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District heating & cooling market valuation to surpass a mammoth $400 billion by 2024, rising adoption of CHP-based systems to expedite the industry growth

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The global district heating and cooling (DHC) market is poised to witness an accelerated growth in the consequent years, primarily owing to growing environmental concerns. Driven by the urgent need to curb carbon emissions, global and regional governments have enforced suitable regulatory measures that have further upheld this industry. As per estimates, the global DHC market was valued at approximately over $200 billion in 2017 and is anticipated to double its remuneration by 2024, given that emerging economies are increasingly investing in the development of various commercial and residential establishments that have a centralized heating and cooling system.

Sweden District Heating & Cooling Market Size, by Application, 2017 & 2024 (USD Million)

Sweden District Heating & Cooling Market Size, by Application, 2017 & 2024 (USD Million)

An outcome of economies of scale, the centralized system of DHC is often extremely cost-efficient when compared to the conventional de-centralized systems. However, an obstacle in the growth of this vertical would be the initial investment required for planning and establishing a distribution infrastructure for the installation of a DHC system. The system’s cost-effectiveness also depends on whether there exists a pre-established distribution infrastructure which could be employed to deliver the DHC services. In case of an existing network, centralized generation costs 40% less than a de-centralized capacity.

Unveiling global DHC market trends with respect to the different energy sources deployed

District heating & cooling market size from combined heat and power (CHP) market is slated to grow by approximately 6% over 2018-2024. According to the International District Energy Association, traditional power plants are extremely inefficient when it comes to generating power as they only extract and convert only about 35%-40% of the energy from the fuel to generate electricity and the remaining 60%-65% of energy is turned into heat which is then released into a local waterbody or into the atmosphere through a smokestack. The association deems this extreme inefficiency to be a massive problem. However, this obstacle also provides a massive opportunity for CHP plants to effectively harvest the immense heat byproduct to produce steam, to heat or to chill water and then effectively cool or heat the surrounding residential or commercial complexes through a DHC network.

According to the association, CHP plants witness fuel efficiencies of around 75%-80% on a regular basis. Additionally, they significantly boost operating efficiencies while decreasing the carbon footprints, thereby providing a massive scope for the expansion of DHC industry from the CHP energy source. The rapid shift from traditional power generation plants to CHP plants is thus slated to augment CHP-based DHC market.

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While CHP has garnered commendable traction, DHC industry players have also been tapping the solar energy source rather prominently. As more and more developed and developing economies turn to renewable sources of energy to fulfil their annual energy needs, it is anticipated that the global DHC market will also experience substantial momentum with the adoption of solar power as an energy source. According to a report by the International Energy Agency the only factor that would limit the development of SHC is the scarcity of viable rooftops and ground space that would house the solar collectors at a location that is accessible to the DHC network. However, even with this constraint, it is being speculated that most of the nations across the globe will come to adopt solar power as an energy source to fuel DHC systems across residential, commercial, and industrial establishments.

According to a 2017 report on SHC by the International Solar Energy Society, over 30 GWth of new solar thermal capacity was authorized in 2017 alone, boosting the global capacity to over 470 GWth. Global Market Insights, Inc., claims that the overall DHC market share from solar power was pegged at $4 billion in 2017, primarily driven by the low operating costs, environmental viability, and ease of installation. Solar power is likely to be majorly adopted across developed as well as developing nations, especially across Europe. Indeed, the European Commission has targeted a deployment of SDH systems across Denmark, Italy, Czech Republic, and Germany, with plans to extend a capacity of 8 GWth by 2020.

Although the global DHC market entertains the deployment of fossil fuels like gas and coal to power the centralized DHC hub, there is a significant untapped potential to upgrade the systems to enable them to employ renewable energy sources like solar, solid bio-fuels, different geothermal technologies, low ambient temperatures and waterbodies. The availability of these cost-competitive clean energy sources makes DHC becomes an extremely worthwhile, cost-effective, and viable service, the rising adoption of which would impel DHC market trends. According to Global Market Insights, Inc., the overall DHC market is expected to exceed an annual energy consumption of 19,000 PJ by 2024.

Author NameAkshay Kedari

An overview of district cooling market across GCC countries, overall industry share to exceed USD 140 billion by 2024

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Emirates Central Cooling Systems Corporation, one of the pioneers of district cooling market, recently generated a heavy momentum in this fraternity with the news of connecting almost 40 buildings with its district cooling services in the first half of 2018. The total connected load in this period was more than 52000 RT (refrigeration tonnes). Reportedly, the company has further awarded the suppliers and contractors with 25 contracts on new projects across various areas in Dubai, in which the company currently operates 73 district cooling plants. For the record, Empower started its operation in the year 2014 by providing district cooling services to only two buildings and the company set a record of providing services to more than 1000 buildings by the end of 2017. Empower’s initiative not just reflects the company’s strengthened position in Middle East district cooling market, but also depicts the growing consumer awareness regarding the importance of energy efficient cooling technologies.

China District Cooling Market Size, By Production Technique, 2017 & 2024 (USD Million)
China District Cooling Market Size, By Production Technique, 2017 & 2024 (USD Million)

For the uninitiated, district cooling technology bears inherent advantage for areas with dense demographic pattern and huge demand for efficient air conditioning. This is the fundamental reason why district cooling industry observes a massive growth scope across GCC countries. In a bid to unlock the potential of the technology, regional governmental bodies are taking significant initiatives that has immensely contributed in the business share.

The Dubai Supreme Council of Energy, a couple of years back, declared its plans to improve the regional district cooling operations by increasing its investment in the technology from 20% to 40% by 2030. Reportedly, this is in sync with the Dubai Clean Energy Strategy 2050 that aims to transform Dubai into an International hub for clean energy. The initiative was touted as a part of the implementation of the demand side management strategy for the energy sector.

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Another gulf country that has emerged to be a profitable growth avenue for district cooling industry is Saudi Arabia. Increasing construction spending in major cities like Macca and Riyadh in tandem with favorable regulations promoting adoption of district cooling systems are two of the interlinked factors that are expected to push Saudi Arabia district cooling market to reach USD 1 billion by 2024.

From the economic point of scale as well, district cooling market is indeed a viable investment spot for GCC countries. Air conditioning across these regions is deemed to be highly cost intensive. As per estimates, the cooling capacity installation across GCC belt approximately costs around USD 50 billion. Accounting for almost 50% of annual electricity consumption and an annual fuel opportunity cost of USD 20 billion, air conditioning presently is the chief determinant of the region’s increasing power requirements. It has been claimed that the cooling demand in this belt would nearly triple by the end of 2030, due to extreme climatic conditions. Meeting this requirement would cost GCC nearly USD 100 billion for installing new cooling capacity and an additional USD 120 billion for new power capacity, if it continues to maintain the existing cooling technology pattern.

District cooling market, however, makes economic sense in areas of highly cooling density. According to estimates, district cooling consumes nearly 40 to 50% less energy for every refrigeration ton-hour that traditional in-house building technologies. In fact, as per experts’ opinion, these sustainable services under favorable circumstances offer significant operational efficiency as well as cost gains.

It is imperative to mention that the full potential of the district cooling market can only be achieved via effective governmental interventions. Its long-term potential capacity & fuel saving alone justify the immediate need for sufficient governmental involvements in making this technology mainstream. By incorporating district cooling in urban planning, governments can allow this ecofriendly technology to play a vital part in the overall economic growth. With a strong regulatory backup and unprecedented technological advancements, overall district cooling market is certain to attain remarkable proceeds over the ensuing years.

Author NameSatarupa De

Europe district cooling market to be driven by a stringent regulatory framework, increasing awareness among customers about energy optimization to augment the industry outlook over 2018-2024

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Europe district cooling market, in recent times, has been witnessing an exponential growth graph, owing to the growing need for energy optimization and the massive deployment of these cooling systems across the continent. Given that the installation of these systems primarily revolves around reduced energy consumption, Europe district cooling market is extensively regulatory-driven. According to the European Union, the demand for cooling systems has been observing a remarkable surge across the residential and commercial sectors, especially in summer. However, in order to ensure optimized usage and lower energy consumption the EU has been encouraging end-users to upgrade existing cooling systems with more efficient technologies, that would add a new growth dimension for Europe district cooling industry players.

Norway District Cooling Market Size, By Production Technique, 2017 & 2024 (USD Million)
Norway District Cooling Market Size, By Production Technique, 2017 & 2024 (USD Million)

Speaking along the same lines, to combat the issue for massive energy deployment across offices, homes, hospitals, schools, and factories, the European Union had conceived a strategic plan called ‘The Heating and Cooling Strategy‘ to boost the usage of renewables. This initiative was aimed toward curbing the dependency on fossil fuels and reducing harmful carbon emissions. It was also expected to contribute toward the upgradation of cooling systems integrated with electricity components across the industrial and residential sectors. Pertaining to the increasing deployment of sustainable energy solutions, especially across the densely populated regions in the continent, Europe district cooling industry size from the residential sector is poised to register an annual growth rate of more than 2% over 2018-2024.

The Heating and Cooling Strategy, incidentally, will also include plans to ease the number of energy efficient renovations to buildings, make it convenient to develop energy efficiency guidelines for hospitals and schools, and improvise on the reliability factor of energy performance certificates for buildings. The construction industry behemoths would specifically need to adhere to the guidelines proposed by the EU in this regard.

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Speaking of the construction industry, it is pivotal to mention that building owners of late, have been giving extensive preference for outsourcing operations. That is to say, many of them have been inclining toward taking help from energy companies in the first place to get district cooling systems installed. In fact, big shot construction firm owners are particularly keen on establishing partnerships with energy firms to get these systems installed and ensure optimized energy utilization. On these grounds, it has been observed that many energy companies have been wanting to penetrate Europe district cooling market.

Taking into account the expanding renewable energy sector across Europe, established companies in Europe district cooling market have been implementing robust growth tactics such as JVs and M&As. Merely a few weeks earlier, NIBE Industrier acquired Alfa Laval’s district cooling systems business unit and conveniently extended its customer base across France, Sweden, U.K., Finland, Czech Republic, and Russia. Given that Alfa Laval is already an established player in Europe district cooling market, the acquisition contributed toward augmenting NIBE’s position in the regional industry.

Powered by the countless number of efficient initiatives undertaken by the European Union, Europe district cooling industry share has witnessed a commendable incline since the last couple of years. In fact, the regional business valuation in 2017, had been pegged at USD 35 billion. As the requirement for decarbonization and energy efficient facilities increase, Europe district cooling industry demand is likely to witness an upsurge. Additionally, the continent has been observing an influx of projects focusing on the renovation of conventional district cooling systems for optimized energy usage. Aided by a plethora of supportive norms and the implementation of strategic initiatives, Europe district cooling market size is expected to surpass a revenue collection of USD 40 billion by 2024.

Author Name : Sunil Hebbalkar

Middle East district cooling market to accumulate commendable returns from commercial applications over 2019-2025

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One of the largest behemoths partaking in Middle East district cooling market share, Emirates Central Cooling Systems Corporation (Empower), has recently amalgamated 75 buildings to its district cooling service platform in a bid to offer its services to numerous commercial and residential buildings. District cooling, being one of the eco-friendliest technologies of the 21st century, is being exploited massively by a majority of building developers and homeowners, who it has been observed, have been treading along the path of district cooling, away from conventional chilling methods.

UAE District Cooling Market, By Production Technique, 2018 & 2025 (000 RT)
UAE District Cooling Market, By Production Technique, 2018 & 2025 (000 RT)

The governments across the Gulf have been looking forward to emerging as a green economy, which will significantly influence Middle East district cooling industry share. Taking into account the requirement of energy efficient systems to reduce building energy consumption, the Dubai government has also been promoting the usage of sustainable cooling technologies.

In a bid to develop smart cities across Middle East, most of the governmental bodies have been enforcing strict norms to deploy smart technologies in residential and commercial sectors. Many firms in Dubai have already implemented district cooling systems through the implementation of efficient and effective air-conditioning systems, which would suitably reduce carbon dioxide emissions, thereby impelling Middle East district cooling industry share.

It would be prudent to declare that post the Paris Agreement on Climate Change, the importance of sustainable and efficient district cooling has substantially escalated across the Middle East. The increasing number of private investments for the development of energy efficient commercial infrastructure is likely to boost Middle East district cooling market size over the years ahead.

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The Middle East district cooling market outlook is likely to witness a major transformation in the years ahead on account of the significant rise in the construction of shopping complexes, hospitals, malls, office buildings, shops, and the like. The regional regulatory bodies have been consistently stressing on the concept of energy optimization, which has led to an spurt in the demand for LEED certified buildings, positively impacting Middle East district cooling industry trends over the forecast period.

The expanding construction space in the cities of the Middle East, specifically across the Saudi Arabic district, will fuel the regional district cooling market share. With the influx of more and more government-approved, energy-efficient construction projects, Middle East district cooling market outlook will depict a transformation in the forecast years.

Bahrain is expected to emerge as a viable avenue for Middle East district cooling market, driven by the rising demand for power during peak summer periods. Bahrain aims to reduce the electricity demand by around 50%, with the use of DC systems, which will also drive the regional industry trends.

Numerous geographies across the globe have been investing in the Middle East, given the extensive proliferation of district cooling in the region. For instance, recently, the French based company, Engie has acquired 40% shares in Tabreed to tap the potential of Middle East district cooling market. Engie also plans to acquire more companies dealing with energy efficient solutions such as district cooling.

Some of the renowned players in Middle East district cooling market are Stellar Energy, Siemens, Emirates Central Cooling Systems Corporation (Empower), Marafeq Qatar, DC Pro Engineering, ADC Energy Systems, Emirates District Cooling, LLC (EMICOOL), Logstor A/S, Qatar Cool, and Tabreed (National Central Cooling Company PJSC).

With the robust increase in the competition among Middle East district cooling market players, owing to the huge demand for the product across the commercial, residential, and industrial sectors, the trend of providing reliable, consistent services to customers is being observed across this business. The United Nations Environment Program (UNEP) has also been actively implementing district energy and sustainable development through promotional and financial channels, thereby augmenting Middle East district cooling industry growth in the years ahead.

Author Name : Sunil Hebbalkar