The global district heating and cooling (DHC) market
features a low concentration of component suppliers with no big
players. Most companies operate at local or regional levels where
proximity to consumers helps avoid extra operational costs and
efficiency losses, states Transparency Market Research in a new
report. The market dynamics are highly susceptible to changes in
terms of technology and scale of projects. “As DHC systems mostly
belong to state-owned entities, government support and funding play a
key role in operational efficiency of a DHC project,” states a TMR
analyst.
TMR estimates that the global market for direct
heating and cooling systems will exhibit a 5.8% CAGR and a 6.2% CAGR
over the period between 2016 and 2024, in terms of energy sales
volumes and revenue, respectively. At this pace, the market is
expected to rise to a revenue-wise valuation of US$243,428.3 mn by
2024. In terms of energy sales volume, the market is expected to
reach 12,187,491.8 tera joules by 2024.
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The segment of district heating is presently the
leading technology in the market, accounting for a share of over 90%
in the global market in 2015. In the same year, Asia Pacific
accounted for a dominant share of over 55% of the global market in
2015. Of the key distribution machines and tools utilized in DHC
systems, the segment of pipes leads with a 60% share in global
market’s overall revenues owing to constant expansion of pipeline
infrastructure, falling prices of pipes, and the need for timely
renovations of distribution networks.
Flexibility of Generation Options and Overall Cost
Savings through Economies of Scale to Drive Market
DHC systems demonstrate excellent flexibility in
terms of the use of different kinds of energy options, depending on
the condition of the utility grid and load profile. DHC system
operators can easily switch between available heat sources in case of
sudden variations in heat generation costs in the market. This not
only ensures that overall costs of operation are kept in check, but
also helps run the system at relatively higher capacities by ensuring
a steady supply of economical heat generation options. Along with
this factor, conducive regulatory mechanisms and incentive schemes,
which play a key role in faster market penetration and reinstating
investor confidence for companies, is also expected to increase
capacity additions in the district heating and cooling sectors
globally in the next few years.
The overall cost savings achieved owing to the
installation of district-wide heating and cooling systems are also
key to the expansion of district heating and cooling systems
globally. Studies have demonstrated that DHC systems lead to a
significant drop in the overall boiler and staffing expenditures,
while also boosting the efficiency of boilers. The sizeable reduction
in the overall fuel required to run these systems owing to their fuel
efficient nature also make them environmentally more viable than
conventional heating and cooling systems. Also, DHC systems scale up
very well as the number of households they serve increase, require
less space for operation, and also ensure better management of
equipment.
Capital-intensive New Units and Rising Share of
Decentralized Energy Systems to Hamper Market’s Growth
The high initial costs required for the construction
of plants, pipeline network, and connections necessary to run
district heating and cooling systems is a chief factor hindering
their widespread adoption globally. The need for several vital and
expensive equipment for running DHC systems, such as heat absorbers,
boilers, heat accumulators, chillers, heat pumps, and heat exchangers
add to the overhead costs necessary to install DHC systems. The
payback periods of DHC systems are also relatively longer, ranging
from 8-20 years, making private bodies hesitant about investments in
these systems.
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Along with these factors, the increasing share of
decentralized energy systems, with the advent of renewables and
off-grid energy systems, globally is also a key restraint to the
overall growth of the global DHC market. As an increasing number of
households and commercial/industrial facilities produce heat and
electricity through CHP and renewable sources, the demand for
centralized district heating and cooling mechanisms could suffer.
This review of the market is based on a recent market
research report published by Transparency Market Research, titled
“District Heating and Cooling Market - Global Industry Analysis,
Size, Share, Growth Trends and Forecast 2016 - 2024.”
For the study, the market has been segmented as
follows:
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
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