark)


• Singapore Power Ltd. (Singapore)


• Vattenfall (Sweden)


• SNC-Lavalin (Canada)

KEY INDUSTRY DEVELOPMENTS:

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


• In April 2018, Empower announced it had signed an agreement to connect its services to Address Hotel at JBR, Marsa Dubai, with a total capacity of 6,500 refrigeration tons (RT)

REPORT COVERAGE

An Infographic Representation of District Cooling Market

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The district cooling 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 advanced market over recent years.

REPORT SCOPE & SEGMENTATION