District Heating Global Market Report 2026

The system of district heating involves an underground infrastructure that efficiently distributes thermal energy from centralized energy plants to various buildings. This is achieved by circulating the plant's steam or hot water through well-insulated thermal pipe networks, providing a continuous and reliable heat supply to buildings. The adoption of district heating eliminates the need for individual building boilers, promoting efficiency and emission control.

District heating plants can be categorized into boiler, combined heat and power (CHP), and other plant types. Combined heat and power (CHP), also known as cogeneration, involves the simultaneous generation of electricity or mechanical power alongside useful thermal energy (heating and/or cooling) from a single energy source. Various heat sources, including coal, natural gas, renewables, and oil and petroleum products, are utilized in district heating systems. These systems find applications in residential, commercial, and industrial settings.

Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report's Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.

Tariffs are affecting the district heating market by increasing costs of imported boilers, heat exchangers, insulated pipes, pumps, and control systems required for large-scale network deployment. Utilities and municipal heating providers in Europe and Asia-Pacific are most affected due to reliance on imported high-capacity equipment and specialized components, leading to higher project development costs and extended implementation timelines. These tariffs are impacting both new installations and network expansion projects. However, they are also driving localization of equipment manufacturing, increased use of locally sourced materials, and innovation in cost-efficient and modular district heating solutions.

The district heating market research report is one of a series of new reports from The Business Research Company that provides district heating market statistics, including district heating industry global market size, regional shares, competitors with a district heating market share, detailed district heating market segments, market trends and opportunities, and any further data you may need to thrive in the district heating industry. This district heating market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.

The district heating market size has grown steadily in recent years. It will grow from $188.25 billion in 2025 to $196.89 billion in 2026 at a compound annual growth rate (CAGR) of 4.6%. The growth in the historic period can be attributed to expansion of urban infrastructure development, rising demand for centralized heating solutions, increasing focus on emission reduction, availability of combined heat and power plants, growth in residential and commercial heating demand.

The district heating market size is expected to see steady growth in the next few years. It will grow to $236.69 billion in 2030 at a compound annual growth rate (CAGR) of 4.7%. The growth in the forecast period can be attributed to increasing investments in renewable district heating, rising adoption of smart grid integration, expansion of geothermal and solar thermal projects, growing regulatory support for decarbonization, increasing retrofitting of aging heating networks. Major trends in the forecast period include expansion of low-carbon district heating networks, rising integration of renewable heat sources, growing deployment of smart heat metering systems, increasing use of waste heat recovery, enhanced focus on energy efficiency optimization.

Rising industrialization is anticipated to drive the growth of the district heating market in the coming years. Industrialization refers to the process by which an economy shifts from being primarily agricultural to one focused on manufacturing goods. Infrastructure development associated with industrialization increases the adoption of district heating components. For example, in September 2024, the International Federation of Robotics (IFR), a Germany-based non-profit organization, reported that industrial robot installations in the UK increased by 51%, reaching 3,830 units, while in the Americas, over 50,000 units were installed for the third consecutive year, totaling 55,389 units in 2023. Therefore, the rise in industrialization is driving the district heating market.

Key companies operating in the district heating market are concentrating on developing innovative solutions, such as low-carbon heat networks, to improve energy efficiency, reduce carbon emissions, and provide sustainable heating solutions to residential, commercial, and industrial customers. A low-carbon heat network is a system that distributes heat, typically as hot water or steam, from a centralized source to multiple buildings or facilities while minimizing carbon dioxide (CO2) emissions compared to traditional heating systems. For instance, in November 2025, Veolia Environnement S.A., a France-based provider of water, waste, and energy management solutions, launched the "Ecothermal Grid" in the UK, a low-carbon heat network designed to deliver carbon-neutral heating and cooling using a combination of energy sources. The Ecothermal Grid incorporates AI-driven smart controls and energy storage technologies to optimize heat distribution, recover excess heat from industrial and data center operations, and provide reliable, flexible, and sustainable heating to urban areas. The initiative includes a £1bn project pipeline across locations such as Wiltshire, London, Bristol, Yorkshire, and Cambridgeshire, with applications ranging from residential complexes to large research campuses, supporting the UK government's 2050 target of 20% heat demand from district heating networks.

In November 2024, Adven Oy AB, a Finland-based energy company, acquired Osterlens Kraft Fjarrvarme AB for an undisclosed sum. Through this acquisition, it aims to strengthen its district heating operations in Simrishamn, Sweden, enhance operational efficiency, and leverage its expertise in fuel procurement and project management to support sustainable and competitive heat delivery. Osterlens Kraft Fjarrvarme AB is a Sweden-based provider of district heating services with over 50 years of experience managing local heating networks.

Major companies operating in the district heating market are Engie SA, Veolia Environnement S.A., Fortum Oyj, Vattenfall AB, E.ON SE, Danfoss A/S, LOGSTOR A/S, Orsted A/S, Statkraft AS, Wien Energie GmbH, Goteborg Energi AB, RWE AG, Helen Ltd., Vital Energi Utilities Ltd., Agder Energi AS, Eidsiva Bioenergi AS, STEAG GmbH, Alfa Laval AB, Ramboll Group A/S, FVB Energy Inc., Keppel Corporation Limited, Hafslund Eco AS

Western Europe was the largest region in the district heating market in 2025. North America is expected to be the fastest-growing region in the district heating market share during the forecast period. The regions covered in the district heating market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa

The countries covered in the district heating market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The district heating market consists of revenues earned by entities by providing services such as high-temperature district heating, medium-temperature, low-temperature district heating, and ultra-low-temperature district heating. The market value includes the value of related goods sold by the service provider or included within the service offering. The district heating market also includes sales of HVAC system thermostats, furnace burners, heat exchangers, blowers, and filter racks. Values in this market are 'factory gate' values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

District Heating Market Global Report 2026 from The Business Research Company provides strategists, marketers and senior management with the critical information they need to assess the market.

This report focuses district heating market which is experiencing strong growth. The report gives a guide to the trends which will be shaping the market over the next ten years and beyond.

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Where is the largest and fastest growing market for district heating ? How does the market relate to the overall economy, demography and other similar markets? What forces will shape the market going forward, including technological disruption, regulatory shifts, and changing consumer preferences? The district heating market global report from the Business Research Company answers all these questions and many more.

The report covers market characteristics, size and growth, segmentation, regional and country breakdowns, total addressable market (TAM), market attractiveness score (MAS), competitive landscape, market shares, company scoring matrix, trends and strategies for this market. It traces the market's historic and forecast market growth by geography.

• The market characteristics section of the report defines and explains the market. This section also examines key products and services offered in the market, evaluates brand-level differentiation, compares product features, and highlights major innovation and product development trends.
• The supply chain analysis section provides an overview of the entire value chain, including key raw materials, resources, and supplier analysis. It also provides a list competitor at each level of the supply chain.
• The updated trends and strategies section analyses the shape of the market as it evolves and highlights emerging technology trends such as digital transformation, automation, sustainability initiatives, and AI-driven innovation. It suggests how companies can leverage these advancements to strengthen their market position and achieve competitive differentiation.
• The regulatory and investment landscape section provides an overview of the key regulatory frameworks, regularity bodies, associations, and government policies influencing the market. It also examines major investment flows, incentives, and funding trends shaping industry growth and innovation.
• The market size section gives the market size ($b) covering both the historic growth of the market, and forecasting its development.
• The forecasts are made after considering the major factors currently impacting the market. These include the technological advancements such as AI and automation, Russia-Ukraine war, trade tariffs (government-imposed import/export duties), elevated inflation and interest rates.
• The total addressable market (TAM) analysis section defines and estimates the market potential compares it with the current market size, and provides strategic insights and growth opportunities based on this evaluation.
• The market attractiveness scoring section evaluates the market based on a quantitative scoring framework that considers growth potential, competitive dynamics, strategic fit, and risk profile. It also provides interpretive insights and strategic implications for decision-makers.
• Market segmentations break down the market into sub markets.
• The regional and country breakdowns section gives an analysis of the market in each geography and the size of the market by geography and compares their historic and forecast growth.
• Expanded geographical coverage includes Taiwan and Southeast Asia, reflecting recent supply chain realignments and manufacturing shifts in the region. This section analyzes how these markets are becoming increasingly important hubs in the global value chain.
• The competitive landscape chapter gives a description of the competitive nature of the market, market shares, and a description of the leading companies. Key financial deals which have shaped the market in recent years are identified.
• The company scoring matrix section evaluates and ranks leading companies based on a multi-parameter framework that includes market share or revenues, product innovation, and brand recognition.

Scope

• Markets Covered:1) By Plant Type: Boiler; Combined Heat and Power (CHP); Others Plant Types
• 2) By Heat Source: Coal; Natural Gas; Renewables; Oil and Petroleum Products
• 3) By Application: Residential; Commercial; Industrial
• Subsegments:
• 1) By Boiler: Natural Gas Boilers; Biomass Boilers; Oil Boilers; Electric Boilers
• 2) By Combined Heat and Power (CHP): Gas Turbine CHP; Steam Turbine CHP; Reciprocating Engine CHP
• 3) By Other Plant Types: Geothermal Plants; Waste Heat Recovery Systems; Solar Thermal Plants; Heat Pumps
• Companies Mentioned: Engie SA; Veolia Environnement S.A.; Fortum Oyj; Vattenfall AB; E.ON SE; Danfoss A/S; LOGSTOR A/S; Orsted A/S; Statkraft AS; Wien Energie GmbH; Goteborg Energi AB; RWE AG; Helen Ltd.; Vital Energi Utilities Ltd.; Agder Energi AS; Eidsiva Bioenergi AS; STEAG GmbH; Alfa Laval AB; Ramboll Group A/S; FVB Energy Inc.; Keppel Corporation Limited; Hafslund Eco AS
• Countries: Australia; Brazil; China; France; Germany; India; Indonesia; Japan; Taiwan; Russia; South Korea; UK; USA; Canada; Italy; Spain.
• Regions: Asia-Pacific; South East Asia; Western Europe; Eastern Europe; North America; South America; Middle East; Africa
• Time Series: Five years historic and ten years forecast.
• Data: Ratios of market size and growth to related markets, GDP proportions, expenditure per capita,
• Data Segmentations: country and regional historic and forecast data, market share of competitors, market segments.
• Sourcing and Referencing: Data and analysis throughout the report is sourced using end notes.
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