Home > Blogs > 3 Supportive Regulatory Policies Pushing District Heating Adoption
The introduction of aggressive climate objectives by global economies and growing prospects for reducing carbon emissions are driving the growth of the district heating market. District heating systems are deemed to be a critical part of the decarbonizing heating sector as they enable for easy integration of clean and flexible energy sources into the overall energy mix.
The ever-increasing population has augmented the demand for infrastructural development. The United Nations, in fact, claims that the global population is expected to reach 9.7 billion in 2050 and eventually 11 billion by 2100. This factor, coupled with the swift expansion of the real-estate sector is likely to provide lucrative growth prospects for district heating solution providers in the ensuing years.
Likewise, the World Energy Council states that heating accounts for at least 50% of global energy utilization. This makes district heating and cooling one of the major innovations that can make a significant contribution to minimizing carbon dioxide and air pollution levels.
The district heating market is expected to witness exponential growth as worldwide governments are increasingly turning to energy-efficient and innovative solutions to reduce their carbon footprint while also lowering heating bills for homeowners.
Buildings, for instance, are the single largest energy consumer in Europe, accounting for around 40% of energy consumption and 36% of carbon dioxide emissions in the European Union. This makes reducing emissions in the building as well as the energy sector a critical point for climate change mitigation as well as meeting the EU’s emission objectives.
National policies and local government support have become fundamental to boosting district heating system adoption in the EU. Some of the major regulatory initiatives have been outlined below:
The European Union Heat Roadmap will focus on developing low-carbon heating as well as cooling solutions by measuring and deploying changes at a national level across all 14 EU member states. It is worth noting that these member states together account for around 85-90% of total heating and cooling requirements across Europe.
The EU has acknowledged that a shift in energy consumption towards a low carbon, locally produced, and renewable energy source, that also involves district heating systems, would help in meeting its Energy Roadmap 2050 ambitions.
To that effect, district heating networks will receive a boost under a new draft of EU legislation that will require all municipalities with above 50,000 population to map out heating as well as cooling decarbonization roadmaps. As Europe looks to wean itself off gas and coal, switching these networks to renewables has become an urgent priority, further augmenting Europe district heating industry size in the years ahead.
2. Finland’s National Energy and Climate Strategy
Renewable energy sources in Finland, which is one of the world leaders in sustainable energy source utilization, represent around 40% of energy end-consumption. In 2017, the country announced the National Energy and Climate Strategy to 2030 initiative to focus on increasing renewable energy usage to at least 50% by the year 2020.
It is also worth mentioning that district heating is Finland’s most prevalent heating solution, with around 66% of new buildings opting for district heating annually. Approximately 70% of Finland’s municipalities are known to produce district heating with waste heat or renewable sources of energy.
3. The Danish Energy Agreements
Denmark announced the Energy Agreement to support the country’s long-term goal of becoming carbon neutral by 2050, an ambition that was set even before the 2015 Paris Agreement. The EU member state also set intermediate goals of reaching 30% renewable energy sources in the entire energy sector by 2020 (which was reached in 2016) and 55% by the year 2030.
Speaking of 2020, Denmark signed a Climate Plan for a Green Waste Sector and Circular Economy to monitor how waste management could help the country lower its GHG emissions. As a part of the COVID-19 crisis recovery initiative, Denmark announced funding to renovate residential establishments, which also includes replacing aging oil-fueled boilers with district heating systems.
Strict regulations to reduce GHG emission levels and a supportive regulatory outlook that promotes sustainable and energy-efficient technologies are stimulating the global district heating industry dynamics.
As sustainable energy becomes a global political agenda, especially following the 2015 Paris Agreement, there has been a surge in demand for low-carbon heating and cooling systems across the globe. Most systems district heating systems used in Europe circulate water at around 70–95°C temperature.
High emphasis on reinforcing R&D activities and subsequent technological breakthroughs have led to the development of the fourth generation of district heating systems that can circulate water at 50-60°C. Even heat loss or wastage within this network is significantly reduced given the technology’s low-temperature design, further allowing to save additional costs.
This next-gen district heating system can also retain the traditional benefits associated with centralized heating networks, such as less money and time lost while maintaining boilers, eventually helping in reducing carbon emissions. This reduced capital expenditure and operational costs have enabled fourth-generation heating networks to emerge as a highly attractive prospect for various manufacturers, further paving the way for the growth of the global district heating market.
Additionally, thanks to its lower installation as well as maintenance costs, the technology can also be adopted in housing associations and the public sector, especially where reducing customer bills is highly prioritized. The system is ideal for centralized air, water, or ground source heat pumps, which can also help in reducing emissions significantly as compared to its gas-based counterparts.
Amid these trends, the growth of district heating market can be viewed as a sustainable and efficient opportunity that can tackle several challenges of the future.
It is worth mentioning here that various cities across the globe are already deploying carbon-neutral district heating solutions, although 90% of the worldwide production of such heating technologies still relies on fossil fuels. Modern networks with reduced operating temperature can integrate 100% renewable energy sources to ensure energy-efficient buildings, predominately in areas where decentralized solutions are not easily integrated.
District heating networks that run-on electricity can also provide electricity grid flexibility capabilities, primarily relying on the demand response. Despite the positive outlook, the potential for low carbon or carbon neutral district heating solutions remains largely untapped given that future systems need to be entirely redesigned to meet new conditions for heat delivery.
With that being said, the state-owned energy company Fortum has committed to producing carbon-neutral district heating systems in Espoo, Finland in the decade beginning from 2020. Fortum intends to reduce CO2 emissions by around 90,000 tons per year, which is 14% of the current district heating-based CO2 emissions in the city.
In a nutshell, district heating systems are some of the most critical solutions for decarbonizing the heating sector as per the Net Zero Emissions by 2050. It would be interesting to witness how the district heating market transforms the global economy in the upcoming years.