February 21, 2024
District Heating Market

The increasing adoption of renewable energy sources is anticipated to open up new avenue for the District Heating Market

The District Heating Market is estimated to be valued at US$ 51.56 Bn in 2023 and is expected to exhibit a CAGR of 1.5% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Overview:

District heating is a system for distributing heat generated in a centralized location for residential and commercial heating requirements such as space heating and water heating. The heat is often obtained from a cogeneration plant burning fossil fuels but increasingly biomass, geothermal heat and waste heat is used too. District heating systems can greatly improve energy efficiency and reduce airborne emissions. Countries like China, United States, Japan, Germany are leading consumers of district heating due to densly populated cities and towns.

Market Dynamics:

One of the major drivers for the growth of district heating market is increasing investments by various governments globally to promote renewable energy sources. For instance, European Union has allocated US$ 260 billion for sustainable energy infrastructure development projects under 2021-2027 budget. These investments are supporting greater adoption of bioenergy, geothermal and solar thermal for district heating projects. Another driver is growing emphasis on reducing carbon footprint of buildings which is boosting demand for low carbon district heating plants using renewable and waste heat sources. This is creating new expansion opportunities for district heating companies.

Segment Analysis

The district heating market can be segmented into two primary segments – residential and commercial. The residential segment currently dominates the district heating market, accounting for over 60% share. This is because district heating finds widespread usage for space heating and providing hot water in residential apartments, housing complexes, and other dwelling units in colder regions. The residential segment dominance can be attributed to the high demand for central space and water heating from households, especially in Northern European countries with harsh winters.

PEST Analysis

Political: Government support policies promoting renewable energy and energy efficiency have positively impacted the district heating market. For example, the European Union has set targets to increase the share of renewable energy to 32% of total energy demand by 2030.
Economic: Rising energy costs and need to reduce energy bills have encouraged commercial and residential adoption of district heating systems. The global district heating market is projected to grow at a CAGR of 1.5% during 2023-2030 due to cost benefits.
Social: Growing environmental awareness about reducing carbon footprint and using clean energy sources is increasing the demand for district heating in commercial buildings and residential apartments.
Technological: Advanced technologies like Fifth generation (5G) district heating systems utilizing low-temperature renewable energy sources like solar, geothermal or ambient heat have modernized district heating infrastructure.

Key Takeaways

The Global District Heating Market Size is expected to reach US$ 51.56 billion by 2023, growing at a CAGR of 1.5% during 2023-2030. Regionally, Eastern Europe accounts for the largest share of over 40% owing to long-standing district heating infrastructure and policies supporting renewable energy adoption in countries like Russia and Poland.

The residential segment is growing fastest in the district heating market due to the increasing construction of eco-friendly residential complexes integrated with central heating systems. Governments in different countries are offering subsidies to residential households to switch from conventional heating to renewable-energy based district heating to reduce carbon emissions.

Key players operating in the district heating market include Vattenfall AB, SP Group, Danfoss Group, Engie, NRG Energy Inc., Statkraft AS, Logstor AS, Shinryo Corporation, Vital Energi Ltd, Gateborg Energi, Alfa Laval AB, Ramboll Group AS, Keppel Corporation Limited, and FVB Energy. Leading operators are investing in upgrading distribution networks and switching to clean energy feedstock like biomass to attract more residential and commercial customers.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it