District Heating Market Size Projected to Surge $ 298.73 Billion Growth by 2031, With CAGR of 4.6% | The Insight Partners

The report runs an in-depth analysis of market trends, key players, and future opportunities. The District Heating Market analysis focuses on a vast array of applications that are expected to determine market strength in the coming years.

/EIN News/ -- US & Canada, May 08, 2025 (GLOBE NEWSWIRE) -- According to a new comprehensive report from The Insight Partners, the global District Heating Market is observing significant growth owing to the growing demand from the energy industry.

The District Heating Market is expanding consistently as cities look for effective and green energy solutions. It involves centralized production and distribution of heat to residential, commercial, and industrial buildings via insulated pipes. The drivers are rising urbanization, strict environmental laws, and the transition to low-carbon energy systems. Renewable energy, waste heat recovery, and combined heat and power (CHP) systems are becoming more integrated to improve efficiency and lower emissions. Europe is at the forefront of the market owing to firm policy support, whereas Asia-Pacific exhibits high growth.

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Overview of Report Findings

1. Market Growth: The District Heating Market was valued at US$ 214.01 billion in 2024 and is projected to reach US$ 298.73 billion by 2031; it is expected to register a CAGR of 4.6% during 2025–2031. The global District Heating Market is observing substantial growth and is expected to maintain its upward trajectory in the foreseeable future. This growth is attributed to the increasing focus on the growing significant demand from the energy industry. The district heating plants (such as boilers and combined heat and power (CHP)) are used for central generation and delivery of heat (usually in the form of hot water or steam) to residential, commercial, and industrial buildings via an interconnected network of insulated pipes. According to International Energy Agency (IEA) data from March 2025, the demand for energy worldwide is soaring owing to the increasing electricity consumption and growing supply of renewables and natural gas. In 2024, global energy consumption increased by 2.2%, significantly quicker than the average yearly demand increase of 1.3% between 2013 and 2023. In 2024, developing economies such as China (4,060 million tonnes (mtoe)), US (2,172 mtoe), India (1,135 mtoe), Russia (838 mtoe), Japan (391 mtoe), Brazil (336 mtoe), and other emerging economies accounted for more than 80% of global energy demand growth. Among these countries, China's energy consumption increased by approximately 3% in 2023. The scalability of district heating solutions makes it a popular choice in highly populated urban areas for a reliable heat supply. District heating solutions deliver the appropriate amount of heat to a large number of buildings while minimizing overall energy waste. Thus, the growing demand for sustainable solutions and rising energy consumption surges the adoption of district heating solutions in the residential, commercial, and industrial sectors. These solutions support sectors with the optimal usage of energy and promote them to reduce greenhouse gas emissions.
   
2. High Focus on Achieving Net-Zero Emissions: Climate change and pollution are becoming significant concerns among industries and consumers for energy production, transportation, and construction. These concerns increase the adoption of district heating systems to reduce carbon emissions. These systems such as combined heat and power (CHP) engines, provide a flexible, integrated, and renewable-based energy system that accelerates decarbonization. These engines have enormous potential for boosting renewable energy utilization by attracting renewable and low-carbon heat sources, hence lowering reliance on fossil fuels. CHP engines absorb CO2 emissions from the central plant or other industrial sources by improving sustainability. The growing focus on achieving net-zero emissions to achieve operational sustainability increases the adoption of district heating systems. According to Climate Action Tracker data, in December 2023, nearly 145 countries considered net zero targets to reduce 90% of global emissions. China, the European Union, the US, and India account for more than half of global greenhouse gas emissions. These regions and countries are promoting sustainability in industrial operations, which surges the demand for district heating systems to reduce emissions from operations. District heating integrates renewable energy sources into the grid. This system allows the central usage, management, and distribution of energy generated from heat pumps, solar thermal panels, and industrial waste heat. This integration supports the desire for greener energy and accelerates the transition to a more sustainable and decarbonized power supply.
   
3. Growing Emphasis Towards the Installation of Heat-Pump: Heat pumps use renewable or environmental heat sources over fossil fuels such as coal or natural gas, which increases their installation in district heating networks. They can play an important role in district heating networks by producing low-carbon, efficient heat, which surges their installation into district heating networks. Their installation reduces the reliance on centralized fossil fuel-based heat generating, lowers grid demand, and promotes better utilization of local renewable energy resources. The growing installation of heat pumps and a rising number of heat pump projects are driving market growth. According to Fern data of March 2024, Europe is implementing initiatives to promote the installation of heat-pump. In December 2024, Germany’s Hamburg utility announced the installation of two large river heat pumps and the construction of a heat storage infrastructure that supports them in coal-to-biomass conversion. Similarly, RheinEnergie commissioned a 150 MW fluvial heat pump system at the Cologne-Niehl power plant in Germany, which will extract thermal energy from the Rhine River to provide district heating to approximately 50,000 households. This plant also requires an investment of US$ 294.88 million (EUR 280 million) to reduce 100,000 tons CO₂ emissions by 2027.
   
4. Geographical Insights: In 2024, Europe led the market with a substantial revenue share, followed by Asia Pacific and North America. Further, Asia Pacific is expected to register the highest CAGR during the forecast period.
   
   

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Market Segmentation

• Based heat source, the market is categorized into coal, natural gas, oil and petroleum products, others. The natural gas segment dominated the market in 2024.
• Based on plant type, the market is categorized into boiler, combined heat and power, others. The combined heat and power segment dominated the market in 2024.
• Based on application, the market is divided into residential, commercial, industrial. The residential segment dominated the market in 2024.
• The District Heating Market is segmented into five major regions: North America, Europe, APAC, Middle East and Africa, and South and Central America.

Competitive Strategy and Development

• Key Players: A few major companies operating in the District Heating Market are Danfoss AS, Veolia, Fortum Corp, Engie SA, LOGSTOR Denmark Holding ApS, Siemens AG, Statkraft AS, Vattenfall AB, Shinryo Corporation, and Vital Energi Ltd.
• Trending Topics: Energy Management Systems, Renewable Energy

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Global Headlines on District Heating

• Danfoss acquired ENFOR’s district energy software and will bring the solutions to the global market under the Danfoss Leanheat suite of sustainable heating and cooling solutions.
• Siemens Energy built a large-scale heat pump plant in Mannheim, Germany, with MVV Energie AG. The plant utilizes river water as a heat source, reducing the usage of coal at the local GKM power plant.

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Conclusion

Rising energy demand, growing investment and installation of heat pumps, and high focus on achieving net zero are the main factors driving the demand for district heating worldwide. The surging smart city projects across urban regions and the growing investment toward the expansion of district heating networks are expected to create growth opportunities for the market during the forecast period. Further, the soaring research and development activities, the growing usage of waste heat from industrial processes, and the evolution of fifth-generation district heating and cooling (5GDHC) networks are expected to generate future growth opportunities in the market. The report from The Insight Partners, therefore, provides several stakeholders—including component providers, system technology integrators, system manufacturers, and others—with valuable insights into how to successfully navigate this evolving market landscape and unlock new opportunities.

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