Project Drawdown defines district heating as a centralized renewably powered heating system and the distribution of generated heat to the buildings of a defined community through a network of insulated buried pipes, to satisfy the demand for space heating. District heating replaces the conventional practice of heating indoor spaces individually, with heat generated on-site. Combining heating loads into larger totals allows for the installation of more efficient boilers which are often only available or cost-effective in larger sizes. Powering renewable district heating systems is possible with biomass, solar, and geothermal energy as well as waste heat enabling economies of scope.
District heating systems require a minimum heat load per linear unit of network to make them financially feasible and provide them an advantage over using on-site space heating systems. The density of the demand area and average yearly temperature dictate the heat load density in an area. In order for typical district heating (nonrenewable) to be commercially viable, there is a need for a minimum of 2 megawatt-hours per meter of planned network length. As a result, district heating systems have been implemented mainly in urban areas with higher population density, located at cooler climate zones (with mostly fossil-powered systems in northern Europe, China, and Russia). District heating is a mature technology, with most systems currently using fossil fuels to generate heat.
This analysis focuses on the district heating systems that provide an alternative to conventional on-site heating by offering efficiencies through scale, replacing current systems’ fuel with renewable energy sources, and offering environmental benefits through decreased greenhouse gas emissions.
Total Addressable Market
The total addressable market for district heating systems using renewable energy sources is based on estimated supply for commercial and residential building space heating in terawatt-hours from 2020 to 2050, derived from International Energy Agency (IEA) data.
Current adoption of district heating from renewable sources represents around 10 percent of total district heating systems (at least 150 terawatt-hours). Future adoption is focused on increasing the number of renewably powered systems to meet demand, but also on using on-site heat exchangers instead of boilers and furnaces.
The impacts of increased adoption of district heating from 2020 to 2050 were generated based on two growth scenarios. These were assessed in comparison with a Reference Scenario, in which the solution’s market share was fixed at the current levels. In each case, the global availability of biomass and geothermal to power these systems was analyzed collectively across all Project Drawdown solutions to ensure that there was sufficient renewable power.
- Scenario 1: This scenario follows a district heating adoption trajectory from IEA ETP 2DS (2017) with an increasing share of zero-emissions sources until 100 percent of district heating is renewably powered by 2060.
- Scenario 2: This scenario follows an adoption trajectory from IEA ETP Beyond 2DS (2017) with an increasing share of zero-emissions sources until 100 percent of district heating is renewably powered by 2050.
Emissions from the conventional alternative included fuel and electrical grid emissions from localized heating systems based on global average final heating demand. Solution emissions (renewable district heating) were assumed zero. We exclude any indirect emissions from say, facility construction, due to limited availability of data and expected customized facilities for the localities of installation due to their unique availability of renewable energy sources. Emissions factors came from the Intergovernmental Panel on Climate Change (IPCC) data.
The financial inputs used in the model assume an average installation cost of US$1796 per kilowatt, determined through a variable meta-analysis (the conventional cost is US$198 per kilowatt). Due to the technology maturity, a learning rate of 2 percent was used, similar to the one applied to the conventional technologies the solution is replacing. An average lifetime of 24 years was used for the solution, compared with 19 years for the conventional.
The district heating solution was integrated with others in the Buildings Sector by first prioritizing all solutions according to the point of impact on building energy usage. This meant that building envelope solutions like Insulation were first, building systems like BAS were second, and building applications like Heat Pumps were last. The impact on building energy demand was calculated for highest-priority solutions, and energy-related district heating input values were reduced to represent the impact of higher building envelope solutions.
Increasing the use of renewable district heating from approximately 1.6 percent in 2018 to 13 percent of building space heat supply by 2050 would require an estimated US$227 billion in net first costs. These results for Scenario 1 show that savings would amount to US$1.6 trillion over the technology lifetime and 6.3 gigatons of carbon dioxide-equivalents over 2020–2050. Under Scenario 2, this solution could reduce 9.9 gigatons of carbon dioxide-equivalent emissions from 2020 to 2050 and US$2.4 trillion for a net cost of US$337 billion to get adoption to 20%.
The main advantages of district heating are twofold. First, the systems are highly flexible: it is much easier to impact ten buildings if they are on a common distribution loop than by trying to negotiate with each of the individual buildings to install efficient renewable technology at each of the buildings. Second, district heating employs economies of scale and economies of scope to install preferred technologies prior to achieving cost-effectiveness at the individual building scale.
The adoption path for district heating is influenced by different factors:
- high heat load density – because the heat network is capital-intensive, the heated area should have a high density to minimize the required pipe length
- economic viability – the district heating system is economically viable only if the total heat requirement of the entire system exceeds a minimum level
- location of buildings – to minimize connection length, buildings should be within the minimum proximity of the existing heat network, resulting in lower investment and operational costs
- location of heat source – by locating the heat source close to or within the urban areas, the total length of heat network can be minimized.
In some areas of the world (such as the United States and Europe), the existing drinking water and sewage infrastructure has reached the end of its lifetime. If replacing those piping networks can be coordinated with installing new district heating piping networks, the cost of the systems could be significantly reduced. In areas where new district heating systems can be installed at the same time as they are building new buildings, the cost of piping can in some cases be cut in half by utilizing radiant heating systems to distribute the heat inside the buildings, significantly decreasing first costs.
Some of the first targets for conversion to renewable district heating systems should be fossil-based district heating systems, which are numerous in China and Russia. These systems, particularly those in China, are also often rather inefficient and result in significant emissions and local pollution. Converting these to renewables can have climate, financial, and health benefits for residents in those countries. Several other systems in Europe can also be upgraded to meet the low emissions standards of the leaders in Scandinavia.
 All the costs presented are in 2014 US$.
 Although we used the term “priority,” we do not mean to say that any solution was of greater importance than any other, but rather that for estimating total impact of all building solutions, we simply applied the impacts of some solutions before others, and used the output energy demand after application of a higher-priority solution as the energy demand input to a lower-priority solution.