Global District Heating Market Size, Share & Industry Trends Analysis Report By Application (Residential, Commercial and Industrial), By Plant Type (Combined Heat & Power, Boiler Plants), By Heat Source, By Regional Outlook and Forecast, 2022 - 2028

Analysis of Market Size & Trends

The Global District Heating Market size is expected to reach $231.3 billion by 2028, rising at a market growth of 6.1% CAGR during the forecast period.

District heating (also known as heat networks or teleheating) is a technique for distributing heat generated in a central place through a network of insulated pipes for residential and commercial space heating and water heating needs.

The heat is often derived from a cogeneration plant that burns fossil fuels or biomass, however heat-only boiler stations, geothermal heating, heat pumps, central solar heating, and heat waste from manufacturing and nuclear power electricity generation are also utilized.

District heating facilities are more efficient and provide superior pollution control than local boilers. Some study indicates that district heating with combined heat and power (CHPDH) is the most cost-effective option for reducing carbon emissions and has one of the smallest carbon footprints among fossil power facilities.

Fifth-generation district heat networks do not use on-site combustion and have zero CO2 and NO2 emissions; they employ heat transmission utilizing electricity, which may be supplied from renewable energy or remote fossil-fueled power plants. The Stockholm multi-energy system employs a combination of CHP and centralized heat pumps.

This enables the creation of heat via electricity when intermittent power production is abundant, and the cogeneration of electric power and district heating when intermittent power production is scarce.

COVID-19 Impact Analysis

COVID-19 had a significant impact on the general expansion of the industry due to the delay in several infrastructure projects and the closure of several industrial and manufacturing enterprises, which impacted the overall demand for district heating systems. However, the easing of government-imposed lockdowns and the resumption of industry operations, coupled with ongoing vaccination campaigns to prevent the spread of the virus, have increased industry revenue. In addition, district heating systems will experience an increase in demand due to an increase in residential and commercial construction projects. During the energy production lockup, renewable energy sources have gotten the upper hand.

Market Growth Factors

Urbanization And Industrialization Expansion

Urbanization is one of the world's megatrends, and the continuing growth of cities is increasing the demand for district heating. Increasing migration from rural to urban areas has led to a rise in public spending. As a result, the need for heating has steadily increased, and large investments have been made in the district heating sector. Growing urbanization results in the development of organized infrastructure suited for district heating solutions. Increasing urban populations necessitate sustainable, efficient, and dependable utility services, such as district heating and energy generation.

Integration Of Diverse Sources Of Energy

One of the primary benefits of district heating systems is their capacity to incorporate diverse energy sources, such as waste heat and renewables. According to the IEA, approximately 90% of the world's heat generation in 2020 will come from fossil fuels, mostly coal (45%), natural gas (40%), and oil (5%), a decrease from 95% in 2000. More heat source diversification (especially from fossil fuels to renewables, electricity, and excess heat) and the incorporation of large-scale heat pumps will accelerate the transition from third-generation to fourth-generation district heating networks, characterized by lower temperatures and greater flexibility.

Market Restraining Factors

Reduced Efficiency For Minor Heating Loads And Space Limitations In Distribution Networks

The uses of district heating is suitable for the construction of large-scale developments by major developers. The primary reason for this is that smaller-scale developers, despite being aware of the advantages of district heating, do not adopt it simultaneously with their neighbors to accommodate their varying building schedules and investments. Because of this, to keep their work schedules on track, small-scale developers choose conventional heating.

Heat Source Outlook

Based on the Heat Source, the District Heating Market is segmented into Coal, Natural Gas, Renewables, Oil and Petroleum Products, and Others. The coal segment witnessed a significant revenue share in the district heating market in 2021. Coal is a cheap heat source that is used to heat homes, commercial buildings, barns, hot tubs, pools, and greenhouses with coal-fired furnaces. This guide will discuss the advantages and disadvantages of heating a room with a coal-burning furnace so that users can decide whether or not it is the best option for the consumer.

Plant Type Outlook

By Plant Type, the District Heating Market is classified into Boiler Plants, Combined Heat and Power, and Others. The combined heat & power segment procured the largest revenue share in the district heating market in 2021. CHP facilities save capital expenditures, create economies of scale, reduce heat losses to the environment, and replace the usage of fossil fuels for district heating, thereby reducing greenhouse gas emissions. They considerably boost power plant efficiency, hence decreasing fuel prices, carbon emissions, and environmental impact.

Application Outlook

Based on the Application, the District Heating Market is bifurcated into Residential, Commercial, and Industrial. The commercial segment registered a significant revenue share in the district heating market in 2021. Demand for district heating systems in the business sector would be influenced by rapid urbanization and industrialization, as well as rising investments in the development of new manufacturing units and facilities.

District Heating Market Report Coverage

Report Attribute	Details
Market size value in 2021	USD 154.6 Billion
Market size forecast in 2028	USD 231.3 Billion
Base Year	2021
Historical Period	2018 to 2020
Forecast Period	2022 to 2028
Revenue Growth Rate	CAGR of 6.1% from 2022 to 2028
Number of Pages	222
Number of Tables	373
Report coverage	Market Trends, Revenue Estimation and Forecast, Segmentation Analysis, Regional and Country Breakdown, Competitive Landscape, Companies Strategic Developments, Company Profiling
Segments covered	Application, Plant Type, Heat Source, Region
Country scope	US, Canada, Mexico, Germany, UK, France, Russia, Spain, Italy, China, Japan, India, South Korea, Singapore, Malaysia, Brazil, Argentina, UAE, Saudi Arabia, South Africa, Nigeria
Growth Drivers	Urbanization And Industrialization Expansion Integration Of Diverse Sources Of Energy
Restraints	Reduced Efficiency For Minor Heating Loads And Space Limitations In Distribution Networks

Regional Outlook

Region-wise, the District Heating Market is analyzed across North America, Europe, Asia Pacific, and LAMEA. The Europe segment acquired the largest revenue share in the district heating market in 2021. Increasing urbanization, expanding demand for energy-efficient technologies, and increasing government restrictions for decreasing greenhouse gas emissions further contribute to the expansion. In addition, the expansion of the European district heating market is supported by stringent emission limitations imposed by numerous environmental organizations.  

Free Valuable Insights: Global District Heating Market size to reach USD 231.3 Billion by 2028

KBV Cardinal Matrix - District Heating Market Competition Analysis

The major strategies followed by the market participants are Partnerships. Based on the Analysis presented in the Cardinal matrix; ENGIE and Vattenfall AB are the forerunners in the District Heating Market. Companies such as Fortum Corporation, The Danfoss Group, NRG Energy, Inc. are some of the key innovators in District Heating Market.

The market research report covers the analysis of key stake holders of the market. Key companies profiled in the report include Fortum Corporation, Vattenfall AB, ENGIE, The Danfoss Group, Statkraft AS, LOGSTOR Denmark Holding ApS (Kingspan Group PLC), Vital Energi Ltd., Alfa Laval AB, SHINRYO CORPORATION, and NRG Energy, Inc.

Strategies deployed in District Heating Market

» Partnerships, Collaborations and Agreements:

• Mar-2022: Fortum joined hands with Microsoft Corporation, an American multinational technology corporation. Under this collaboration, Fortum would catch the extra heat developed by a new data center region to be produced by Microsoft in the Helsinki metropolitan location in Finland. Moreover, the data centers would utilize 100% emission-free electricity, and Fortum would transfer the pure heat from the server cooling process to houses, services, and company buildings that are communed to its district heating system.
• Mar-2022: Vattenfall formed a partnership with Ameresco, the greatest renewable energy company. Together, the companies aimed to operate with energy groups, city stakeholders, and local Bristol companies to establish a full range of technologies focused at optimizing city-wide electrical infrastructure.
• Dec-2021: Vattenfall partnered with Cloud&Heat Technologies, a provider of scalable, energy-efficient, and secure tailored high-density infrastructure solutions. This partnership aimed to appoint a data center at a biomass factory outside Stockholm. Moreover, the facility would generate power from the combined heat and power (CHP) biomass plant and send extra heat to the local district heating network.
• Dec-2021: ENGIE signed the New Gartenfeld agreement with GASAG, the main natural gas supplier and vendor in Berlin. This agreement aimed to transform a former cable factory site into an endurable district of the future. Moreover, to achieve this innovative project, ENGIE, and its local partner GASAG have joined hands to install, link, and utilize a highly efficient dispersed energy infrastructure, that would deliver mobility and energy supply services.
• Dec-2021: Danfoss formed a partnership with ENFOR, a spin-off from the Technical University. This partnership acknowledges the mutual ambition of ENFOR and Danfoss to further produce creative software to support the utilization and energy companies with green growth. Moreover, Danfoss and ENFOR would merge the unique software answer based on artificial intelligence and processing of large data produced and offered by ENFOR into the complete software offering delivered by Danfoss.
• Jul-2021: Vital Energi came into a partnership with SGN, a British gas distribution company. Through this partnership, the companies aimed to create, own and operate low and zero-carbon heat networks. Moreover, the aim is to provide new and existing industrial, residential, and commercial buildings.
• Jun-2020: Fortum teamed up with Chempolis, a technology company. Under this collaboration, the companies aimed to conduct trial runs of straw-based cellulose, hemicellulose, and lignin samples at Chempolis's test facility in Oulu, Finland. Moreover, the collaboration is to produce several Fortum-owned biorefineries that are built on Chempolis's patented fractionation technology.
• Apr-2020: Vattenfall came into a partnership with Cory Riverside Energy, a waste and recycling management business. This partnership aimed to deliver low-carbon heating for east London homes.

» Mergers and Acquisitions:

• May-2019: Danfoss completed the acquisition of Leanheat, a turnkey IoT solution that upgrades building HVAC systems. Through this acquisition, Danfoss has further reinforced its standing in the global market for Multi-Family Houses and District Heating Systems.

» Geographical Expansion:

• Mar-2022: Vattenfall expanded its geographical footprint by establishing a new heat plant Carpe Futurum in Uppsala, Sweden. This expansion would decrease carbon dioxide emissions by about 200,000 tonnes per year, compared with when heat and other fossil fuels were utilized.

» Joint Venture:

• Jul-2022: Fortum formed a joint venture with Green Investment Group, a specialist green investor. This joint venture aimed to partner with industrial and infrastructure consumers to entertain clients and societies to lower their carbon footprint. Additionally, the broad entry to the UK also allows Fortum to investigate the investment prospect for other strategic growth regions, such as the recycling of batteries and WtE-ash recycling.

Scope of the Study

Market Segments Covered in the Report:

By Application

• Residential
• Commercial
• Industrial

By Plant Type

• Combined Heat & Power
• Boiler Plants
• Defense
• Others

By Heat Source

• Natural Gas
• Coal
• Oil & Petroleum Products
• Renewables
• Others

By Geography

• North America
  • US
  • Canada
  • Mexico
  • Rest of North America
• Europe
  • Germany
  • UK
  • France
  • Russia
  • Spain
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Singapore
  • Malaysia
  • Rest of Asia Pacific
• LAMEA
  • Brazil
  • Argentina
  • UAE
  • Saudi Arabia
  • South Africa
  • Nigeria
  • Rest of LAMEA

Key Market Players

List of Companies Profiled in the Report:

• Fortum Corporation
• Vattenfall AB
• ENGIE
• The Danfoss Group
• Statkraft AS
• LOGSTOR Denmark Holding ApS (Kingspan Group PLC)
• Vital Energi Ltd.
• Alfa Laval AB
• SHINRYO CORPORATION
• NRG Energy, Inc.