Market Research Future (MRFR) has published on the “Global District Heating Market”.

The global district heating market is estimated to register a CAGR of 2.48% during the forecast period of 2025 to 2035.

As per Market Research Future (MRFR) analysis the following companies as the key players in the global district heating market— Fortum, Vattenfall AB, ENGIE, Danfoss, Statkraft, Veolia, LOGSTOR Denmark Holding ApS, Vital Energi, Kelag International GmbH, and SHINRYO CORPORATION among other key players.

District Heating Market Highlights

The global district heating market is Projected to Grow at a CAGR of 2.48% in the Forecast Period, and the Market is expected to Reach US$ 200 billion by 2035.

District heating systems are highly efficient, as they utilize various heat sources, such as combined heat and power (CHP) plants, waste heat from industrial processes, and renewable energy sources. By consolidating heat generation in a central location, these systems minimize energy losses and optimize the use of heat, leading to overall energy savings. The is increasing focus on environmental sustainability is a major driver for the global district heating market. 

By utilizing renewable energy sources and waste heat, district heating systems contribute to reducing greenhouse gas emissions and air pollution. This aligns with global efforts to combat climate change and transition to low-carbon energy solutions. The rapid urbanization and population growth in many regions have led to higher energy demand for heating in densely populated areas. District heating offers a scalable and efficient solution to meet the heating needs of urban communities, making it an attractive option for policymakers and urban planners. 

Government initiatives and regulations aimed at promoting energy efficiency and reducing carbon emissions play a crucial role in driving the adoption of district heating systems. Subsidies, incentives, and supportive policies encourage investments in district heating infrastructure, making it more economically viable for both public and private stakeholders.

Browse In-depth Details [Table of Content, List of Figures, List of Tables] of District Heating Market Trends

Segment Analysis

Based on heat source, the market is divided into market has been segmented as natural gas, renewables, coal, oil & petroleum products, and others. The natural gas segment accounted for the largest revenue share of 32.0% in 2022 and is projected to maintain its dominance throughout the forecast period. Natural gas is a widely available and reliable source of energy, making it a popular choice for district heating systems. It is also a relatively clean-burning fossil fuel, emitting lower levels of greenhouse gases and pollutants compared to coal and oil. This aligns with the growing focus on environmental sustainability and the need to reduce carbon emissions. Natural gas is cost-effective and offers price stability, making it an attractive option for both consumers and energy providers. The availability of natural gas pipelines and infrastructure also makes it easier to transport and distribute, reducing the overall cost of energy delivery.

Based on plant type, the global district heating market is segmented as combined heat & power, boiler plant, and others. The combined heat & power segment dominated the global district heating market with the largest market revenue share of 62.0% in 2022 and is also projected to dominate the global district heating market revenue through the projected period. The driver behind the growth of the CHP segment is its ability to generate both heat and electricity simultaneously, which makes it a highly efficient and cost-effective solution for district heating systems. CHP plants use a variety of fuels, including natural gas, biomass, and coal, to generate electricity and heat. The heat generated during the electricity generation process is captured and used for district heating, which reduces the overall energy consumption and greenhouse gas emissions.

The global district heating market is segmented based on application, including residential, commercial, and industrial. Among these, the residential segment held the largest market revenue share of 49.3% in 2022 and is expected to continue dominating the market throughout the forecast period. One of the primary drivers behind the growth of the residential segment is the increasing urbanization and population density in many regions across the globe. As more people move to urban areas, the demand for efficient and sustainable heating solutions for residential buildings has been on the rise. District heating systems provide an effective way to meet this demand by supplying heat to many residential units from a centralized source, thereby reducing the overall energy consumption and environmental impact.

Regional Analysis

By Region, the district heating market is segmented into North America, Europe, Asia-Pacific, Middle East & Africa, and Latin America. In 2022, the Europe region dominated the district heating market, holding a substantial 49.51% of the market share. This region is projected to continue its significant contribution to the market's revenue share throughout the forecast period. Europe has been at the forefront of promoting sustainable energy solutions, and district heating aligns with the region's ambitious climate and energy targets. The European Union's policies and regulations, such as the Energy Efficiency Directive and the Renewable Energy Directive, have been instrumental in driving the adoption of district heating systems across the region. Europe's emphasis on energy efficiency and decarbonization has led to a growing demand for sustainable heating solutions. District heating, with its ability to utilize various heat sources, including renewable energy, waste heat, and combined heat and power (CHP) plants, is well-suited to meet the region's energy efficiency goals.

The district heating market in Asia Pacific is experiencing rapid growth, fueled by urbanization, industrialization, and the increasing demand for heating solutions in the region. Countries like China, South Korea, and Japan are witnessing significant investments in district heating infrastructure to meet the rising energy demand and address environmental concerns. The market growth in Asia Pacific is also supported by government initiatives aimed at promoting clean energy and reducing air pollution. Furthermore, the integration of smart heating technologies and the development of eco-friendly district heating systems are contributing to the expansion of the market in the region. In North America, the district heating market is experiencing steady growth due to increasing focus on energy efficiency and sustainable heating solutions. The region is witnessing a rise in the adoption of district heating systems, particularly in urban areas, as they offer a more efficient and environmentally friendly alternative to individual heating systems. Government initiatives and policies aimed at reducing carbon emissions and promoting clean energy are further driving the market growth. Additionally, the modernization of existing district heating infrastructure and the integration of renewable energy sources are contributing to the expansion of the market in North America.

Key Findings of the Study

• The global district heating market is expected to reach USD 200 billion by 2035, at a CAGR of 2.48% during the forecast period.


• The Europe region accounted for the largest market revenue share of 49.51% in 2022.


• Based on heat source, the natural gas segment dominated the global market with the largest revenue share of 32.0% in 2022.


• Based on plant type, the combined heat & power segment dominated the market with the largest market revenue share of 62.0% in 2022.


• Based on the application, residential segment dominated the market with the largest market revenue share of 49.3% in 2022.


• The global district heating market key players include Fortum, Vattenfall AB, ENGIE, Danfoss, Statkraft, Veolia, LOGSTOR Denmark Holding ApS, Vital Energi, Kelag International GmbH, and SHINRYO CORPORATION among Other Key Players.