Global Solar District Heating Market Assessment, By System [Large System, Small System], By End-user [Residential, Commercial, Industrial], By Region, Opportunities and Forecast, 2018-2032F

Global solar district heating market is projected to witness a CAGR of 8.77% during the forecast period 2025-2032, growing from USD 4.54 billion in 2024 to USD 8.88 billion in 2032. The market has experienced significant growth in recent years and is expected to maintain a strong pace of expansion in the coming years.

The demand for solar district heating is driven by several factors, including the rapid pace of urbanization as well as environmental, economic, and technological considerations. Solar district heating systems can integrate into existing heating networks, allowing municipalities to leverage abundant solar energy while minimizing reliance on non-renewable energy sources.

Furthermore, governments and regulatory authorities are implementing regulations aimed at reducing carbon emissions, along with providing financial incentives for renewable energy investments. These initiatives are propelling the adoption of solar heating technologies. Incentive programs and rebates from governments across various regions also promote the use of solar technologies, creating significant opportunities for the solar district heating market in the coming years.

For instance, in December 2024, The European Bank for Reconstruction and Development (EBRD) provided a loan of up to USD 108 million to Novosadska Toplana Novi Sad company in Serbia for the construction of a large-scale solar-thermal power plant for decarbonize district heating. The project was co-financed by an investment grant of USD 25 million from the European Union (EU) and other donors through the Western Balkans Investment Framework (WBIF). The plant will feature 38,600 m² of solar collector fields, an 850,000 m³ seasonal heat storage system, a 17-megawatt (MW) heat pump, a 60 MW electric boiler, and lastly, incorporating advanced power-to-heat technology. This development highlights the investment by the government and higher authorities for the establishment of solar plants that will drive the growth in solar district heating in the coming years.

Rising Investment in Sustainable Heating Solutions Accelerate Market Growth

Rising awareness of climate change and the need to reduce carbon emissions drives the adoption of solar district heating solutions. Solar district heating solutions are considered eco-friendly options that help reduce carbon footprints by harnessing renewable energy. The residential sector is looking to invest in implementing shared solar heating systems that allow homeowners to participate in solar energy generation, thus promoting sustainable development. The residential sector seeks cost-effective centralized heating solutions due to the high demand for hot water in residential premises. Solar district heating systems can provide clean energy to fulfill the heating needs of urban areas.

District heating has gained utmost prominence in Germany. For instance, Germany currently has 4,100 district heating systems with 34,000 km of pipeline which is supplying around 140 TWh of energy and covering 14% of the heat demand in the buildings sector. Germany is rapidly expanding its networks to ensure better profitability and double its annual investments in technology.

As of January 2024, Germany has 55 solar district heating plants with 112 MW in operation. The country seeks to invest in nine more plants with 79 MW capacity in the realization phase and 70 plants with 277 MW in preparation. The investment in Germany for the technology will reach USD 5.1 billion by 2045, supplying energy to the residential sector.

Technological Advancement in Solar Collectors and Energy Storage Solutions Creates Market Opportunities

The upcoming innovation in solar collectors and energy storage solutions enhances the efficiency, reliability, and economic viability of solar district heating systems. The ongoing advancement in flat-plate collectors and evacuated tube collectors allows the system to operate at higher temperatures and improve overall energy output. Furthermore, the tracking systems are installed in the collectors which optimize the angle of solar collectors to maximize sunlight capture throughout the day which increases the productivity of the system.

In addition, the excess energy generated from solar district heating can be stored in energy storage technologies, such as large water tanks or underground storage solutions, which could be distributed at peak energy demand. The capability of systems makes it more economically viable for municipalities and businesses looking to invest in renewable energy infrastructure, thereby creating an opportunity for the solar district heating market in the coming years.

For instance, in November 2024, the report published by the International Energy Agency (IEA) on the Solar Heating and Cooling Programme mentioned that the use of CPC (Compound Parabolic Concentrator) technologies in the evacuated tubes helps improve the efficiency of the collector, which resulted in higher yields. Furthermore, Taylormade Solar Solutions Pvt. Ltd. from India produces evacuated tube collectors according to German quality standards. The company is adopting the weather-proof CPC reflector technology to increase the efficiency of evacuated tube collectors. This development testifies that companies are adopting new technologies to improve the collectors, which help increase the energy production from solar district heating systems.

Large-Scale Systems to Dominate the Market Share

Large-scale systems have the largest market share and dominate the market. Large-scale systems benefit from economies of scale as systems significantly lower the cost per unit of energy produced than smaller installations. The cost-effectiveness of large-scale systems makes it an appealing option for utility operators to invest in the market. The system can fulfill 50% to 80% of a household's hot water needs while reducing reliance on conventional energy sources, which boosts the demand for large-scale systems in the market.

Large-scale systems are adopting upcoming advancements in solar technology that will improve the efficiency and reliability of these systems in the coming years. In addition, innovations in solar collector designs and integration with smart home systems create better opportunities for large-scale systems in the market. Furthermore, forthcoming government policies are implementing regulations to promote the adoption of renewable energy, driving investment in large-scale systems.

Europe Leads the Solar District Heating Market

Europe has dominated the solar district heating market and is expected to reign supreme during the forecast period. The European region has become a leader in global solar district heating due to the presence of major countries such as Denmark, Germany, and Sweden. These countries are heavily investing in the adoption of solar technologies and experiencing significant urbanization and economic growth. In addition, Denmark has successfully implemented solar district heating technology because of its established district heating infrastructure in the country. The government also encourages the utility sector to adopt solar district heating systems which is boosting the market size in the region.

Furthermore, European governments are actively promoting renewable energy through incentives and regulations aimed at reducing carbon emissions, further driving the adoption of solar district heating systems. During recent years, the solar sector in the region has witnessed robust growth owing to the increasing adoption rate of solar technology in the generation of hot water. In addition, countries in the region are proactively focusing on decarbonization and sustainability goals, which further enhances the investment in solar district heating systems.

For instance, as per the International Energy Association and SHC solar heating and cooling program (July 2023), 266 cities and towns in Europe were receiving energy through the solar district heating plant. The region plans to expand and develop new district heating systems to reduce the dependency on fossil fuels. Furthermore, the IEA (International Energy Agency) SHC Task 68: Efficient Solar District Heating (SDH) Systems has developed a specific solar district heating info package for the region. This development highlights that the region is looking to invest in solar district heating plants, which will make the region dominant in the global market.

Future Market Scenario (2025 – 2032F)

• Ongoing improvements in the technology and design of solar district heating systems will enhance efficiency, thereby increasing the productivity of hot water generated by these systems.
• Environmental concerns are driving the adoption of sustainable technological solutions for energy generation, creating market opportunities.
• The residential sector is heavily investing in solar water heater technologies to ensure a reliable hot water supply for household needs.
• Supportive government policies and financial incentives for deploying new technologies aimed at sustainability in developing countries will continue to significantly impact the creation of market opportunities for the solar district heating market in the coming years.

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Report Scope

“Solar District Heating Market Assessment, Opportunities and Forecast, 2018-2032F”, is a comprehensive report by Markets and Data, providing in-depth analysis and qualitative and quantitative assessment of the current state of the global solar district heating market, industry dynamics, and challenges. The report includes market size, segmental shares, growth trends, opportunities, and forecast between 2025 and 2032. Additionally, the report profiles the leading players in the industry, mentioning their respective market share, business models, competitive intelligence, etc.

Report Attribute	Details
Base Year of the Analysis	2024
Historical Period	2018-2023
Forecast Period	2025-2032
Projected Growth Rate	CAGR of 8.77% between 2025 and 2032
Revenue Forecast in 2032	USD 8.88 billion
Segments Covered	System, End-user
Regions Covered	North America, Europe, South America, Asia-Pacific, Middle East and Africa
Key Companies Profile	ENGIE, Alfa Laval Corporate AB, LOGSTOR Denmark Holding ApS, Absolicon Solar Collector AB, Aalborg CSP A/S, Keppel DHCS Pte Ltd, Statkraft AS, Danfoss A/S, Meriaura Group, TVP Solar
Customization Scope	15% free report customization with purchase
Pricing and Purchase Options	Avail the customized purchase options to fulfill your precise research needs
Delivery Format	PDF and Excel through email (subject to the license purchased)

In the report, global solar district heating market has been segmented into the following categories: 

• By System
  • Large System
  • Small System
• By End-user
  • Residential
  • Commercial
  • Industrial
• By Region
  • North America
  • Europe
  • Asia-Pacific
  • South America
  • Middle East and Africa

Key Players Landscape and Outlook

Continuous innovation characterizes the landscape of solar district heating globally, as the companies compete in terms of energy efficiency, product life, and unique features. The market outlook remains positive, owing to increased demand for renewable energy for heating water and the adoption of innovative solar technologies. Product launches, agreements, business expansions, collaborations, and developing technologies are projected to increase competition in the fast-paced market.

For instance, in September 2024, TVP Solar inaugurated the first utility-scale solar district heating plant in Germany. The plant features 6,086 m² of advanced TVP MT-Power v4 high-vacuum solar thermal panels, for 4.7 MW generating renewable heat, and 1,000 m³ TES capacity. The system is set to deliver over 3 GWh/year of heat to Germany. This development will help the company to increase renewable energy in the coming years.

Key Players Operating in Global Solar District Heating Market are:

• ENGIE
• Alfa Laval Corporate AB
• LOGSTOR Denmark Holding ApS
• Absolicon Solar Collector AB
• Aalborg CSP A/S
• Keppel DHCS Pte Ltd
• Statkraft AS
• Danfoss A/S
• Meriaura Group
• TVP Solar

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• How are the markets predicted to develop in the future and what factors will drive or inhibit growth?
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