District Heating Market Size, Share & Industry Analysis, By Heat Source (Coal, Natural Gas, Renewables, Oil & Petroleum Products, and Others), By Plant Type (Boiler, CHP, Others), By Application (Residential, Commercial, Industrial), and Regional Forecast, 2020-2027

The global district heating market size was USD 173.42 billion in 2019 and is projected to reach USD 204.74 billion by 2027, exhibiting a CAGR of 2.2 % during the forecast period.

The district energy systems provide heat for regulating temperature at commercial and industrial spaces and other heating applications at different end-use sectors in the form of hot water or steam. The energy is generated at a central heat plant from where it is distributed using a well-established heat network of insulated pipes. The heat generation is carried out using combined heat and power systems, pumps, or boilers. These systems help in reducing the setting up of individual heating systems and reduce the greenhouse gas emission as heat is generated at the central plant, which is capable of meeting the heat demand for a large number of customers. 

Freezing Effect of COVID-19 on Heating Networks

The Covid-19 crisis has affected the whole energy supply chain across the globe. During the COVID-19 pandemic, several countries have been forced to go under lockdown, which has interrupted the construction activities and supply chain. This has compelled government organizations and private companies involved in the construction of heat networks to push forward the commissioning date of the projects due to the unavailability of laborers to complete the project in a stipulated time. For instance, in the United States, only 3GW of solar installations are expected during the 2^nd quarter of 2020, and India has pushed ahead of the deadlines for 3GW solar installation. This will certainly harm the future investments for heating networks as economies of various countries are facing a rough patch. The main reason behind this is that a major focus at the current situation is on bolstering the health infrastructure.

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On the bright side, renewable energy sources have gained the upper hand in energy production during the lockdown periods. As per the study conducted by the International Renewable Energy Agency (IRENA) on the study of 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% as compared to the first quarter of previous years. This trend of growth in renewable energy penetration in the power mix of each country is expected to continue in the coming years to fulfill the long term and short term green energy targets.

LATEST TRENDS

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Green Energy Targets Will Fuel the Investments in Heating Sector

As the tensions regarding global warming and the harmful effects of carbon emission such as ozone depletion are rising, the countries all over the globe are moving towards renewable sources. Several efforts are being taken to maximize green energy and enable cleaner environments by setting green energy targets to be achieved in the forthcoming years to help the global cause. For instance, Brazil aims to have 42.5% of its primary energy supply to be from renewable by the end of 2023. According to the brief carbon analysis, the United Kingdom government aims to have about half of its electricity using renewables in 2025. Also, the government has started the decommissioning of coal-fired power plants in the country. Germany has also set a target for renewables to account for 65% of its total energy by 2030. In Asia, China has planned to achieve 16% of its energy from renewables by 2030, and following investments and growth in the country, the renewable energy sector is expected to hold 26% share and surpass the set target.

Flexibility in Source Used for Heat Generation Will Act as an Advantage to Drive the District Heating Market Growth

District energy systems can cope up with different heat-producing equipment such as pumps, boilers, and combined heat and power plants, which enables electricity generation along with the heat energy produced. This increases the scope of fuels being used to produce heat. The fuels that can be used in district heating systems are coal, natural gas, renewables, oil, and petroleum products, and others, which include bio-waste. The heating networks can utilize both boilers and combined heat plant and power systems.

DRIVING FACTORS

Government Initiatives in Improving Heating Sector Will Boost the Market Growth

As the demand for energy has risen dramatically in several countries over the past decade, the governments are looking for sustainable options to address the demand. District energy being able to cope with various input sources and be efficient in producing energy with fewer carbon emissions is being looked upon as the best cost-effective solution. Several countries have announced massive investments to boost the district heating sector in their country. For instance, the UK has announced a stimulus package of USD 2 billion investment for the heating sector during 2015-2025. Poland has announced an investment of USD 5 billion forms 2018-2028 in the heating sector. Germany has announced an investment of approximately 1 billion till 2030. Similar packages are expected in Denmark, Netherlands, and China in the coming years.

Increasing Demand for Heating Systems with Increasing Population in Urban Areas Will Aid Growth

The energy demand has increased at an exponential rate over the years with the increasing population. Also, the migrating population from rural to urban areas has increased, which has boosted the infrastructure projects at residential, commercial, and industrial locations. This, in turn, has created the demand for district energy efficient networks across all three sectors. This trend is expected to continue in the coming years, which will drive the growth of the market. As per the recent study released by Oxford University by 2050, around 2/3^rd of the population would be living in urban areas.

RESTRAINING FACTORS

Heavy Capital Investment and Lack of Required Infrastructure Poses Threat to Market Growth

The primary restraint for the market is the initial heavy capital investment required to establish a safe network of transmission and distribution lines. The insulated pipes and underground laying of these require a considerable investment, which acts as a major obstacle for investors. Also, the 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.

SEGMENTATION

By Heat Source Analysis

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Efforts Taken to Reduce Carbon Emissions Will Drive the Growth of Renewable Segment

Based on the heat source, the market is segmented into coal, natural gas, renewable, oil and petroleum products, and others. In recent years, the increasing trend of power generation has shifted from fossil fuels towards renewable considering the environmental factors. This has led the renewable energy sources to acquire a considerable share in the global DH market. The advantages of the concept such as low costs, better efficiency, and negligible carbon emissions have driven the growth of this segment.

By Plant Type Analysis

Electricity Generation Along with Heat Will Propel the Growth of Combined Heat & Power Plants

Based on plant type, the market is segmented into boilers, combined heat and power plants (CHP), and others. The CHP systems enable the electricity generation along with heat being produced for the heating systems. This has been the major factor in the growth of their market share in recent years. The other factor indirectly contributing to the segment growth is the increasing demand for electricity. Further, the CHP systems have a higher efficiency as compared to the traditional boilers and reduce the costs as they avoid distribution and transmission losses. Also, the support from governments in promoting the utilization of the CHP systems has aided the growth of the market.  

By Application Analysis

Growth in Migration from Rural to Urban Sector Has Driven the Growth of Residential Segment

In terms of the application, the global market is segmented into residential, commercial, and industrial. The residential segment holds the largest district heating market share owing to the increased requirement heating network at a residential location for various uses such as space heating and water heating. Also, there has been a rise in the number of construction projects in the residential sector owing to the increasing urbanization, which has been the catalyst for the segment growth.

REGIONAL INSIGHTS

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Globally, there has been an increase in the construction of new district heating systems. Europe has dominated the market as the region has low-temperature conditions for most of the year. Following Europe, Asia Pacific stands as the most lucrative market with countries such as China making a huge investment in heating networks. The Northern part of China, which experiences low- temperature, has witnessed the maximum deployment of the heating plants. The market has also seen a significant growth rate in North America, and the United States has certain projects in the pipeline that will drive the investment for the heating network. The Rest of the World would witness slow growth in the market as these systems stand as a new concept, and have started the deployment as a cost-effective measure for power in the country.  

KEY INDUSTRY PLAYERS

Ramboll, Danfoss Group, and Veolia Are Among the Leading Players in the Market

The competitive landscape of the market depicts a fragmented market with manufacturers and service providers such as Ramboll, Danfoss Group, and Veolia occupying a considerable share in the global market. These companies have been successful over the years owing to adoption of strategies such as signing contracts with different companies across regions.  Also, a well-established supply chain, customer preference, and an established brand name have been the factors for their success. The market also includes other players such as Helen, Alfa Level, GE COWI, Statkraft, and others who are increasing their customer reach and establishing a strong footprint in the market. This is expected to result in a competitive market for heating systems in the coming years. 

LIST OF KEY COMPANIES PROFILED:

• Danfoss Group (Denmark)


• Ramboll (Denmark)


• Dall Energy (Denmark)


• Veolia (France)


• Helen (Finland)


• Alfa Lavel (Sweden)


• GE (United States)


• COWI (Denmark)


• Statkraft (Norway)


• Uniper (Germany)


• ENGIE (France)


• ABB (Switzerland)


• Kelvion (Germany)


• GRUNDFOS (Denmark)


• E.on Energy Services ( Germany)


• FVB Energy Inc. (United States)


• NextGen Heating (United Kingdom)

KEY INDUSTRY DEVELOPMENTS:

• In July 2021, Kane, a building services specialist, received a couple of contracts to provide mechanical, electrical, and plumbing connections for the redesigning of the Sheerwater estate in Surrey, UK. The two phases will have a combined value of GBP 15 million or about USD 20.9 million and focus working on the 30-hectare Sheerwater estate involving the building of about 1,200 homes. Both the phases will be delivered by Kane through its Northern Ireland plant, with the prefabricated energy center for the Red Phase to supply multiple phases by an underground district heating network.


• In July 2021, Ameresco declared to conclude the energy conservation project for the Carmarthenshire County Council (CCC) to advance the council estate’s prevailing energy infrastructure. The project includes energy-saving measures such as pipework insulation, lighting controls, CHP and district heating improvements, solar PV installation, and LED lighting replacement, among other refurbishing initiatives.


• In July 2021, Nottingham City Council announced to introduce its district heating energy company ‘Enviroenergy’ in-house in the upcoming year to invest in the network. The company operating as a separate legal entity named EnviroEnergy LTD was working under the council since 2001 to supply heating solutions for around 5,000 homes and 70 businesses in the city.


• In May 2021, Perma-Pipe International Holdings, Inc. confirmed to receive an agreement worth USD 4.5 million to deliver its products & solutions for a district heating & cooling network in Eastern Canada. The venture will involve a specialized Multi-Therm® high-temperature pre-insulated pipe system consisting of a galvanized and insulated steel carrier pipe to refurbish the healthcare infrastructure project.

REPORT COVERAGE

The district heating market research report provides a detailed industry analysis and focuses on key aspects such as leading companies, plant types, heat source, and leading applications of the system. 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 over recent years.

Report Scope & Segmentation