New Technologies, Fuels Enhance Viability of $10B District Heating Market

July 30, 2014 By Karen Henry

districtheating-energy-manageTraditionally, buildings are fueled by petroleum, natural gas, electricity and coal, but an opportunity exists to decouple the energy source from the building, through district heating (DH) networks. According to a report from Lux Research titled “Heating for the Future: Identifying Global Hotspots for District Energy,” DH can deliver cost gains of up to 74 percent over conventional distributed heating. Although the sector is decades old and worth $10 billion annually, efficiency and technical sophistication of systems varies from region to region, with Europe currently leading the way.

New technologies, coupled with a range of alternative fuels, will enable more efficiencies, lower carbon output and enhance the economic viability of DH for a wider range of geographies, notably the Northeastern United States, Spain, Poland, South Korea and Japan, Lux predicts.

In its evaluation of six proven alternative heat generation methods for DH, and their viability in the continental United States, the European Union and East Asia, Lux Research made the following findings:

  • Natural gas has the widest application. With incremental gains in combustion efficiency, natural gas-fired DH produces the most consistent total cost of operations (TCO) reductions across residential, multi-residential and commercial building types. Cost savings range between 47 percent and 74 percent, better than those derived from biomass and waste-to-energy (WTE). Even in the worst-case scenario, gas-fired delivers savings of 47 percent for residential, whereas WTE slides to 21 percent and biomass to 27 percent.
  • Legacy differences determine gains. DH has compelling TCO reductions in regions such as Scandinavia because it displaces high-cost electric heating that, for example, costs $0.40/kWh. Similarly, it is a cost-effective alternative to fuel oil in Japan, Spain and Poland.

Renewable mix is best for Asia. In Asia-Pacific, the most promising technologies are ground source heat pumps (GSHPs), biomass and solar thermal. Each can drive down TCO by 10–20 percent. In South Korea, the GSHPs can realize a higher than 30 percent cost reduction, while China’s commercial segment alone is viable for WTE.

Leave a reply