Saudi Arabia District Cooling Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2025 - 2030)

Saudi Arabia District Cooling Market Trends & Growth Drivers

Integration of Renewable Energy Sources Is Key Trend

As it must cater to huge spaces and multiple built units, district cooling is an energy-intensive technology. Moreover, even though fossil fuels are easily available in the kingdom, the government is trying to shift away from them towards cleaner sources of electricity.

The government targets the installation of 150 Gigawatts (GW) of renewable energy capacity by 2030, aiming to reduce greenhouse gas emissions by 278 million tonnes each year. Under the targets, 40 GW of wind capacity and 58.7 GW of solar capacity is to be commissioned by the end of this decade. Since cooling is one of the most energy-intensive application in the country, feeding energy generated from these sources to DHC systems enable a considerable emission reduction.

District cooling systems in the kingdom are being further being enhanced by integrating them with thermal energy storage. This technology collects electricity during off-peak hours to power a and releases the cooling energy when the demand is high, primarily during the day. By using the electricity stored during off-peak durations, the load on power plants during peak demand periods reduces significantly.

TES-integrated DHC has already been commissioned at the under-development Red Sea Project. Chillers are powered by solar energy at night; therefore, they produce more cooling energy than needed. This energy is stored in a massive TES and released whenever demand rises.

Rampant Infrastructure Development Is Biggest Market Driver

The Saudi Arabian district cooling market is primarily driven by the large scale of infrastructure development across the residential, commercial and industrial sectors. As per reports, USD 1.5 trillion worth of construction projects are either underway or planned in the kingdom. The biggest among them is the USD 500-billion NEOM, a smart city being constructed on 26,500 square kilometres of land.

Other mega projects under various stages of execution are The Red Sea Project, Diriyah Gate, King Abdullah Financial District, and Qiddiya, all part of the Vision 2030. These projects will comprise thousands of industrial, commercial and residential premises, all of which will require year-round space and process cooling.

For instance, the King Salman Park Foundation contracted Saudi Tabreed to set up a district cooling plant at the park with a capacity of 60,000 thousand tonnes of refrigeration (TR). Similarly, a 21,000-TR district cooling plant is to come up in Medina, for which City Cool, ADC Energy Systems and Johnson Controls Arabia have been contracted. In all, the Saudi government targets a 3-million-TR capacity by 2030.

High Initial Investment Could Slow Down Market Advance

The high capital required to set up DHC plants could pose challenges in the growth of the market. Such infrastructure is composed of several heavy-duty, high-capacity systems, such as centralised cooling units, long insulated pipelines (often laid underground), massive heat exchangers and high-output compressors.

Moreover, to achieve the maximum cooling and energy efficiency, these systems must be integrated with a range of sensors that communicate real-time data to building management systems. This is why district cooling plants can only be set up at the administrative level, with the initiation and financial support of municipal councils in major cities, provincial governments and the crown. Land acquisition and development are another problem, apart from the fact that these plants are unviable for individual buildings.

Saudi Arabia District Cooling Market Analysis

Production Technique Analysis

• Electric chillers are the largest category in the market, with 49.0% share in 2024, and they will also grow the fastest during the forecast period.
• This is credited to the reliability and high efficiency of electric chillers, especially centrifugal ones.
• Moreover, with the increasing focus in the kingdom on the reduction in fossil fuel consumption, electric chillers are being preferred over DHC systems that use heat as the primary energy source.
• The expanding availability of electricity produced from renewable and clean sources also drives the market in this category.

The following production techniques have been analysed:

• Free Cooling
• Adsorption Cooling
• Electric Chillers (Largest and Fastest-Growing Category)

End User Analysis

• The commercial category is the largest in the market as comfort is a key requirement at shopping malls, hotels, hospitals, educational institutions and other kinds of commercial spaces.
• In this regard, the market is primarily driven by the growing hospitality & tourism industry, especially in the holy cities of Mecca and Medina.
• Compared to 2019, 58% more tourists came to Saudi Arabia in 2023 and to accommodate them, a large number of hotels and resorts are being constructed.
• The residential category will witness the highest CAGR during the forecast period, of 10.9%.
• This is credited to the development of large residential complexes in existing urban areas and upcoming smart cities.
• Over individual ACs for homes, district cooling for the entire premises provides energy efficiency.
• Over the last two decades, the kingdom has been attracting an increasing number of immigrants from around the world.
• This is driving the construction of large residential colonies, which are being equipped with district cooling.

The report offers analysis on the following end users:

• Commercial (Largest Category)
• Industrial
• Residential (Fastest-Growing Category)

Service Analysis

• Operations & maintenance is the largest category with USD 607.4-million revenue in 2024.
• This is because the operation and maintenance of district cooling systems are technically challenging, which is why end users often outsource them.
• Operational monitoring and regular maintenance are vital to ensure maximum system reliability and energy efficiency.
• Additionally, regular upgrades are offered as part of O&M services, lessening the hassles for end users to continuously integrate advanced technologies themselves.
• The energy management category is expected to witness the fastest growth over the forecast period.
• This is attributed to the kingdom’s strong focus on energy efficiency and sustainability under numerous government initiatives.
• Demand-side management, energy audits and TES integration are important to ensure minimal energy consumption and maximum cooling efficiency.
• Moreover, these strategies are mandatory for buildings and colony seeking the green certificate.

Here are the services studied during the study:

• Pre-Installation
• Installation and Commissioning
• Operations and Maintenance (Largest Category)
• Retrofit
• Energy Management (Fastest-Growing Category)
• Support

Regional Analysis

• Al-Riyadh is the largest and fastest-growing market in the country.
• This is attributed to the huge scale of infrastructure development in the Saudi capital.
• Sports Boulevard, Diriyah Gate, King Salman Park, Qiddiya, King Abdullah Financial District (KAFD), Green Riyadh, New Murabba, Banan City, Riyadh Metro, and Wadi Hanifah are among the biggest construction projects in the province.
• Riyadh is already the kingdom’s most-populated province, which is why its energy consumption is among the highest.
• To reduce the load on the grid, energy-efficient district cooling plants are being established in various district of the city.

The following provinces are part of the scope:

• Al-Riyadh (Largest and Fastest-Growing Provincial Market)
• Makkah
• Al-Madinah
• Al-Qaseem
• Eastern Region
• Aseer
• Tabouk
• Hayel
• Northern Border
• Jazan
• Najran
• Al-Baha
• Al-Jouf

Saudi Arabia District Cooling Market Share

The Saudi Arabian district cooling market is fragmented primarily due to the requirement for different services and the varying scale of projects. Most players in the market are regional companies, along with a few established globally operating ones. Additionally, providing pre-installation, installation & commissioning, operations & maintenance, retrofitting, energy management and support services is technically less challenging than developing and manufacturing the systems. This lowers the entry barriers, allowing many new real estate and infrastructure services companies to enter the market.

Saudi Arabia District Cooling Market News

• In November 2024, The UAE Ministry of Energy and Infrastructure has signed a MoU with Emirates Central Cooling Systems Corporation (Empower) to explore, develop and enhance opportunities for collaboration in delivering district cooling services across the northern emirates.
• In October 2024, Emirates Central Cooling Systems Corporation PJSC (Empower) signed an agreement with Mitsubishi Heavy Industries Thermal Systems Ltd. (MHI Thermal Systems) to supply advanced chillers with a total capacity of 100,000 tons of refrigeration.
• In September 2024, Jhonson Controls International plc announced its participation at the Water, Energy, Technology and Environment Exhibition, held in Dubai. The company showcased its new solutions for smart buildings, such as the Cooling as a Service, for enhanced cooling efficiency under high loads.
• In June 2024, Medina, Saudi Arabia 2024 - The Knowledge Economic City “the Company” has announced the signing of contract with a consortium of three companies - “City Cool”, “Johnson Controls Arabia (JCA)”, and “ADC Energy System” to build a chilled water district cooling plant, where the consortium’s services would be based on a Build, Own, Operate, and Transfer (BOOT) model.