District Heating Market worth $242.1 billion by 2028 – Exclusive Report by MarketsandMarkets™

CHICAGO, Nov. 20, 2023 /PRNewswire/ — The District Heating Market is projected to grow from USD 191.5 billion in 2023  and is estimated to reach USD 242.1 billion by 2028; it is expected to grow at a Compound Annual Growth Rate (CAGR) of 4.8% from 2023 to 2028 according to a new report by MarketsandMarkets™. The demand for energy-efficient, cost-effective heating, and intensified urbanization and industrial growth collectively fuel the district heating market.

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Browse in-depth TOC on “District Heating Market” 

120 – Tables
55 – Figures
200 – Pages

District Heating Market Report Scope:

Report Coverage


Market Revenue in 2023

$191.5 billion

Estimated Value by 2028

$242.1 billion

Growth Rate

Poised to grow at a CAGR of 4.8%

Market Size Available for


Forecast Period


Forecast Units

Value (USD Million/Billion)

Report Coverage

Revenue Forecast, Competitive Landscape, Growth Factors, and Trends

Segments Covered

By Heat Source, By Plant Type, By Application

Geographies Covered

North America, Europe, Asia Pacific, and Rest of World

Key Market Challenge

Limited availability of waste heat recovery plants

Key Market Opportunities

Digitization in district heating network

Key Market Drivers

Increasing shift towards renewable sources in district heating

District Heating market for a coal segment to hold the largest share during the forecast period

The coal segment maintains a larger share in the district heating market by heat source due to historical reliance on coal as a traditional and cost-effective fuel source, particularly in certain regions. Many district heating systems, especially in older industrial areas, have been established with coal-fired plants, contributing to the prevalence of coal in this sector. While there is a global shift towards cleaner and more sustainable energy sources, including renewables, the transition away from coal can be gradual, and existing coal-based infrastructure often continues to play a significant role in meeting heating demands. Economic considerations, coupled with the established infrastructure, have sustained the dominance of coal in the district heating market, though there is an increasing focus on diversifying and transitioning towards cleaner alternatives to address environmental concerns and meet evolving energy standards.

District Heating market for combined heat & power segment to hold the highest market share during the forecast period

The combined heat & power (CHP) segment holds a larger share in the district heating market by plant type primarily due to its inherent efficiency and dual-purpose functionality. CHP plants generate both electricity and useful thermal energy from the same energy source, providing a compelling solution for meeting diverse energy needs. The simultaneous production of electricity and heat enhances overall energy efficiency compared to separate systems, contributing to cost savings and reduced environmental impact. The versatility of CHP systems allows for the utilization of various fuel sources, including natural gas, biomass, and waste heat, making them adaptable to different regional and industrial requirements. As the demand for integrated and sustainable energy solutions grows, the combined heat and power segment continues to gain prominence in the district heating market as a reliable and efficient option for meeting both electricity and heating demands.

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District heating market for residential application to exhibit the highest CAGR during the forecast period

The residential segment in the district heating industry is experiencing the highest CAGR due to several key factors driving increased adoption. Rising urbanization and population density in urban areas have led to a surge in residential construction, creating a heightened demand for efficient and sustainable heating solutions. District heating offers an attractive alternative for residential spaces, providing a centralized and cost-effective method of delivering reliable heat. Moreover, growing environmental consciousness and government initiatives promoting clean energy have spurred the integration of district heating systems in residential areas, often incorporating renewable and waste heat sources. As consumers seek environmentally friendly and economically viable heating options, the residential segment is witnessing accelerated growth, positioning district heating as a preferred and future-proof solution for meeting the heating needs of expanding urban populations.

District Heating market for Asia Pacific to hold the highest CAGR during the forecast period

The Asia Pacific region is experiencing the highest CAGR in the district heating market due to several dynamic factors propelling its rapid expansion. The region is undergoing robust urbanization and industrialization, resulting in an increased concentration of buildings and industrial zones with substantial heating demands. Governments across Asia Pacific are recognizing the importance of sustainable energy solutions, prompting investments in district heating infrastructure to meet the rising demand for heating services. Additionally, a growing awareness of environmental concerns is driving the adoption of district heating systems that leverage renewable energy sources, aligning with global efforts to reduce carbon emissions. As urban populations in the Asia Pacific continue to swell, there is a heightened focus on organized and efficient utility services, positioning district heating as a strategic and innovative solution for the region’s evolving energy needs.

The district heating companies includes major Tier I and II players like Fortum (Finland), Vattenfall (Sweden), ENGIE (France), Danfoss (Denmark), Statkraft (Norway) and others. These players have a strong market presence of district heating across various countries in Americas, Europe, and Asia Pacific.

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