District Heating & Cooling Market: Economies of Scale offered by District Heating & Cooling Systems to Augment their Installation Worldwide.

With no big player holding dominance, the global district heating and cooling (DHC) market currently exhibits low concentration of component suppliers. A majority of the companies in the market operate either in local or regional level. The proximity to customers, helps these companies avoid incurring extra operational cost, states Transparency Market Research (TMR) in a report.

TMR has estimated the global market for direct heating and cooling systems to exhibit a CAGR of 6.2% and 5.8% in terms of energy sales revenue and volume, respectively between 2016 and 2024. Expanding at this rate, the market is projected to reach US$243,428.3 mn by the end of 2024. Based on volume, the market is forecast to reach 12,187,491.8 tera joules by 2024.

Currently, the district heating segment leads the market based on technology. It held over 90% of the market in 2015. Regionally, Asia Pacific dominated the global market with a share of 55% in 2015. The increasing importance attached to ensuring energy efficiency and favorable government initiatives have augmented the growth of the market in the region.

Economies of Scale Ensured by District Heating and Cooling Systems Augment their Demand Globally

“The primary reason behind the growing popularity of DHC systems is the excellent flexibility they offer in terms of using myriad energy options, depending on load profile and condition of the utility grid,” observed the TMR report’s author. DHC system operators help keeping check on the overall operation cost by easily switching between the available heat sources during fluctuations in heat generation costs. Besides this, the conducive incentive schemes and regulatory mechanisms facilitate faster market penetration, thereby reinstating confidence of enterprises operating therein.

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“The impressive savings achieved from the district-wide installation of heating and cooling systems has led to the expansion of the global DHC market,” said a lead TMR analyst. These systems are also fuel efficient in nature, which makes them environmentally friendlier than conventional heating and cooling technologies. Additionally, DHC systems scale up impressively since they can serve an increasing number of household, require lesser space, and ensure better management of systems. Driven by these factors, the global DHC market is expected to exhibit robust growth in the forthcoming years.

High Initial Cost Required for Installing DHC Systems and Advent of Alternatives Could Hamper DHC Market

Installing DHC system requires high initial cost for the construction of pipeline networks, connections, and plants, which is a key factor hampering the market’s trajectory. The need for expensive equipment such as boilers, heat absorbers, chillers, heat pumps, heat accumulators, and heat exchangers for the system to run unhindered also creates bottlenecks for the market. Additionally, the advent of off-grid and renewable energy systems, coupled with the rising share of decentralized energy systems, is a key factor restraining the market’s overall growth. With an increasing number of commercial and industrial facilities and households producing heat and electricity through renewable sources and CHP, the demand for centralized DHC systems could suffer in the near future.

Nonetheless, awareness regarding long term cost-savings offered by DHC systems, combined with favorable government incentives will boost adoption of these systems across emerging economies. This will in turn create opportunities for the growth of the global DHC market in the near future.

The report segments the global district heating and cooling market as:

Global District Heating and Cooling Market: Consumption Analysis by Technology Type

• District Heating
• District Cooling

Global District Heating and Cooling Market: Generation Analysis by Components Type

• Chillers
• Boilers

Global District Heating and Cooling Market: Distribution Analysis by Components Type

• Pipes
• Pressure Pumps
• Valves

Heating Systems to Report Higher Sales in Global District Heating and Cooling Market, says TMR

With no clear established leader, the global market for district heating and cooling (DHC) demonstrates a low concentration in its competitive landscape, reports Transparency Market Research (TMR). Local players exhibit a monopoly over their respective regional markets as these heating and cooling systems are mostly traded at the local municipality or the district level. Currently, these players cater to a number of industries and applications.

As this market is highly susceptible to changes in terms of technology and the scale of projects, players are recommended to keep updating themselves with the latest technologies in order to meet the requirements of consumers.

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Benefits Offered by DHC Systems to Boost Installations

“With overall energy sales of more than 6,300,000 TJ, leading to a revenue of over US$132 bn in 2014, the global district heating sector is growing rapidly,” an analyst at TMR states. Similarly, cooling systems are also witnessing a significant rise in their sales. As district heating and cooling systems help reduce the overall cost of the boiler (including other expenditures such as installing and staffing), fuel boiler’s efficiency, and are environment-friendly, they have proved to be much more beneficial than that of standalone boilers. The growing awareness regarding these benefits offered by DHC systems has added considerably to their sales in the recent times and will continue to do so over the forthcoming years, states TMR.

The flexibility in heat generation offered by these systems, depending upon the load profile and the condition of the utility grid, is expected to increase their adoption across the world in the near future. The Middle East, especially the GCC countries, are also expected to witness a strong rise in the installation of these devices in the years to come due to the increasing need for optimization in the existing methods of air conditioning as well as for more energy efficient technologies.

High Initial Capital Limiting Adoption of DHC Systems

In spite of the convenience offered by DHC systems, a steady adoption rate is not the case with them. The high initial capital required for the construction of utility, pipeline network, and connections has been limiting their installation in the recent times, hampering the market’s growth. However, players are very much positive about the future of this market, owing to the continual advancement of the technologies utilized in these systems.

Strong Project Pipeline in China Aids Sales of Heating and Cooling Systems in Asia Pacific

The government incentives and a strong project pipeline in China enable Asia Pacific to report the highest sales of heating and cooling systems, says TMR. Currently, the region holds a share of more than 50% of the overall heat and cooling sales across the world and is expected to remain the leading regional market for district heating and cooling over the next few years. Between, heating and cooling systems, the former is registering higher sales. Analysts expect this trend to continue in the years to come.

On the whole, the global market’s opportunity is likely to rise at a CAGR of 5.70% between 2015 and 2023 and increase from US$142.6 bn in 2014 to an estimated value of US$229.4 bn by the end of the forecast period.

Key Takeaways

• The global district heating sector reports rapid growth with energy sales of over 6,300,000 TJ in 2014
• As of 2014, Asia Pacific held more than 50% of the overall sales of DHC
• The global DHC market is likely to reach US$229.4 bn by 2023

The global district heating and cooling market is segmented into:

• By Technology
• District Heating Systems
• District Cooling Systems

Global District Heating and Cooling Market to Exhibit 5.7% CAGR 2015-2023, Propelled by Environmental Benefits

Transparency Market Research (TMR) has announced the publication of a new research report on the global district heating and cooling market. The report examines the market from all angles and provides a complete overview of the market’s performance in the last few years. The report is titled ‘District Heating and Cooling Market - Global Industry Analysis, Size, Share, Trends, Growth and Forecast 2015 - 2023’ and is available for sale on the company’s website.

District heating is a system of heat distribution consisting of a central heat generation unit and multiple recipients. Space and water heating requirements of residential as well as commercial complexes can be fulfilled by district heating systems much more efficiently than with individual installations in each of the recipient units. The central heating unit in district heating systems are often cogeneration plants generating electricity and heat, usually from combustion of fossil fuels. However, biofuels and nuclear power are also starting to be used in district heating systems.

The global district heating and cooling market was valued at US$142.6 bn in 2014, according to the TMR report. Exhibiting a steady CAGR of 5.7% from 2015 to 2023, the market is expected to rise to a valuation of US$229.4 bn.

On the basis of technology, the global district heating and cooling market is segmented into district heating and district cooling. Heating services took up an overwhelmingly dominant 90% of the global market in 2014, due to the ease of supplying heating services from a cogeneration plant.

The primary driver of the market for district heating and cooling services is the high overall savings that can be achieved through the system. Most, if not all, residential and commercial complexes require a steady supply of hot water. However, generating the heat at the site of its usage leads to higher resources being spent in the process. As a result, the demand for centralized distribution is growing.

Centralized generation of heat also leads to less pollution. This factor has also boosted the global market for district heating and cooling, since environmental regulations in place in many regions across the world have supported the usage of district heating and cooling systems over individual units.

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In terms of regional distribution of the global market, Asia Pacific holds a dominant share of more than 50%. The rapid urbanization in the region is responsible for the growing demand for district heating and cooling, since installation of the system requires urban infrastructure being in place already. Though Asia Pacific will continue to be a major regional player in the global district heating and cooling market, the RoW market is expected to exhibit the fastest growth rate in the aforementioned forecast period.

On the competitive front, the global district heating and cooling market is quite fragmented due to the presence of several key players. Some of the major market players profiled in the report are Emirates Central Cooling Systems Corporation (EMPOWER), Emirates National Central Cooling Company PJSC (Tabreed), ADC Energy Systems LLC, Emirates District Cooling LLC (Emicool), KELAG Wärme GmbH, Shinryo Corporation, Ramboll Group A/S, Tekla Corporation, and Keppel DHCS Pte. Ltd.

The global district heating and cooling market is segmented as follows:

By Technology:

• Heating
• Cooling

By Geography:

• North America
• Europe
• Asia Pacific
• Rest of the World

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