The global district heating market is expected to cross a valuation of USD 340 billion by 2033. In 2023, the market size is estimated to be USD 198 billion. The CAGR during the forecast period is expected to be 5.6%.
Significant factors which might propel the market growth are:
The adoption of tough climate goals by governments throughout the world is expected to fuel market growth. In addition, concerns about recycling waste energies are growing, and building energy efficiency standards is gaining traction. This would certainly lead to the deployment of sustainable technology, which is expected to boost demand for district heating systems.
The district heating networks would combine radiant heat with low-temperature supplies (between 40 and 60 degrees Celsius). In addition, new-generation district heating plants would lead to decentralized heat and cold generation by utilizing easily available energy sources.
Modern district heating networks are likely to play a vital role in the market by implementing energy-efficient, environmentally friendly methodologies.
Traditionally, district energy companies have relied on non-renewable heat sources, such as coal, oil, or natural gas. Consequently, the operating cost is entirely reliant on the price of that fuel. However, in the current times, companies are investing in renewable energy sources to generate heat at central units.
Due to the increased usage of heat sources in district heating, it becomes feasible to take advantage of price fluctuations in various types of fuels. A district heating plant is particularly adaptable to heat source selection. It can handle many types of heat sources, including wind and sun, industrial surplus heat, combined heat and power, and boilers.
District heating providers may select the least expensive heat source available. This improves production and supply efficiency. The district heating solutions provide customers with cost-effective and efficient heating services, which contributes to the market's growth.
However, district heating solution suppliers confront issues in delivering heat from the source to end-users with minimal or no heat loss during transport. Heat pipes transferring heat must be well insulated and sturdy, or else the heat generated would be lost.
Asia Pacific is expected to be the leading market during the forecast period. The business trends may be boosted by a rising propensity towards the use of decentralized systems in a variety of commercial and industrial facilities. Increasing initiatives to adopt energy-efficient DH systems are also expected to drive market growth. The demand for district heating systems is expected to be accelerated by ongoing government programs and plans for urban expansion.
| Attributes | Value |
|---|---|
| District Heating Market Value (2022) | USD 184 billion |
| District Heating Market Expected Value (2023) | USD 198 billion |
| District Heating Market Forecast Value (2033) | USD 340 billion |
| District Heating Market Expected CAGR (2023 to 2033) | 5.6% |
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In the current times, a lot of district heating systems operate through non-renewable sources of energy. Owing to this, lots of environment-conscious buyers are seeking suitable alternatives. There has been an increase in customers, as the urgency to achieve sustainable goals has been inculcated on a personal level as well. This can be best explained by comparing the historical CAGR with the anticipated CAGR. While the historical CAGR for the market was 8.9%, the anticipated CAGR is 5.6%. To make up for the expected dip, the manufacturers are now focusing on adopting renewable sources of energy to reduce carbon footprints.
A district heating system consists of a heat-producing unit powered by oil, gas, or wood chips, a distribution network of well-insulated pipes, and equipment such as heat exchangers. The investment is primarily to establish a production unit and distributed heating system.
The investment required for a distributed heating-producing unit varies based on its kind. For boilers and renewable heat sources, a significant investment is necessary, whereas excess heat from industries and data centers requires very little expenditure.
Pipe systems for district heating transmission and distribution are critical and need significant investment, as pipes must be of exceptional quality to minimize heat loss. However, district heating solution suppliers are hesitant to spend owing to constantly changing environmental regulations, consequently restricting the district heating market growth.
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District heating companies are projected to benefit significantly from technological advancements and digitization. Digitalization is driven further by the rapid adoption of modern technology goods and solutions such as smart meters, demand-based heating systems, home automation, and smart infrastructure.
Consumers may have a role in balancing future heating demand by utilizing these options. Rapid advancements swiftly reduce heating costs with increasing efficiency. As new buildings require distributed heating systems, advanced infrastructure developments create considerable potential.
Additionally, modern district heating networks are expected to play a critical role in enabling energy-efficient district heating solutions. These procure heat from various sources, most notably excess heat from industrial processes and a variety of renewable energy sources, depending on their availability.
The new infrastructures offer substantial thermal transfer surfaces and the potential for installing modern district heating systems. Additionally, advanced district heating systems may synergize within existing heating networks to boost efficiency, dependability, and cost-efficiency. As a result, technical developments in the district heating sector are likely to generate considerable revenue for solution suppliers.
| Regions | North America |
|---|---|
| Countries | United States |
| CAGR (2023 to 2033) | 5.3% |
| Regions | Europe |
|---|---|
| Countries | United Kingdom |
| CAGR (2023 to 2033) | 4.7% |
| Regions | Asia Pacific |
|---|---|
| Countries | China |
| CAGR (2023 to 2033) | 5% |
| Regions | Asia Pacific |
|---|---|
| Countries | Japan |
| CAGR (2023 to 2033) | 4.1% |
| Regions | Asia Pacific |
|---|---|
| Countries | South Korea |
| CAGR (2023 to 2033) | 3.4% |
The companies based out in the United States are making use of green energy to operate the district heating system. Most companies are making use of solar energy to operate these devices. The systems that are being developed by them are functioning on the principle of passive solar energy systems. This technology makes use of walls, windows, and floors to collect, store, and release the sun’s energy.
| Attributes | Details |
|---|---|
| United States Market Expected Size (2033) | USD 120.5 billion |
| United States Market Absolute Dollar Growth | USD 48.9 billion |
| CAGR % 2017 to 2022 | 8.6% |
Several companies are utilizing the energy from biomass. These do not produce as much carbon dioxide as fossil fuels. These are much more affordable than other forms of non-renewable sources, as a result of which a lot of manufacturers in the market are investing in them.
The United Kingdom is meant for being under the grip of extreme cold for a major part of the year. This might surge the sales of district heating devices. The manufacturers in the region have been developing energy-efficient systems, which reduce operating costs. The authorities are incentivizing such companies, which would boost the market share.
| Attributes | Details |
|---|---|
| United Kingdom Market Expected Size (2033) | USD 14.3 billion |
| United Kingdom Market Absolute Dollar Growth | USD 5.2 billion |
| CAGR % 2017 to 2022 | 7.6% |
The government has been implementing strict regulations to reduce the emission of greenhouse gases. In fact, in most of the developed cities across the United Kingdom, heat networks are essential to achieve net-zero emissions. The low-carbon heating option has led to a lot of stakeholders investing huge amounts in this system.
China is currently the leading consumer of district energy. The country has been pursuing assertive public policy decisions to elevate cleaner, energy-efficient district energy. In 2015, the country consumed more than 185 million tonnes of coal, which was way higher than the national energy consumption of the United Kingdom. With transitions being made from coal to clean energy, the scope of the market is expected to skyrocket during the forecast period.
| Attributes | Details |
|---|---|
| China Market Expected Size (2033) | USD 24.4 billion |
| China Market Absolute Dollar Growth | USD 9.4 billion |
| CAGR % 2017 to 2022 | 8.2% |
The technological developments in the market are also expected to surge the growth. The key players are making use of artificial intelligence to regulate the operation of the district heating systems. The manufacturers are also working on developing advanced automation that would work in synchronization with Artificial Intelligence to increase efficiency and save energy.
The fourth-generation district heating makes use of a low supply temperature (50-60 0C), which increases the efficiency of the entire system. This is done by integrating renewable energy and waste heat. The diversification of heat sources, which ensures large-scale solar heat utilization and inter-seasonal heat storage, promises higher efficiency.
| Attributes | Details |
|---|---|
| Japan Market Expected Size (2033) | USD 19.9 billion |
| Japan Market Absolute Dollar Growth | USD 6.6 billion |
| CAGR % 2017 to 2022 | 7.1% |
The manufacturers are harnessing solar energy in particular, as these reduce the dependence on other forms of non-renewable energy sources, which are higher in cost. They are also investing in product innovation to make the operation user-friendly.
South Korea has been implementing massive projects that deal with district heating. Companies like General Electric have been a part of this project, which reflects the demand for this system. The Anyang district heating plant has been generating 500 megawatts of energy to support heat and power supply in the region.
| Attributes | Details |
|---|---|
| South Korea Market Expected Size (2033) | USD 11.7 billion |
| South Korea Market Absolute Dollar Growth | USD 3.3 billion |
| CAGR % 2017 to 2022 | 5.8% |
The existing infrastructures are also being upgraded. A combined CHP plant in South Korea completed a project to improve its output and overall operation. The system was updated with gas turbine technology, which would enhance the reliability of the plant.
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| Segment | Source |
|---|---|
| Attributes | CHP |
| CAGR (2017 to 2022) | 8.6% |
| CAGR (2023 to 2033) | 5.4% |
| Segment | Application |
|---|---|
| Attributes | Residential |
| CAGR (2017 to 2022) | 8.4% |
| CAGR (2023 to 2033) | 5.1% |
Because of its high sustainability and cost-effectiveness, the Combined Heat and Power (CHP) segment is expected to grow significantly. Product demand is expected to be boosted by improved energy supply efficiency and the use of waste heat and low-carbon renewable energy sources.
Favorable regulatory norms for decreased carbon footprints and cost reductions may encourage growth. The industry's acceptance of cogeneration techniques is aided by a paradigm shift towards sustainable heat, power supply, and regulatory goals to improve energy efficiency.
The residential category is expected to be the leading segment. The widespread use of small heating systems and strong real estate investment have boosted the demand for district heating systems in residential buildings.
Increased application of decentralized generators and surging urban population may positively impact the business picture. The demand for district heating systems in the business sector is expected to be influenced by rapid urbanization and industrialization. Increased expenditures in the creation of new manufacturing units and facilities are also expected to surge the growth of the business segment.
The start-ups operating in the market are making use of geothermal energy systems for district heating networks at scale. They are also making use of innovative business models, which provide a holistic control and monitoring platform. These assist in carbon reductions while operating in a complex heat network environment.
Water-horizon: The start-up has been developing highly innovative renewable energy solutions for industrial heating and cooling applications. It makes use of an industrial transportable thermal battery. The system helps in recovering waste heat from industrial activities, and it stores heat with a high density without any loss of energy.
The key players operating in the market are now focusing on the more important aspects of the business. At such a time, they are streamlining the operations. Thus, they are divesting the business units, which are not fetching higher profits. Moreover, with supply chains getting affected worldwide, the manufacturers are of the view that investing in the key performance indicators is the best investment. In December 2022, Fortum completed the divestment of Uniper.
In December 2022, Fortum and KärnfulNext announced to jointly explore opportunities in Sweden for Small Modular Reactors.
In December 2022, Ewald Woste was elected the new chairman of the STEAG Gmbh supervisory board.
Dominant Players in the Market
| Company | Description |
|---|---|
| STEAG Gmbh | STEAG Gmbh was the central management company of the STEAG group till the end of 2022. After the division of the company into the black coal division and green growth division, STEAG Gmbh has been the management holding company. The company holds all the shares in STEAG Power Gmbh and Iqony Gmbh and handles the main sovereign functions. The group has been employing 5,754 workers. The company has been delivering comprehensive technical expertise for issues on energy generation and energy services. |
| Fortum | Fortum is driven by the purpose to drive change for a cleaner world. The current lifestyle demands more energy than ever before. To drive this purpose, the company has been making use of reliable production methods, like hydropower and nuclear power. The company has been providing consumer solutions and is responsible for electricity and gas retail businesses in the Nordics, Poland, and Spain. |
| Statkraft AS | Statkraft AS has been delivering clean energy solutions for more than a century. The company is currently Europe’s leading renewable energy producer, and a global company in the energy market operations. The company has been developing and operating renewable energy assets within hydropower, wind, solar, gas, and biomass, supplying district heating and buying & selling energy. The company operates across Europe, South America, and Europe. Statkraft AS employs over 5,000 employees and has a presence in over 20 countries. |
Other companies profiled: Shinryo Corporation, Ramboll Group A/S
The projected revenue of the market by 2033 is USD 340 billion.
The market CAGR for 2033 is projected to be 5.6%.
The market is valued at USD 198 billion in 2023.
North America holds a substantial market share.
The main challenge for the district heating market is the high initial investment costs.
1. Executive Summary 2. Market Overview 3. Market Background 4. Global Market Analysis 2017 to 2022 and Forecast, 2023 to 2033 5. Global Market Analysis 2017 to 2022 and Forecast 2023 to 2033, By Source 5.1. CHP 5.2. Geothermal 5.3. Solar 5.4. Heat only Boilers 5.5. Others 6. Global Market Analysis 2017 to 2022 and Forecast 2023 to 2033, By Application 6.1. Residential 6.2. Commercial 6.2.1. College 6.2.2. Office 6.2.3. Government/ Military 6.3. Industrial 6.3.1. Chemical 6.3.2. Refinery 6.3.3. Paper 6.4. Others 7. Global Market Analysis 2017 to 2022 and Forecast 2023 to 2033, By Region 7.1. North America 7.2. Latin America 7.3. Europe 7.4. Asia Pacific 7.5. Middle East and Africa 8. North America Market Analysis 2017 to 2022 and Forecast 2023 to 2033, By Country 9. Latin America Market Analysis 2017 to 2022 and Forecast 2023 to 2033, By Country 10. Europe Market Analysis 2017 to 2022 and Forecast 2023 to 2033, By Country 11. Asia Pacific Market Analysis 2017 to 2022 and Forecast 2023 to 2033, By Country 12. Middle East and Africa Market Analysis 2017 to 2022 and Forecast 2023 to 2033, By Country 13. Key Countries Market Analysis 14. Market Structure Analysis 15. Competition Analysis 15.1. NRG Energy 15.2. Statkraft 15.3. Shinryo Corporation 15.4. LOGSTOR 15.5. Vital Energi 15.6. Kelag 15.7. Fortum 15.8. Vattenfall 15.9. ENGIE 15.10. Danfoss 16. Assumptions & Acronyms Used 17. Research Methodology
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District Heating Market
