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European Combined Heat and Power for District Heating Market

  • October 2013
  • Frost & Sullivan
Report ID: 1863206

Summary

Table of Contents

Building a Future towards Energy Self-sufficiency

Both the International Energy Agency (IEA) and the EU Member States have identified district heating as a growth area. However, implementation of combined heating and power (CHP) policies is slow and growth has been sluggish. However, the market is set to grow steadily between 2012 and 2019. The key challenge facing the market is defining policy and regulatory reforms that will encourage district heating’s accelerated adoption. Despite the high investment cost of technology and low payback periods, Europe is well-placed to increase adoption of district heating systems by 2020. The region is making developments across technology, skills, and the supply chain to meet its targets of attaining energy efficiency through district heating.

Key Findings

- Frost & Sullivan forecasts that the overall European combined heat and power (CHP) for district heating market will increase at a compound annual growth rate (CAGR) of X% between 2012 and 2019.
- The European Commission and the Energy Climate Foundation (ECF) have developed the Roadmap 2050 to identify opportunities to reduce greenhouse gas emissions byX%, increase the share of renewable energies to X%, and save X% energy by 2020.
- The Energy Roadmap 2050 contains a slow but steady growth plan for both CHP plants and district heating (DH) in the future. The International Energy Agency (IEA) also predicts a modest growth rate for the district heating market.
- The application of district heating in the industrial sector is expected to increase. The heat distributed to the residential and commercial sectors will also continue to increase in the next X to X years.
- It is mainly the Northern, Central, and Eastern European countries that have a high penetration of district heating. While Poland and Germany have the largest total amount of district heat delivery, the highest growth rates for district heating are expected to be in Austria and Italy.
- Supportive government legislation for combined heat and power will eventually drive the district heating market in Europe.
- CHP currently contributes to almost X% of the total district heat generated, while the rest comes from renewables and fossil fuels.
- The European district heating market comprises more than X units, thereby meeting X% of total European heat demand. The market is expected to reach a size ofXgigawatt thermal (GWth) by 2019 and generate a revenue of € billion.
- Both the International Energy Agency and the latest European Union (EU) Member States’ studies under the Cogeneration Directive have identified district heating as a growing area within the scope of combined heat and power. However, successful implementation of combined heat and power (CHP) policies has yet to occur; this has a direct impact on the district heating market which witnessed a sluggish growth rate ofX% in 2012.

CEO’s Perspective

1. Conducive policies and regulatory reforms are necessary to favour the development of district heating.
2. The best opportunity for district heating is represented by emerging economies outside of Europe, such as India and China.
3. Ambitious European targets to increase energy efficiency in future power and heat distribution are the key drivers for CHP-DH.
4. Material, process, and equipment innovation will lead to higher efficiency and cost effectiveness in CHP for district heating.
5. Bio fuels, geothermal, solar power, and waste resources are likely to increasingly replace fossil fuels in CHP for district heating.

Market Definitions

Geographic Coverage: Europe
Study Period: 2009–2019
Base Year: 2012
Forecast Period: 2013–2019
Monetary Unit: Euro
Conversion Rate: € = $X

- The scope of this study includes the European market for CHP for district heating.
- The terms CHP for district heating and CHP-DH have been used interchangeably.
- The study includes an in-depth analysis of the CHP-DH market with a specific focus on prime equipment, plant types, applications, regions, and fuel types.

Total CHP for District Heating Market: A Typical District Heating Network, Europe, 2012
- Procurement
Heat Sources
1.CHP
2.Heat Boilers
3.Industrial Waste
4.Incinerator
- Transport and Distribution
District Heating Transfer Station
- Delivery and Service
Customer Substation
1.Space Heating
2.Hot Water
3.Steam

- District heating is a system of centralised heat production and distribution, typically common in urban areas. The heat generation sources are equipped to produce both heat and electricity, or heat-only.
- The district heating systems that produce both heat and electricity are essentially cogeneration units.
- A district heating network comprises the following:
oA heat generation source, heat transportation and distribution network, return pipes, and a customer interface comprising a delivery and service substation.
- Industrial processes and municipal waste incineration can also provide waste heat for district heating systems. Typically, buildings need space heating and hot water, while industrial companies need steam and hot water.
- Combined heat and power for district heating (CHP-DH) systems provide space heating and hot tap water to residential, commercial, and industrial customers. Industrial processes such as drying and evaporation require heat and hot water which can be supplied by district heating systems.
- A single unit or multiple buildings or dwellings are heated from a central source.
- District heating also involves a network of double pipes that transport the hot water generated from these systems to be used for both process needs as well as spatial heating applications. The water generated can also be used for further hot water needs in residential as well as commercial end-user sites.
- These networks are complex and large, ensuring that multiple sites are connected to the same heat and power source. In some cases, multiple combined heat and power plants form a single unit.
- Also, a number of heat-only producing plants, covering peak load and stand-by heat, may be connected to the main plant. District heating provides better integration across CHP and renewable energy sources.
- Several distributed power generating technologies such as gas power plants, solar thermal, solar photovoltaic, wind power, and small hydropower are now being deployed along with cogeneration to generate district heat, not only across industries and commercial enterprises, but also for large utilities.
- District heating plants are significantly less polluting than individual heat supply plants because of the ability to use low-emission heat sources. A DH unit also has the opportunity for emissions mitigation.
- An IEA-affiliated study of district heating and cogeneration found that, “District heating and cogeneration reduce total existing carbon dioxide emissions from fuel combustion by X– % globally compared to a world without district heating. District heating alone is responsible for avoiding at least X million tonnes of CO2 emissions per year. This corresponds to % of total European CO2 emissions.”
- District heating can greatly contribute to achieving the targets of reduction in greenhouse gas emissions and reduce Europe’s reliance on imports. According to the Cross Border Bioenergy Consortium, “Doubling sales of DH by 2020 will reduce Europe’s primary energy supply by % or Mtoe/year, diminish its import dependency by X Mtoe/year, and lower its CO2 emissions byX% or XMtoe/year.”

Key Questions This Study Will Answer

Is the market growing, how long will it continue to grow, and at what rate?
Are the existing competitors structured correctly to meet customer needs?
Will these companies/products/applications continue to exist?
What are the key drivers and restraints affecting this market?
Are the technologies meeting customer needs or is there additional development needed?
What will be the preferred fuel of the future for district heating?

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