District Cooling Market by Production Technique (Free Cooling, Absorption Cooling, & Electric Chillers), Source (Fossil Fuels, Renewable Energy), Application (Residential, Commercial, & Industrial) and Region - Global Forecast to 2029
[270 Pages Report] The district cooling market is projected to grow from USD 1.1 billion in 2024 to USD 1.3 billion by 2029, at a CAGR of 3.6% between 2024 and 2029. The district cooling market is set to expand significantly due to the surge in urbanization, rising global temperatures, and the need for efficient and sustainable cooling solutions. Governments and industries are channeling investments into district cooling systems to cut down energy consumption and greenhouse gas emissions, complying with stringent environmental standards. Moreover, technological advancements and the integration of renewable energy sources are enhancing the appeal of district cooling systems, driving their adoption across various sectors.
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District Cooling Market Dynamics
Drivers: Urbanization and population growth fueling demand for sustainable district cooling solutions
Urbanization and population growth significantly drive the district cooling market due to the heightened need for efficient and sustainable cooling solutions in densely populated urban areas. As urban migration increases, the concentration of buildings and infrastructure leads to higher energy consumption for cooling. The United Nations projects that by 2050, 68% of the global population will reside in urban areas, up from 55% in 2018. This trend is especially evident in developing regions such as Asia and Africa, where cities are expanding rapidly. For example, India’s urban population is expected to reach 600 million by 2031, while Africa’s urban population is set to triple by 2050. District cooling systems can be up to 50% more energy-efficient than conventional air conditioning systems. Cities like Dubai and Singapore have successfully implemented district cooling to provide reliable and efficient cooling services to large-scale developments. The rapid pace of urbanization and the growing need for sustainable cooling solutions drive the expansion of the district cooling market, promoting efficient energy use and contributing to environmental sustainability.
Restraints: High initial infrastructure costs and investments for district cooling systems
One significant restraint for the district cooling market is the high initial infrastructure costs and substantial investment required for setting up district cooling systems. Unlike traditional air conditioning units that can be installed on a per-building basis, district cooling systems involve centralized production and distribution networks. This necessitates the installation of extensive piping networks, cooling plants, and thermal storage facilities to effectively serve a large area or community. According to International District Energy Association, the initial setup costs for district cooling systems can be several times higher than conventional cooling systems due to these infrastructure requirements.
Opportunities: Technological advancements in Smart Grid Integration and IoT
The integration of smart grid technologies and Internet of Things (IoT) solutions offers substantial opportunities for the district cooling market. Smart grid technologies enable real-time monitoring and optimization of energy distribution, thereby enhancing the efficiency and reliability of district cooling systems. IoT sensors and data analytics further enable predictive maintenance and energy management, optimizing operational performance and minimizing downtime. For instance, IoT-enabled sensors can monitor temperature fluctuations, system pressures, and energy consumption across district cooling networks. This real-time data empowers operators to proactively identify potential issues and implement preventive measures, thereby improving system reliability and reducing maintenance costs. Moreover, the integration of smart grid technologies facilitates demand response initiatives, allowing district cooling systems to adjust cooling capacity in response to real-time electricity prices and grid conditions. This adaptive capability not only optimizes energy utilization but also bolsters grid stability during peak demand periods, thereby enhancing overall energy efficiency and resilience.
Challenges: Difficulties faced during the implementation of district cooling systems
Large locations necessitate district cooling plants and piping, and district cooling plant development is a multi-phase, multi-year process. Interfaces with other infrastructure are consequently present, especially in the pipe works for chilled water and condensing water. In these situations, interface problems are typical and might arise even at a greenfield site. An integrated planning strategy is necessary to minimize the complexity during construction in order to solve these interface challenges. Commercial challenges include securing the necessary financing facilities, maintaining the warranties and bank guarantees within the time frame of the contract, paying the contractor on time, selecting suppliers, and negotiating contractual terms and conditions with subcontractors and suppliers. Engineering challenges include maintaining green building trends, arranging equipment to fit the available area, selecting suitable and energy-saving equipment, and coordinating with government agencies for permits and approvals.
DISTRICT COOLING MARKET ECOSYSTEM.
Fossil fuels accounted for the largest growing by source segment of the district cooling market.
Globally, fossil fuel-based district heating and cooling systems still predominate, although initiatives to switch these systems to renewable energy sources are gaining momentum. The International Energy Agency (IEA) claims. The growing need for sustainable and energy-efficient cooling infrastructure is propelling expansion in the district cooling industry as well. With advantages for the environment, including less energy and water use, district cooling systems offer an environmentally friendly substitute for conventional cooling techniques. District cooling is becoming more popular as a result of government rules requiring new development projects to be sustainable and energy-efficient. District heating and cooling systems are still mostly powered by fossil fuels, but the sector is aggressively moving toward more efficient and renewable energy sources. The urge to lessen is what's driving this shift.
Free cooling accounted for the fastest growing production technique segment of the district cooling market
Free cooling is growing at the fastest rate in the district cooling market due to its ability to leverage natural cooling sources, such as cold ambient air or water, to reduce reliance on mechanical refrigeration. This method significantly cuts energy consumption and operational costs, making it an attractive option for businesses and municipalities aiming to improve energy efficiency and sustainability. Additionally, free cooling systems have a lower environmental impact by minimizing greenhouse gas emissions. As energy prices rise and environmental regulations become stricter, the cost savings and eco-friendly benefits of free cooling make it an increasingly popular choice in the district cooling market.
Asia Pacific is the fastest-growing district cooling market.
The surge in construction activities, alongside a burgeoning population and evolving climatic conditions, are critical drivers of this regional market growth. Additionally, the push towards sustainable and energy-efficient cooling solutions in urban developments, increased investments in infrastructure, and government initiatives promoting eco-friendly technologies are further catalyzing the market. The integration of advanced technologies and innovations in district cooling systems is also anticipated to enhance operational efficiency and reduce energy consumption, thereby contributing to the market's expansion in the coming years.
Key Market Players
Johnson Controls Inc. (US), Daikin Industries, Ltd. (Japan), Trane Technologies plc (Ireland), Mistubishi Heavy Industries, Ltd. (Japan), and Danfoss A/S (Denmark) are the key players in the global district cooling market.
Danfoss A/S is one of the leading suppliers of controls and heat transfer solutions for district heating and cooling applications. Its products and services aid in optimum energy efficiency for the customer while maintaining maximum comfort. The company operates through three major business segments: Danfoss Power Solutions, Danfoss Climate Solutions, and Danfoss Drives. District cooling solutions are provided under the Danfoss Climate Solutions segment. In 2020, Danfoss combined the Heating and Cooling segments into the Climate Solutions segment, enabling the company to provide the broadest and most innovative portfolio of solutions.
Scope of the Report
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Report Metric |
Details |
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Years Considered for the study |
2021-2029 |
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Base year |
2023 |
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Forecast period |
2024–2029 |
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Units considered |
Value (USD) |
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Segments |
By Source |
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Regions covered |
Asia Pacific, Europe, North America, South America, Middle East & Africa |
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Companies profiled |
Johnson Controls Inc. (US), Daikin Industries, Ltd. (Japan), Trane Technologies plc (Ireland), Mitsubishi Heavy Industries, Ltd. (Japan), and Danfoss A/S (Denmark). A total of 28 players have been covered. |
This research report categorizes the district cooling market based on Resin Type, Application, and Region.
By Source:
- Fossil Fuels
- Renewables
- Other Sources
By Production Technique:
- Free Cooling
- Absorption Cooling
- Electric Chillers
By Production Technique:
- Commercial
- Residential
- Industrial
By Region:
- Asia Pacific
- Europe
- North America
- South America
- Middle East & Africa
Recent Developments
- In June 2023, Danfoss introduced a new family of entry-level case/refrigeration controllers for Food retail applications.
- In March 2023, Danfoss has officially finalized its acquisition of BOCK GmbH, a world leader in CO2 and low-GWP compressors utilized in cooling and heating applications. The completion of the acquisition reinforces Danfoss’ position as a preferred provider of greener cooling and heating solutions.
Frequently Asked Questions (FAQ):
What are the growth driving factors of district cooling?
Urbanization and population growth fueling demand for sustainable district cooling solutions is the major factor for driving district cooling market.
What are the major applications of district cooling?
The major applications of district cooling are packaging commercial, residential, and industrial.
Who are the major manufacturers?
Johnson Controls Inc. (US), Daikin Industries, Ltd. (Japan), Trane Technologies plc (Ireland), Mitsubishi Heavy Industries, Ltd. (Japan), and Danfoss A/S (Denmark) are some of the leading manufacturers operating in the global district cooling market.
What are the reasons behind district cooling gaining market share?
The global district cooling market is expected to grow at a high rate due to the increasing awareness about environmental protection and cost-effectiveness and the growing need to manage the peak load of power grids.
Which is the largest region in the district cooling market?
Middle East & Africa is the largest region in district cooling market. .
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This research study involves the use of extensive secondary sources, directories, and databases, such as Hoovers, Bloomberg L.P., Factiva, ICIS, and OneSource, to identify and collect information useful for this technical, market-oriented, and commercial study of the global District cooling market. Primary sources are mainly industry experts from core and related industries, preferred suppliers, manufacturers, distributors, service providers, and organizations related to all segments of the value chain of this industry. In-depth interviews were conducted with various primary respondents, including key industry participants, subject matter experts (SMEs), C-level executives of key market players, and industry consultants, among other experts, to obtain and verify critical qualitative and quantitative information as well as assess growth prospects of the market.
Secondary Research
Secondary sources include annual reports, press releases, and investor presentations of companies; directories and databases, which include D&B, Bloomberg, and Factiva, white papers and articles from recognized authors, and publications and databases from associations, such as the BP Statistical Review of World Energy, Energy Information Administration, and Department of Energy. Secondary research has been used to obtain important information about the key players and market classification & segmentation according to industry trends to the bottom-most level and key developments related to market and technology perspectives. A database of the key industry leaders has also been prepared using secondary research.
Primary Research
In the primary research process, various sources from both the supply and demand sides have been interviewed to obtain and verify qualitative and quantitative information for this report as well as analyze prospects. Primary sources from the supply side include industry experts such as CEOs, vice presidents, marketing directors, technology and innovation directors, and related executives from various leading companies and organizations operating in the district cooling market. Primary sources from the demand side include experts and key persons from the application segment.
After the complete market engineering process (which includes calculations of market statistics, market breakdown, market size estimations, market forecasts, and data triangulation), extensive primary research has been conducted to gather information and verify and validate the critical numbers arrived at. Primary research has also been conducted to identify the segmentation, applications, Porter’s Five Forces, key players, competitive landscape, and key market dynamics such as drivers, opportunities, challenges, industry trends, and strategies adopted by key players.
Following is the breakdown of primary respondents:
To know about the assumptions considered for the study, download the pdf brochure
Market Size Estimation
In the complete market engineering process, both top-down and bottom-up approaches have been extensively used along with several data triangulation methods to estimate and forecast the overall market segments listed in this report.
Top-down and bottom-up approaches have been used to estimate and validate the market size of district cooling for various applications in each region. The key players in the market have been identified through secondary research, and their market share in respective regions has been determined through primary and secondary research. This entire procedure includes the study of annual and financial reports of the key market players and extensive interviews for insights from industry leaders such as CEOs, vice presidents, directors, and marketing executives. All percentage shares, splits, and breakdowns have been determined using secondary sources and verified through primary sources.
Global District cooling Market Size: Bottom Up Approach
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Global District cooling Market Size: Top-down Approach
Data Triangulation
After arriving at the overall market size from the estimation process explained above, the total market has been split into several segments and sub-segments. Data triangulation and market breakdown procedures have been used wherever applicable to complete the overall market engineering process and to arrive at the exact statistics for all segments and sub-segments. The data has been triangulated by studying various factors and trends from both the demand and supply sides. The market has been validated using both the top-down and bottom-up approaches. Then, it was verified through primary interviews. Hence, for every data segment, there are three sources—the top-down approach, the bottom-up approach, and expert interviews. When the values arrived at from the three points matched, the data was assumed to be correct.
Market Definition.
District cooling market encompasses the district cooling system that centralizes cooling energy production and distribution via chilled water from a central plant to multiple buildings through underground pipelines. It eliminates individual building cooling systems, enhancing efficiency and sustainability. Serving diverse sectors like commercial, residential, and industrial, district cooling reduces energy consumption and greenhouse gas emissions. Users purchase cooling services from providers, benefiting from shared infrastructure and operational cost savings. Scalable and adaptable, these systems support urban development with efficient cooling solutions, making them pivotal in modern urban planning for energy efficiency and environmental sustainability.
Key Stakeholders
- District cooling equipment manufacturers
- District cooling manufacturers
- District cooling distributors and suppliers
- Consumers and Building Owners
- Research institutes and companies.
- Industry, energy, and environmental associations
- Renewable energy advocates
- Government and research organizations
Report Objectives
- To describe and forecast the district cooling market based on source, production technique, and application in terms of value
- To describe and forecast the district cooling market based on application and region in terms of volume
- To describe and forecast the market size of various segments across five key regions: North America, South America, Europe, Asia Pacific, and the Middle East & Africa
- To provide detailed information regarding the drivers, restraints, opportunities, and challenges influencing the market growth
- To strategically analyze the micromarkets1 with respect to individual growth trends, prospects, and contributions to the overall market size
- To analyze market opportunities for stakeholders and provide a detailed competitive landscape for market leaders
- To study the trends and disruptions impacting customers’ businesses, value chain analysis, ecosystem analysis, case study analysis, technology analysis, trade analysis, patent analysis, key conferences and events, investment and funding scenario, regulatory landscape, tariff, standards, Porter’s five forces, and key stakeholders and buying criteria, pertaining to the market
- To strategically profile the key players and comprehensively analyze their market ranking and core competencies2
- To analyze competitive developments in the district cooling market, such as product launches, contracts, expansions, and mergers & acquisitions.
Note: 1. Micromarkets are defined as the further segments and subsegments of the district cooling market included in the report.
2. Core competencies of companies are captured in terms of their key developments and product portfolios, as well as key strategies adopted to sustain their position in the district cooling market.
Available Customizations
MarketsandMarkets offers customizations according to the specific needs of the companies with the given market data.
The following customization options are available for the report:
Product Analysis
- Product matrix, which gives a detailed comparison of the product portfolio of each company
Regional Analysis
- Further breakdown of the district cooling market, by country
Company Information
- Detailed analysis and profiling of additional market players (up to five)
Generating Response ...
Growth opportunities and latent adjacency in District Cooling Market
Interested in details of pre-commissioning of district cooling plants in UAE.
Market estimation and forecast, list of key manufacturers, current global trends present in the market
information on efficient cooling solutions for DC application.
District cooling market in India and Top 5 metro cities
Information on District cooling market
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Disctict Cooling in Mexico: 1. Market Potential 2. Policy/regulatory framework 3. Business cases
Interested in DC current related market with MEQuery not Clear region coverage
Middle East DC market overview, trends and forecast up until 2019; competitive landscape including that in the Middle East ; company profiles.
District cooling market analysis for P.R. China
Information and analysis on District Cooling market in GCC with a focus on Saudi Arabia along with assets, owners, value and capacity, etc.
Global district cooling market trends and insights on IT business and software vendors related to district cooling
District Energy systems market insights
Require colombia market of district cooling and heating market with estimates by cities in colombia
Information on the OUCs over district cooling, and players active in the US and North American Market
Detailed information on energy saving industry, forecast, and trends