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The district cooling market size is estimated to grow by USD 12.2 billion at a CAGR of 7.13% between 2023 and 2028. The global population is projected to reach 9.7 billion by 2050, leading to a surge in urbanization, particularly in developing economies (United Nations, 2019). In response, there is a significant increase in investments in infrastructure projects, including district cooling systems. District cooling is an energy-efficient alternative to traditional cooling systems, providing centralized cooling to multiple buildings through a network of insulated pipes. This approach reduces energy consumption and lowers greenhouse gas emissions, making it an eco-friendly solution for urban areas. Furthermore, district cooling systems offer cost savings through economies of scale and require less maintenance compared to individual air conditioning units. These benefits make district cooling a preferred choice for sustainable urban development.
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The District Cooling market is witnessing significant growth due to the increasing demand for energy efficiency and sustainability in cooling systems. With population growth and urbanization, the need for air conditioning systems is on the rise, leading to a higher carbon footprint. Traditional cooling techniques, such as air-conditioning systems, consume large amounts of energy and contribute to increased energy consumption. District cooling, also known as centralized cooling, is an alternative solution that offers energy savings and reduced environmental impact. It uses chilled water to cool multiple buildings in a district, making it an efficient and cost-effective option. The use of renewable energy sources, such as solar and geothermal, in district cooling systems further enhances their sustainability. The commercial sector is a major contributor to the demand for district cooling, as large commercial buildings require significant cooling capacity. The capital cost of district cooling systems can be high, but the long-term energy savings and environmental benefits make it an attractive option.
The Eurocodes and Energy Conservation Code are driving the adoption of energy-efficient cooling systems, while energy prices and environmental concerns are also influencing the market. Electrical chillers and Variable Refrigerant Flow (VRF) systems are commonly used in district cooling systems. Refrigerants used in these systems must be energy efficient and have a low global warming potential to minimize environmental impact. The DLRC (District Cooling and Heating) market is expected to grow significantly in developing economies, particularly in the Asia Pacific and the Middle East, due to their high population growth and increasing urbanization. Air conditioner ownership is on the rise in these regions, making district cooling a viable solution for energy-efficient and sustainable cooling. Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The increasing global population and rapid urbanization is notably driving market growth. The market is witnessing significant growth due to the increasing demand for energy-efficient and sustainable cooling solutions in response to population growth and the need to reduce environmental impact. Traditional cooling techniques, such as air-conditioning systems relying on fossil fuels, have large carbon footprints and high operational costs. In contrast, district cooling systems utilizing chilled water from centralized plants offer improved energy efficiency and reduced environmental impact. Renewable energy sources, including solar, geothermal, and waste heat, are increasingly being integrated into district cooling systems to further enhance sustainability. Governmental and regulatory incentives are driving the adoption of district cooling systems among consumers and businesses.
Real estate developers in the commercial sector are recognizing the benefits of district cooling, including lower capital costs, shorter payback periods, and the ability to offer tenants a more consistent and reliable cooling solution. Production techniques, such as free cooling and absorption chillers, are also gaining popularity for their energy efficiency. The district cooling market encompasses various operations, including storage, distribution, and residential and commercial applications. Variable Refrigerant Flow (VRF) and electrical chillers are common technologies used in district cooling systems, with DLRC (District Cooling and Heating) being a popular implementation. Energy consumption and refrigerants are critical considerations in the district cooling market, with ongoing research focused on improving energy efficiency and reducing the environmental impact of refrigerants. The distribution network is a key component of district cooling systems, requiring careful planning and maintenance to ensure reliable and efficient operations. Thus, such factors are driving the growth of the market during the forecast period.
The technological advancements in district cooling systems is the key trend in the market. The market is witnessing significant growth due to the increasing demand for energy efficiency and sustainability in the real estate sector. With population growth and urbanization, the need for cooling solutions, particularly in commercial areas, is on the rise. Traditional cooling techniques using fossil fuels and high energy consumption air-conditioning systems are being replaced by more eco-friendly alternatives, such as chilled water systems. Renewable energy sources, including solar, geothermal, and waste heat, are being integrated into district cooling systems to reduce carbon footprints. Governmental and regulatory incentives are driving consumers and businesses towards more sustainable production techniques, such as free cooling, absorption chillers, and electric chillers. District cooling systems offer operational benefits, including energy storage and distribution, which can lead to cost savings and improved efficiency.
The DLRC (District Cooling and Heating) market is expected to see increased adoption in both residential and commercial sectors due to its ability to reduce energy consumption and environmental impact. Variable Refrigerant Flow (VRF) and electrical chillers are becoming popular choices for their energy efficiency and flexibility. The capital cost and payback period for district cooling systems are becoming more competitive, making them an attractive option for businesses and consumers alike. The distribution network for district cooling is expanding, with centralized plants being built to serve larger areas, further increasing the market's potential for growth. Thus, such trends will shape the growth of the market during the forecast period.
The high installation cost of district cooling systems is the major challenge that affects the growth of the market. The market is experiencing significant growth due to the increasing demand for energy-efficient and sustainable cooling solutions in response to population growth and the need for reduced environmental impact. Real estate and commercial sectors are leading the charge, as traditional cooling techniques such as air-conditioning systems contribute substantially to carbon footprints. Chilled water systems, utilizing renewable energy sources like solar, geothermal, and waste heat, are becoming increasingly popular. Governmental and regulatory incentives are further driving the adoption of district cooling, as consumers and businesses seek to minimize their reliance on fossil fuels.
Production techniques like Free Cooling, Absorption Chillers, and Electric Chillers are being employed in operations, storage, and distribution networks to optimize energy consumption and reduce costs. Variable Refrigerant Flow systems and DLRC (District Cooling and Heating) are also gaining traction. The capital cost and payback period of district cooling systems are becoming more attractive, making them a viable option for both residential and commercial applications. The distribution network of centralized plants ensures efficient and reliable cooling, making district cooling an essential component of modern infrastructure. Hence, the above factors will impede the growth of the market during the forecast period.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Danfoss AS - The company offers district cooling solutions which includes controllers for differential pressure, flow, and temperature. These optimize network balance, improve energy efficiency, and enhance end user comfort in heating or cooling networks.
The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The electric chillers segment is estimated to witness significant growth during the forecast period. The market is experiencing significant growth due to the increasing demand for cooling in both residential and commercial sectors, driven by population growth and the need for energy efficiency and sustainability.
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The electric chillers segment accounted for USD 11.60 billion in 2018. Traditional cooling techniques, such as air-conditioning systems, have high carbon footprints and contribute to increased environmental impact. In response, there is a shift towards district cooling systems that utilize chilled water for cooling, reducing overall energy consumption and carbon emissions. Renewable energy sources, such as solar, geothermal, and waste heat, are being integrated into district cooling systems to further enhance energy efficiency and sustainability. Governmental and regulatory incentives are also encouraging the adoption of district cooling, as businesses and consumers seek to minimize their carbon footprints and comply with environmental regulations. Production techniques, such as free cooling and absorption chillers, are being used to optimize energy efficiency in district cooling systems. Electric chillers, DLRC, and variable refrigerant flow systems are also gaining popularity due to their energy efficiency and cost-effectiveness.
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Middle East and Africa is estimated to contribute 37% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
The market is witnessing significant growth due to increasing energy conservation efforts and rising energy prices. Production technologies are being advanced to enhance energy efficiency and reduce environmental concerns. Eurocodes, a set of European technical standards, are being implemented to ensure the structural integrity and energy performance of district cooling systems. Energy Conservation Code regulations are driving the adoption of district cooling as an alternative to traditional HVAC systems. Environmental concerns, including the reduction of greenhouse gas emissions, are also fueling the market's growth. As energy prices continue to rise, district cooling is becoming an economically viable solution for large-scale cooling needs.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion " for the period 2024-2028, as well as historical data from 2018-2022 for the following segments.
The District Cooling market is witnessing significant growth due to the increasing demand for Energy efficiency and Sustainability in cooling systems. Population growth and the resulting expansion of urban areas have led to a surge in demand for cooling solutions, particularly in the Real estate and Commercial sectors. Traditional cooling techniques, such as air-conditioning systems, have high carbon footprints and contribute to increased energy consumption. To address these challenges, District Cooling systems have gained popularity. These systems use Chilled water for cooling, which is produced at a centralized plant and distributed to consumers and businesses through a distribution network. Renewable energy sources, such as Solar, Geothermal, and Waste heat, are being increasingly used to power District Cooling plants, reducing reliance on Fossil fuels. Governmental and Regulatory incentives are also driving the adoption of District Cooling systems.
Consumers and businesses are recognizing the benefits of these systems, including reduced environmental impact and lower operational costs. Production Techniques, such as Free Cooling and Absorption Chillers, are being used to improve the efficiency of District Cooling systems. The market for District Cooling is segmented into Residential and Commercial applications. The Commercial sector is currently the largest contributor to the market, with Electric Chillers and Variable Refrigerant Flow systems being the most commonly used technologies. DLRC (District Cooling) is a key player in the market, offering Energy consumption optimization and Refrigerants that are Energyefficient cooling. The Capital cost and Payback period are important considerations for the adoption of District Cooling systems, with the former being a major barrier to entry for some consumers and businesses.
Market Scope |
|
Report Coverage |
Details |
Page number |
205 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 7.13% |
Market growth 2024-2028 |
USD 12.2 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
6.4 |
Regional analysis |
Middle East and Africa, North America, Europe, APAC, and South America |
Performing market contribution |
Middle East and Africa at 37% |
Key countries |
UAE, Saudi Arabia, Qatar, US, France, and Japan |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
ADC Energy Systems, Alfa Laval AB, Avanceon Ltd., Danfoss AS, DESMI AS, Electricite de France SA, Emicool, Emirates Central Cooling Systems Corporation PJSC, ENGIE SA, Fortum Oyj, Johnson Controls International Plc., Keppel Ltd, LOGSTOR Denmark Holding ApS, National Central Cooling Company PJSC, Ramboll Group AS, Shinryo Corp, Siemens AG, SNC LAVALIN, Sojitz Corp., SP Group, Trane Technologies plc, and Veolia Environnement SA |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for market forecast period |
Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
1 Executive Summary
2 Technavio Analysis
3 Market Landscape
4 Market Sizing
5 Historic Market Size
6 Additional Value/Volume Data
7 Five Forces Analysis
8 Market Segmentation by Product Type
9 Market Segmentation by End-user
10 Customer Landscape
11 Geographic Landscape
12 Drivers, Challenges, and Opportunity/Restraints
13 Competitive Landscape
14 Competitive Analysis
15 Appendix
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