District Heating Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

District Heating Market Size

District Heating Market Trends & Drivers

Combination of Multiple Energy Sources

The combination of multiple energy sources is also one of the major district heating market trends. These systems not only use renewable sources of energy but also work with the waste heat from industrial plants and data centers, which helps in achieving a higher energy efficiency. With even more diversification of the energy sources in district heating systems, the transition toward more-advanced systems will hasten. Examples of such systems include a waste treatment plant in Sweden in Högbytorp which generates electricity and heat, along with biogas, biofertilizers, and compost.

Government Programs and Initiatives

Many initiatives are being taken by the government of different countries to boost the adoption of district heating systems with new technologies and low carbon emissions. For instance, the European Commission has approved a German scheme of EUR 2.98 billion to encourage the usage of green district heating systems fueled by renewables and waste heat from industries and data centers. Under this scheme, the new district heating systems set up in Germany will use at least 75% green energy and waste heat; this will be accompanied by the decarbonization and upgradation of the existing systems. This move envisions the installation of around 681 MW of sustainable heat generation capacity per year, which will reduce greenhouse gas emissions by around 4 million tonnes annually

The District Energy in Cities initiative by the UN Environment Programme is another step to encourage countries to increase their investments in DHC systems. Moreover, a pilot program of the Polish government to reduce the negative impact of district heating on the environment is being implemented between 2019 and 2025. The program involves the usage of energy from renewable sources, such as geothermal energy; waste heat, and heat from cogeneration and the modernization/expansion of heating networks.

District Heating Market Analysis

Fossil Fuels and Future of Renewable Sources

Fossil fuels, such as coal, natural gas, and oil, are the major contributors in the heat source segment, with up to 90% of the revenue generated from their use. This is due to the dependence of major economies on conventional resources, such as China’s dependence on coal and Russia’s dependence on its natural gas. Among the fossil fuels, coal is the widest-used energy source for district heating systems.

However, due to the increasing efforts for achieving net-zero emissions by 2050, the renewables category will be the fastest-growing in the forecast period. This would essentially be due to the joint efforts of countries for decarbonization. Currently, the initiatives in the European region for the integration of renewables in district heating systems, with around 25% of its energy produced from clean sources, make it one of the key regions in the market.

In this regard, the leading countries in the European region are Sweden, Estonia, Austria, Denmark, Lithuania, Iceland, and Latvia, with more than 50% of their district heating energy produced from sustainable resources. Additionally, due to the conflict between Ukraine and Russia, the government of regional countries had to reconsider their dependence on Russia for their energy needs. This has driven the emphasis on green energy, which will push the usage of renewables in this region at a high rate.

Residential Category To Grow at Significant Rate

The residential category, within the application segment, is expected to grow at a high rate in the forecast period, attributed to the increasing number of households globally. With the increasing level of urbanization, there is a rise in the need for energy. This, in turn, drives the modernization of the heating infrastructure, to make it apt for providing energy to modern homes. They are also cost-effective, as the owners share the cost of heating a building, and only one boiler is needed for the whole building, instead of one per residence. The advancements in smart home technologies are also a driver of the increasing demand.

In cold countries, such as Denmark, Sweden, and Russia, 40–50% of the heating requirements of buildings are fulfilled by these solutions, which lead to energy efficiency.

Combined Heat and Power (CHP) To Grow at a High Rate

The CHP category in the plant type segment is expected to grow at a high rate, due to the cost-effectiveness and high sustainability of this approach. The cogeneration of electricity and heat is beneficial as the loss of energy while transferring it to another plant for electricity generation is minimal or extremely low. It also helps in reducing carbon emissions and operating costs, facilitating the integration of renewable energy sources, and improving the flexibility of critical infrastructure and the electrical power system.

CHP systems are majorly used in industrial, large commercial, and institutional applications; therefore, with the high rate of industrialization, this category is advancing rapidly. These systems also help reach economies of scale, which further makes technologies such as thermal energy storage or biomass more affordable to implement and operate.

Pumps To Grow at Significant Rate

The heat pump category within the component segment is expected to grow at a high rate in the forecast period, due to the rising usage of technologically advanced systems. Heat pumps in these network help in reducing heat loss and integrating renewable power in electricity networks, by running when the production of renewable power is high. They also help in increasing the temperature of the heat generated, which is used in different industries, such as chemical, refining, and paper.

With the increasing industrialization rate globally, the demand for heat pumps is rising in district heating networks. These pumps ultimately help in decreasing the consumption of energy and stabilizing the energy prices.

Regional Analysis

Europe Leads in Market Share

The European region held the largest share of the market revenue, of more than 36%, in 2022. This was due to the rising demand for energy in the region, backed by the increasing industrialization and urbanization, as well as the growing preference for energy-efficient systems, and government regulations to reduce greenhouse emissions. The low temperature in most of the region for most of the year is also one of the factors that make Europe the biggest market for these systems.

Additionally, many new geothermal district heating plants are being constructed in the region to utilize clean energy. In this regard, the development of the region’s biggest such facility was announced at the beginning of 2022, and it will be partly operational by 2025. The KeepWarm project, under which the modernization of 16 pilot district heating systems has begun in Central and Western Europe, and many more projects are contributing to the market advance.

APAC will be the fastest-growing region in the forecast period, due to the booming industries, rapid urbanization, and constantly changing climate. Additionally, the increasing disposable income and rising concerns related to the emission of CO2 are the key driving factors for this market in the APAC region.

Moreover, China is the biggest market in the region due to the huge investments being poured in district heating systems, such as the one in Heilongjiang province, which is supported by the Asian Development Bank (ADB). It will cater to 1.21 million urban residents in six cities.

Market Breakdown

This fully customizable report gives a detailed analysis of the district heating industry from 2019 to 2030, based on all the relevant segments and geographies.

Based on Heat Source

• Coal
• Natural Gas
• Renewables
• Oil and Petroleum Products

Based on Component

• Boiler
• Insulated Pipeline
• Pumps
• Heat Exchanger
• Heat Meters

Based on Plant Type

• Boiler Plants
• Combined Heat and Power (CHP)

Based on Application

• Residential
• Industrial
• Commercial

Geographical Analysis

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • U.K.
  • France
  • Italy
  • Spain
• Asia-Pacific
  • Japan
  • China
  • India
  • South Korea
  • Australia
• Latin America
  • Brazil
  • Mexico
• Middle East and Africa
  • Saudi Arabia
  • South Africa

Top District Heating Companies