cite Share ‘About this report In 2021 district heat production increased by around 3% compared with 2020 and met nearly 8% of the global fr However, the decarbonisation potential of district heating is largely untapped, as fossil fuels still dominate distric Aligning with the Net Zero Emissions by 2050 Scenario requires significant efforts to rapidly improve the energy + COZ emissions The global district heating market is growing, but decarbonisation efforts were not enough to curb associated emissions China, Russia and Europe are responsible for more then 90% of global district heat * production, | 2021, due to growing demand, CO, emissions from district heat production accounted for about 3.5% of global CO, emissions, an increase of 3.5% on 2020 and 15% on 2010. Over the past decade, the global average CO, intensity of district heat supplies has been stable. Aligning with the Net Zero Scenario requites the CO, emissions intensity of district heat praduction to be at least 20% lower by 2030 compared with 2021. 602 emissions intensity index for district heat production and heat production by Open 2 county and region, 2021 Carbon tne a Word avaagn 202-100)cite Share Energy ‘Annus! energy supplos to dist heating networks in the Net Zero Scenario, World, Open & 2010-2030, HALissres.ce wy 40Despite large potential for the integration of renewable sources and recycled heat, fossil fuels dominate district heat supplies globally | 2021 the amount of heat produced for district heating networks globally was nearly 16E/, about 10% more than a decade earlier. However, district heating supplies stil ‘accounted for only about 8% of total final heat consumption globally. Nearly 90% of district heat globally was produced from fossil fuels in 2021 - predominantly coal (over 45%), especialy in China, natural gas (about 40%), In particular in Russia, and oil (3.5%) - down from about 95% in 2000, Renewables represented less. than 8% of global district heat supplies. While bioenergy and municipal waste account for the large majority of renewable district network supplies, large-scale solat thermal systems and heat pumps are seeing growing interest. At the end of 2021 almost 300 solar district heating systems representing 1.6 GWh were in operation worldwide. Europe currently leads renewables integration in district heating, with about 25% of its district heat supplies produced from renewable sources. Particularly high rates are ‘observed in countries such as Sweden, Denmark, Austria, Estonia, Lithuania, Latvis and leeland where more than 50% of district heat is fuelled by renewables. Inthe Net Zero Scenario, district heating continues to supply a similar share of global final heat consumption, although energy efficiency improvements in district heating networks and in building envelopes allow for @ decline in district heat supplies by 2030, down by ‘around 20% compared with 2021. In the same period, renewable energy used in district networks almost doubles from current levels, with renewable sources (including renewable electricity) representing almost one-fifth of district heating supplies by 2030. Activity Clobal annual hest deliveries to end-use sectors though distit heating networks, open & 2000-2021 cite Sharecite Share 1 Sltconeumpton tenes © Industry © Bulléngs © Agriculture The share of district heat in global heat consumption has been stable since 2000 Many buildings and industrial sites rely on district heating, ranging from lerge urban networks in Beijing, Seoul, Milan and Stockholm to smaller networks such as university and medical campuses. Around 40% of the heat generated globally in district heating plants is consumed by the buildings sector. Globally, district heating supplies a relatively small share of the heat Used in buildings, at only 11% of the sector's final space heat consumption - a share that, has remained impressively constant since 2000, considering that the floor area increased by 65% during the same period. However, while the global average share is low, district heating does cover a high proportion of the heat delivered in buildings in some European ‘countries, such as Denmark (around 65%) and Sweden (above 45%), as well as in Russia {about 40%) and China (above 15%). Around 40% of the heat generated globally in district heating plants goes to the industrial ‘sector, which also affects a network's ability to reduce distribution temperatures, as Industral users often requite high-temperature heat. Using heat pumps to increase ‘temperatures at local substations can offer solutions in some cases. China leads industrial district heat use, accounting for about 55% of the global total in 2021, up from around 35% in 2010. By contrast, Russia's share fell to loss than 25%, down from more than 35% In 2010. Deployment ‘The market is expanding, and new projects were announced in 2021 and the first half of 2022, including some with low-emission energy sources. Solar thermal district heatcite Share plant and three extensions builtin 2020 and only one new system commissioned in the ‘country in 2021. The largest developments in solar thermal district heating in 2021 ‘occurred in China, which represented three-quarters of the global market. Geothermal district heat + In Europe, 13new geothermal heating and cooling plants connected to district heating were announced in 2021. n the Danish city of Aarhus, the development of Europe's largest geothermal district heating facility was announced at the beginning of 2022, to be partly operational by 2025, + Inthe UnitedStates, a district heating and cooling project consisting of 200 geothermal wells has been announced + Inicetand, a local heating uilty introduced new geothermal district heating in H6fn, to replace electric heating. Subsidies are provided for those connected to district heating as well as to the utility company. Waste heat recovery Projects integrating secondary heat sources thats, heat obtained through waste heat recovery - are alo onthe rise. In 2022 an enesay company in Vienna, Austria, launched a heatecycling programme that intends to take advantage ofthe warm water (30°C) from local thermal baths with the use ofa heat pump. Another example fom Austra is the istrict heating system exporting waste heat from Inersion's data centre to the neighbouring Floridsdort Hospital in Vienna. The Austrian federal government is funding the project with @ EURS S milion subsidy. In Ireland, the construction of the country's first large-scale district heating network tated in May 2021. The Tallaght Dstict Heating Scheme uses waste heat from a local data centre to heat ctferent public, residential anc ‘commercial buildings inthe Tallaght town centre area, Innovation Innovative systems harnessing the decarbonisation potential of district heating are emerging Greater heat source diversification (especialy shiting from fossil fuels to renewables, ‘electricity and excess heat) and the integration of both large-scale and decentralised ‘consumer heat pumps will propel the transition towards lower-temperature and more flexible district heating networks - a progression from third-generation to what is called fourth-generation district heating, and alternatively, the electrcity-based and decentralised fifth generation Innovstions are principaly related to: ‘+ Integration of secondary heat sources. Heat can be recovered from several sources such as data centres, metro tunnels, industry, electrolysers, nuclear power plants, directly or supported by heat pumps and storage systems. In 2022 in Canada, a waste heat district hesting system was launched, to be fully operational by 2034. In Lund, Sweden, the first phase of the largest low-temperature district heating system from surplus heat was inaugurated in 2079 and is expected to expand over the ‘coming years with a plan up to 2035. + Circular economy models. For example, in Sweden a waste treatment plant is producing heat and electricity, while also producing biogas, biofertilisers and compost, as well as collecting heavy metals, ammonium sulphate and cleaned ash + Integration of renewables, hest pumps and thermal storage systems , towards low. temperature district heating systems, Several innovations are advancing with thesecite Share + Renovation of existing networks: for example, the KeepWarm project started 16 pilot district heating retrofit projects in Central and Eastern Europe. ‘+ Digitalisation, in particular active controls and artificial intelligence: for example, citias in Northern China started testing smart heating with the use of big data anelysis. In Europe, the recently concluded TEMPO project developed technological innovations that contribute to minimising the temperature in networks and enable the cost-efficient implementation of a low-temperature network. OPT/ has developed a methodology for efficient engineering of a digital twin of a district heating system {for demand forecasting, predictive optimisation of production and thermal comfort assessment of consumers, + Component improvements: for example in Germany, District LAB was opened to provide an experimental faclity for district heating network components, as well as operational models. The Global District Energy Climate Award has been in place since 2009 to identify best practices and innovations in district energy, and the last edition in 2021 nominated ‘sevenwinners, The annual International DHC+ Student Awards (launched in 2012) highlight outstanding and original contributions to district heating and cooling-related research, including economic and technological aspects, energy management and the ‘environmental consequences of energy utilisation. ‘Supporting infrastructure Aholistic and systemic approach is needed to optimise heat distribution, integrating district heating and the buildings it serves Many networks operating today distribute heat by pipe as pressurised water at supply temperatures of over 80°C, with heat losses ranging from 10% to 30%, The renovation of ‘existing networks towards lower operating temperatures, improved piping insulation and integration of digitalisation techniques can significantly reduce heat losses, potentially ‘containing them below 10%. In Northern China, projects to limit losses even with wary long-distance transmission networks (20-150km, to exploit waste heat) are ongoing Demand response can be employed for peak-shaving, reducing installed capacity requirements and also optimising overall network operations, including loss reduction. For example, 2s part of its modernisation process, the district heating system of Bolzano, Italy, introduced a control system that reduced overall energy losses by up to 5%. Modern telemetering also opens opportunities for demand-side management, as in the electricity market. Adequate pricing mechanisms - such as tallored pricing based on the ‘quantity of energy used and the time of consumption - can give signals to the final users land reduce the load on the district heating network, reducing losses and heat ‘consumption, However, greater attention should also be paid to the correct installation and operation of final customers’ heating systems to ensure they fully enable the benefits of optimised district heating systems to be realised. Full district heating and buildings renovation packages can help to optimise overall heat flows. This should be done in a holistic way, supporting the transition both from the network side ‘and final use side,cite Share Policy support is critical for further deploying and decarbonising the district heating market District heating deployment is often spurred by the benefits it can offer (economies of scale, energy efficiency, reduced pollution, ete.) and by national/local policy frameworks. Policies that prompt greater district heating penetration and modernisation have been linked to ‘+ Grants, subsidies and incentives for renewables integration: for example in the United Kingdom, GBP 250million has been provided to develop district heating projects, such as in East Devon and Landon, via the Heat Networks Investment project since 2018. In 2022 the Green Heat Network Fund replaced it, and opened {for applications with a total of CBP288 milion. Other funding opportunities have been introduced in Austria, the Furopean Union, France and Canada In August 2022, the European Commission approved a EURSbillion scheme to promote green district heating based on renewable energy and waste heat in Germany. + Taxes on fossil fuel consumption, CO2 emissions and pollutant emissions (for Instance in the Nordic countries and China). + Energy and heating plans/strategies and renewables targets: in 2021 Chile's National Heat and Cold Strategy was issued, also promoting district eneray projects Using ground. and air-source heat pumps: in Europe, by the end of 2021 at least _29.countries had committed to renewable heating and cooling targets. China has been supporting a shift from fossil fuel-based district heating to greater use of renewables and recycled heat under the 14th Five-Year Plan for Renewable Eneray. Development + Zoning policies and integration of district heating into energy standards for buildings, as per the zero-carbon-ready buildings concept. Under the proposed Energy Security Bill in the United Kingdom, certain buildings would be required to be connected to a district heating network, + Tariffs: the Danish government dedicated EUR13million at the end of 2021 to financial support for those affected the most by energy price increases (including district heating costs). In 2022 high commodity prices motivated the launch of subsidy programmes to cover the operational expenses of district heating utility ‘companies, such as the one announced from the Czech government + Consumer rights: the establishment of consumer protection rights in new markets {for district heating, comparable with the rights of other energy consumers, is Important to provide the necessary trust to allow the deployment of new systems. PolieyCountryYearStatusJurisdiction Subsidy schama to davelop coganartion fom municinlbiogesPoland2023In forceNtional FUR 80 millon for aparemantbulings ati 1onia2028nforoeNational (0¢? Group Green investment ProgramMoroces2023In frceNationall Increase to subsidy for renewable energy and energy sovings 2022 (ISDF)Netherlads2072I forceNlat onal Distt Hating PoolDanmark2022InfresNstionslcite Share ‘Showing 6 of 87 International collaboration Associations, collaboration programmes and initiatives are also critical to stimulate and promote district heating expansion Improved collaboration, transparency snd communication between stakeholders are an ‘essential condition for sharing and expanding best practices. For instance: + TheDistrict Heating and Cooling Technology Collaboration Programme (IEA DHCTCP) has led research in the field since the 1980s and now comprises 13members from major district energy markets. + TheDistrict Energy in Cities Initiative, a multistakeholder partnership coordinated by UN Environment Programme, helps local and national governments increase their investments in district energy. + In Europe, Eurohest & Powerconnects several district eneray stakeholders to create momentum for sustainable heating and cooling. As part of Euroheat & Power, theDHC# Technology Platform enables further networking and organises several events to promote district energy and increase awareness of technology options, including the International DHC+ Summer School + The Celsius initiative (created from the Celsius Project concluded in 2017) is a collaboration hub thet helps cities exchange information on innovations, best practices and policies to develop their heating and cooling networks + Inthe United States, with over2 400 members, the Internationsl District Eneray, [Association works to connect, inform and expand the district heating industry. + IncChina, the China District Heating Association suppor of district heating. nationwide deployment Recommendations for policy makers Deploy national and local heating and cooling strategies ‘Together with broader policy goals, targets related specifically to district heating (e.g.district heating penetration, integration of renewable energy sources, waste heat recovery plans) are importans to drive the transition to officiont district heating networks. Good knowledge and anticipation of current and future heat demand and resources (through heat mapping) is fundamental to set such targets, design coherent long-term heat strategies, assess district heating potential and define its role, See, for example, the Heat Rosdmap Europe. In addition, building capacity for eneray and infrastructure mapping at the local level allows advanced urban planning practices to integrate energy, infrastructure and land planning. For instance, excavation costs for district energy systems could be shared withcite Share Design specific regulation and financing strategies for district heating and build expertise and capacity Building and expanding district heating networks is highly capital intensive, and market ‘expansion requires investors to have visibility and be supported by long-term measures. ‘These can include specific financing tools, stable economic incentives (which can be financed through land value capture strategies), regulation to define and mandate ‘connection zones thus ensuring an anchored load and economies of scale, and the integration of specific criteria into buildings energy codes. Policy makers should also streamline administrative procedures for modern district heating projects. Improving the technology and expanding its application in the longer term calls for allocated funding for research and innovation to optimise district heating system ‘operation with high shares of renewable sources, for testing different technology solutions, and for establishing training programmes for al stakeholders involved. Recommendations for the private sector Demonstrate advanced optimised systems with enhanced flexibility through pilot projects Demonstration projects help assess the real-world effectiveness of diferent technologies, to enhance district system flexibility. For instance, digital controls and sensors can help ‘optimise network operations, maximise the integration of renewables and facilitate system maintenance. Broader diffusion of heating system-connected meters and data- driven advanced control systems could help balanee generation and consumption patterns. Storage is another key parameter to optimise in order to enhance both short- and long: term flexibility, District system operators can exploit the storage potential of the network itself, as well as decentralised storage at the consumer level ‘Taking full advantage of cross-sector synergies (buildings, industry, and heat and power generation) and cross-service synergies (heating and cooling) requires integrated infrastructure planning as well as developing and testing interoperability standards. Develop scalable business models to accelerate the deployment of low-temperature district heating networks Identifying business models that are scalable and replicable in diferent contexts can spur district heating deployment, in particular in new markets. Such business models can vary stakeholder engagement processes, ownership structures (including cooperative and no for-profit schemes), billing strategies, investment and financing schemes, ways to couple buildings renovation with network expansion, and the technologies and energy sources, ‘employed (waste heat, heat pumps, storage, artifical intelligence, etc.) Additional resources The IEA District Heating and Cooling Technology Collaboration Programme deals with the design, performance and operations of district heating and coolingcite Share Acknowledgements + Jack Corscadden, Eurohest & Power, Reviewer + Lars Gulley, VEKS, Reviewer + Domenico Lattanzio, IEA, Contributor + Eloi Piel, Euroheat & Power, Reviewer + Robin Wiltshire, IEA DHC TCP, Reviewer References The tem “District Heat” inthis page refers to the heat” category es defined by the EAs Eneray Statistics Manual and reported in the IEAs Energy Selences. Ths heats defined as the emount of, prociced and eo, In other tems, tis the amount of heat esting the pln for use by persons Unvlates tothe producer The Energy Mix Keep up to date with our latest news and analysis by subseribi 0 our regular newsletter Your email Explore our other newsletterscite Share Countries bout teboone 3S Fuels and technologies'*™**#ermnmeconux 5 8. Topics Events oon GE Deletes » 8 fare venom Analysis v tine ® Data and statistics (BIEA 2023Terms Privacy