UK District Heating Industry Overview
|Study Period:||2018 - 2028|
|CAGR:||> 3.46 %|
*Disclaimer: Major Players sorted in no particular order
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UK District Heating Market Analysis
The United Kingdom District heating market is expected to register a CAGR of 3.46% over the forecast period (2022-2027). The United Kingdom government has recognized heat networks as a major technology to decarbonize heat to expand the market for these systems. The United Kingdom has done its part to reduce carbon emissions. The district heating market has industrial uses, such as the use of heating systems in the chemical, petrochemical, and paper industries. The industry's expansion will be fueled by a decrease in transmission losses and an increase in safety against gas leaks.
- Government rules requiring the creation of green buildings, as well as the increasing acceptance of renewable energy sources, will invigorate the sector dynamics. Increasing expenditures on manufacturing facility development in tandem with the continued incorporation of fuel-efficient technology will support market growth.
- According to the UK government, 81 heat network projects are being planned for installation by the HNDU (Government's Heat Network Development Unit). District heating networks link heat sources, including local waste heat, with companies and houses to transport hot water via a network of pre-insulated pipes.
- In the United Kingdom, the growing focus is on carbon emissions along with government funding & incentives toward the acceptance of district heating systems will drive the industry expansion. Furthermore, growing concerns toward recycling waste energies coupled with economic feasibility, cost competitiveness, and low dependency on conventional fuel will further stimulate the market progression.
- Additionally, the United Kingdom government suggests that heat networks may cost-effectively meet the district heating market by providing 14–20% of the heat demand by 2030 and 43% by 2050. In Jan 2022, The government's GBP 320 million Heat Networks Investment Project (HNIP), which promotes the development of heat networks throughout England and Wales, is the source of the GBP 19.1 million funding.
- Due to the COVID-19 pandemic there has been lot of disruption in supply chain across United Kingdom. Due to the restrictions in lockdowns the construction projects were hugely impacted due to no proper availability of the labour force to complete the projects in stipulated time.
UK District Heating Industry Segments
District heating delivers heat to homes and businesses by distributing hot water through an insulated pipe network. Heating supplies are transitioning away from fossil fuels like coal and natural gas and toward renewable energy sources like solar and geothermal. The United Kingdom district heating market is segmented by heat source (coal, natural gas, renewables, oil, and petroleum products), and by end-user (residential/domestic, non-domestic).
|By Heat Source|
|Oil and Petroleum Products|
|By End Users|
UK District Heating Market Trends
This section covers the major market trends shaping the UK District Heating Market according to our research experts:
Residential Usage Set to Drive the Market
- In the United Kingdom, residential consumption from district heat systems makes up a significant portion. This causes a lot of carbon emissions, which makes it difficult for countries to meet their 2050 zero-emission goals. As a result, governments are proactively developing legislation to effectively regulate district heating among citizens. For example, under the Energy Efficiency Directive (EED) announced by the European Commission in 2021, all municipalities with a population of more than 50,000 people would be required to develop plans for local heating and cooling systems.
- Many industrial sites and buildings in the United Kingdom rely on the district heating system, from huge urban networks to smaller networks such as medical campuses and universities. Modern networks, which can operate at low temperatures, can combine 100% renewable sources to supply energy-efficient buildings. Direct integration of existing renewable energy sources or efficient operations where decentralized solutions do not enable it is difficult, particularly in specific areas.
- The residential sector is expected to rise significantly as a result of the rapid and expansion of heat production brought on by urbanization. Homes and businesses use about 40% of the heat produced globally by district heating plants. 90% of the world's district heat production still relies on fossil fuels, however several large cities are now deploying low-carbon district heating alternatives.
- Additionally, homes, university housing, and public buildings in the United Kingdom would benefit from cleaner, more affordable heat and energy due to government financing of GBP 19.0 million promised in 2022 to expand Great Britain's network of low carbon heating.
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Renewable Resources to Hold Significant Market Growth
- District heating systems connect energy users and energy sources. Affordable energy for consumers is provided by district heating using low-cost energy sources, such as waste and heat. On the other hand, oil-fired boilers have high operation costs, and low capacity costs, making them suitable for covering short periods of peak heat demand.
- Decarbonizing heating and cooling is a key element of the UK government's Net Zero policy. It is a cornerstone of the Prime Minister's Ten Point Plan for a Green Industrial Revolution and will be central to their upcoming Heat and Buildings Strategy.
- Biomass fuels and combustible waste contribute to the growth of the district heating market in the United Kingdom. District heating provides an amazing opportunity to use extra heat that would otherwise be wasted. The majority of investments in this industry are focused on building distribution networks and heat-producing units for infrastructure, which helps to reduce carbon emissions.
- With increased urbanization, the demand for this sector is continuously expanding. For example, the UK government announced a substantial expansion of heat networks in January 2022 as the latest move toward powering households with green energy. The GBP 19 million investment will be used to build five new heat networks, two in Bristol and three across the United Kingdom.
- Furthermore, bioenergy accounts for the majority of district heat supply in the United Kingdom, particularly in locations such as biomass-rich mountains, conversion fuel in ancient plants, or areas with strong biofuel availability. Geothermal, solar thermal, and bioenergy are the key renewable resources with the potential to be used in district heating systems. The United Kingdom dominates the renewables market in district heating, accounting for the majority of European geothermal and solar thermal consumption, as well as bioenergy-based output.
UK District Heating Market Competitor Analysis
The United Kingdom District Heating Market is dominated by players like Vital Energi Utilities Ltd, Energy Group Limited, Baxi Heating UK Ltd, Ramboll UK Limited, Veolia UK, Sweco UK, Vattenfall, Equans, E.ON Plc, and Danfoss over the forecast period. The end-users of the United Kingdom district heating market are Residential/ Domestic and Non-domestic.
- March 2022 - Vattenfall partnered with Ameresco to develop an extensive low and zero-carbon heat network in the City of Bristol, the United Kingdom, to decarbonize the city and achieve carbon neutrality goals. The partnership helps improve energy infrastructure, clean air, and lower energy costs. Due to a collaboration between Ameresco and Vattenfall Heat United Kingdom, the Bristol City Leap project, a 20-year concession to decarbonize the city in the United Kingdom will receive an investment of almost EUR 1.2 billion.
- December 2021 - Danfoss, United Kingdom, enters strategic partnership with Enfor. The mutual ambition of Danfoss and Infor resulted in new software innovation to support the energy companies and utilities with the green transition. The advantages of the latest software offering include cost savings, energy, operational improvements, and CO2 reductions for the utilities.
UK District Heating Market Top Players
Baxi Heating UK Ltd
*Disclaimer: Major Players sorted in no particular order
UK District Heating Market Recent Developments
- May 2022 - Cavendish Nuclear, a British provider of nuclear services, and X-energy, a US firm, have signed a Memorandum of Understanding (MoU) to cooperate in the deployment of High-Temperature Gas-Cooled Reactors (HTGRs) in the United Kingdom. The primary goal would be to generate high-temperature heat that could be utilized to generate power, make hydrogen, supply industrial processes, and possibly even district heating.
- April 2022 - E.ON United Kingdom, launched a smart network system for greener home developments and collaborated with Cala Homes to achieve low carbon energy potential. The smart energy network enables homes to be built to the highest sustainability standards - with solar panels, heat pumps, and EV chargers and connected to the grid where otherwise there could be an insufficient network capacity.
UK District Heating Market Report - Table of Contents
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
4.1 Market Overview
4.2 Industry Attractiveness - Porter's Five Forces Analysis
4.2.1 Bargaining Power of Suppliers
4.2.2 Bargaining Power of Consumers
4.2.3 Threat of New Entrants
4.2.4 Threat of Substitutes
4.2.5 Intensity of Competitive Rivalry
4.3 Impact of COVID-19 on the District Heating Market
5. MARKET DYNAMICS
5.1 Market Drivers
5.1.1 Augmented Demand for Energy-efficient and Cost-effective Heating Systems
5.1.2 Rising Urbanization and Industrialization
5.2 Market Challenges
5.2.1 High Infrastructure Cost
6. MARKET SEGMENTATION
6.1 By Heat Source
6.1.2 Natural Gas
6.1.4 Oil and Petroleum Products
6.2 By End Users
7. COMPETITIVE LANDSCAPE
*List Not Exhaustive
7.1 Company Profiles
7.1.1 Vital Energi Utilities Ltd
7.1.2 Energy Group Limited
7.1.3 Baxi Heating UK Ltd
7.1.4 Ramboll UK Limited
7.1.5 Veolia UK
7.1.6 Sweco UK
7.1.9 E.ON Plc
8. INVESTMENT ANALYSIS
9. FUTURE OF THE MARKET
UK District Heating Market Research FAQs
What is the study period of this market?
The United Kingdom District Heating Market is studied from 2018 - 2028.
What is the growth rate of United Kingdom District Heating Market?
The United Kingdom District Heating Market is growing at a CAGR of >3.46% over the next 5 years.
Who are the key players in United Kingdom District Heating Market?
Baxi Heating UK Ltd, Sweco AB, Equans, Vattenfall AB, Danfoss are the major companies operating in United Kingdom District Heating Market.
United Kingdom District Heating Industry Reports
In-depth industry statistics and market share insights of the United Kingdom District Heating sector for 2020, 2021, and 2022. The United Kingdom District Heating research report provides a comprehensive outlook of the market size and an industry growth forecast for 2023 to 2028. Available to download is a free sample file of the United Kingdom District Heating report PDF.