District Heating Market Size | Share and Trends 2024 to 2034

District Heating Market Size and Growth 2024 to 2034

The global district heating market size accounted for USD 192.98 billion in 2024 and is expected to reach around USD 319.10 billion by 2034, expanding at a CAGR of 5.2% from 2024 to 2034.

District Heating Market Key Takeaways

• Europe led the global market with the highest market share of 48% in 2023.
• Asia Pacific is projected to expand at the fastest CAGR during the forecast period.
• By Heat Source, the renewable segment captured the biggest revenue share in 2023.
• By Plant Type, the combined heat and power (CHP) segment is estimated to hold the highest market share in 20232.
• By Application, the residential segment generated over 60% of revenue share in 2023.

Europe District Heating Market Size and Growth 2024 to 2034

The Europe district heating market size was estimated at USD 88.05 billion in 2023 and is predicted to be worth around USD 153.17 billion by 2034, at a CAGR of 5.4% from 2024 to 2034.

Europe dominated the district heating market in 2023. The large power stations in Europe create waste heat. This heat is used to meet the region’s entire heating needs. Thus, this region is dominating with large market share.

Asia-Pacific, on the other hand, is expected to develop at the fastest rate during the forecast period. The expansion of the district heating market in the region is predicted to be fueled by population growth, rising disposable income, and more government efforts. Furthermore, the expansion of the district heating market is fueled by the surge in the number of households connected to district heating and a rising demand for thermal comfort.

Growth Factors

The district heating is a cost-effective method of transferring heat generated in a central place to multiple buildings such as companies, residences, and factories via a network of insulated pipes. The heat is employed in a variety of household and commercial applications including room and floor heating as well as water heating. The central solar heating, geothermal heating, and heat waste from nuclear power plants are the most common sources of heat. The district heating is particularly fuel efficient, and its flexibility allows for replacement of greener alternatives, both of which are anticipated to drive the growth of the district heating market during the forecast period.

The regulations aimed at reducing greenhouse gas emissions as well as increased awareness about the waste recycling will drive the greater demand for district heating in the market. The strict regulations aimed at improving building energy efficiency through the use of sustainable technologies will help the district heating market grow at a rapid pace. Due to its cost-effectiveness and environmental friendliness, the global district heating market has seen a substantial growth. The heat supply from district heating is produced in an environmentally sustainable manner, reducing greenhouse gas emissions and positively impacting the product demand globally. The government initiatives aimed at reducing carbon emissions as well as increased adoption of sustainable energy will help to boost the growth of the market.

The natural gas has steadily gained a healthy amount of market share in the global district heating industry as the trend toward power generation has switched away from fossil fuels, primarily due to environmental determinants. The natural gas' multiple advantages, including as lower costs and lower carbon emissions combined with outstanding efficiency, have aided the segment's expansion. The growing natural gas exploration activity in each region is also a factor in the growing popularity of these systems.

In recent years, non-conventional energy sources such as solar and wind have gained popularity. In various developed and developing countries, there has been a shift toward solar energy. However, since the district heat network serves a large number of people, and renewables are a newbie to the area, they have a limited market compared to natural gas. The natural gas-fired district heating has a higher established and installed capacity than renewable-fired district heating. However, due to the high cost of renewables, the money generated by using them surpasses that of natural gas. This trend is expected to continue, with the share of renewables increasing at a consistent rate.

Market Scope

Heat Source Insights

In 2023, the renewable segment dominated the district heating market. As public and government concern about environmental safety has grown in recent years, power companies have shifted their attention from fossil fuels to renewable sources. This element boosts the use of renewable energy sources all over the world. 

The natural gassegment, on the other hand, is predicted to develop at the quickest rate in the future years. Around the globe, the exploration efforts are increasing. In comparison to fossil fuels, natural gas plants are far more cost effective and have fewer negative environmental effects.

Plant Type Insights

In 2023, the combined heat and power (CHP) segment dominated the district heating market. The combined heat and power (CHP) systems allow for the production of both electricity and heat for the heating systems. This has been a major component in their growth in recent years. 

The boiler segment, on the other hand, is predicted to develop at the quickest rate in the future years. Due to rising global demand for power, the boiler segment is also expected to rise during the forecast period. The installation of various energy plants is similarly on the rise all across the world. 

Application Insights

The residential segment dominated the district heating market in 2023 and garnered a revenue share of 60%. Due to the rising need for heating networks at residential locations for diverse functions such as water heating and space heating, the residential category has the greatest market share during the forecast period.

The industrial segment is the fastest growing segment of the district heating market in 2023. With the current transformation, infrastructural development is also rising in the industrial sector. The use of heating spaces in the industrial sector is increasing as a result of this issue. 

District Heating Market Companies

• Shinryo Corporation
• Ramboll
• Danfoss Group
• E. on Energy Services
• FVB Energy Inc.
• Dall Energy
• Statkraft
• Kelvion
• NRG Energy
• NextGen Heating

Recent Developments

• In February 2020, Deutsche Telekom and Vattenfall AB agreed to a 10-year energy supply arrangement based on solar power.

• ENGIE Africa and its subsidiary AUSAR Energy began construction of eight hybrid solar power facilities at remote locations in February 2020. 

• Fortum paid more than $7 billion for Uniper SE in March 2020. Fortum would be able to expand its base across Europe as a result of this acquisition.

• Savosolar PLC was awarded a contract to deliver two solar heating systems to NewHeat SAS in June 2020. The heat generated by these two systems would be sold to firms in Narbonne and Pons by this France-based company.

• Fortum teamed up with Fluxio and Solteq in May 2018 to research energy saving strategies. The collaboration will aid in the transition to a carbon-neutral district heating system.

• Danfoss purchased more shares of Leanheat in June 2018, enhancing its position in building energy efficiency and management.

• Vattenfall installed new smart heat meters for the district heating system in Berlin in March 2018. The new smart meters offer precise control, which aids in the most efficient use of gasoline and thereby lowers carbon dioxide emissions. 

To increase their market share across the district heating market, leading industry players are working on developing novel products with improved features. Furthermore, major market players use focused research and development operations as well and contracts and partnerships, to obtain a competitive advantage in the global district heating market. Other strategies adopted by key market players are joint venture, investments, and merger and acquisition to expand their market.

Segments Covered in the Report

By Heat Source

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

By Plant Type

• Boiler
• Combined Heat and Power (CHP)
• Heat Exchangers
• Heat Meter
• Others

By Application

• Residential
• Commercial
• Industrial

By Geography

• North America
• U.S.
• Canada
• Europe
• U.K.
• Germany
• France
• Asia-Pacific
• China
• India
• Japan
• South Korea
• Malaysia
• Philippines
• Latin America
• Brazil
• Rest of Latin America
• Middle East & Africa (MEA)
• GCC
• North Africa
• South Africa
• Rest of the Middle East & Africa