The transformation of the European energy landscape is being defined by legislation and regulations which are aimed at creating a renewable sector to meet EU goals of reduced carbon emissions and, higher supply security at a lower cost. The defining legislation is the 2015 Paris Agreement which sets out legally binding climate goals for emissions to be reduced by 80-95% by 2050, with intermediate goals of 20% reduction in 2020 and 40% by 2030.

Extensive analysis has been carried out across Europe identifying and qualifying the benefits of district heating as a key measure to meet these goals.

The Heat Roadmap Europe analysis undertaken by the Stratego Project reviewed the benefits of district heating across five European countries, Czech Republic, Croatia, Italy, Romania, and the United Kingdom. These member countries represent population, climate, resources, and energy supply diversity which can be used as the basis to inform national energy policy for wider European implementation.

The study found that by collecting the excess heat generated from both industry and electricity production, and using smart district heating grids, it will be possible to save all the natural gas that is currently being used for heating buildings in Europe.

Opportunities are plentiful, but be prepared

The case for investment and overall industry change is creating opportunities across the entire sector as the 4th generation of district heating (4GDH) becomes a reality. The coherent technological and institutional concept of 4GDH uses smart heating networks to ensure the development of sustainable energy systems, involving the integration of all available heat sources into a single network. By using waste heat from industry, heat from renewable energy sources, co-generation and other sources, heating and cooling can be supplied to low-energy buildings with low losses and high energy efficiency.

Swedish companies are already at the forefront of development and implementation in this field and can look to European markets to take knowledge, expertise and solutions to develop partnerships and collaborations that will deliver growth and help governments meet regulatory requirements.

While on paper the opportunities are vast, the short-term reality is that the European market is largely fragmented, at both country and regional levels. As an historically traditional industry, this fragmentation is unsurprising but presents Swedish actors with a challenge. Not only is the operational aspect of the market fragmented, but national and regional legislation is far from being cohesive.

Business Sweden has been working across the whole European district heating market, gaining a whole market perspective analysing and identifying the opportunities and challenges. Working with several Swedish companies and helping them define a tailored approach to expand or move into new markets has reiterated the potential of the market and the pivotal role Swedish solutions can play in transforming the market.

Across Europe there are large variations in market maturity which provides a range of opportunities across all levels of the district heating ecosystem. The Nordics represent the most advanced countries and primarily have opportunities to further transition renewables and 4th generation technology. While in many Eastern European countries there are extensive networks, but they need upgrades and advancements. This is where the large bulk of brownfield opportunities exist, often with EU-funding available. The dominance of natural gas in Western and Southern Europe means district heating has been largely unnecessary but things are changing, and big opportunities are emerging.

The range of opportunities extend across the entire district heating spectrum and at all levels of the maturity cycle. These include:

• New greenfield projects
• Renovations and upgrades
• Excess heat
• Renewables
• 4th generation networks
• District cooling
• Regulatory framework

Connecting locally a key to success

The district heating sector across Europe is comprised of a wide range of stakeholders and key industry players. Identifying and engaging with the right stakeholders, at the right time, can seem like a near impossible task. But connecting with key local players is imperative if market expansion and growth is to happen. Increasingly, a local market presence is becoming necessary to work with local suppliers and tailor solutions to local needs.

Due to the large-scale investments required in district heating projects, both green and brownfield, engaging with stakeholders over the long-term is absolutely necessary and will enable successful collaboration on long project cycles and planning processes.

What is clear is the important role district heating is set to play in achieving the EU’s heating strategy of capturing and utilising excess heat, increasing the share of renewables and improving efficiencies. This will be key to turning Europe’s energy transition into a reality. This means greenfield opportunities are emerging in Western Europe while in Eastern and Northern Europe brownfield opportunities are present alongside some EU funding.

If experts’ hopes and expectations are realised and the prevalence of district heating networks increases to become one of the principle methods of delivering heat, the future market will be structured significantly different both economically and environmentally. Swedish district heating knowledge and expertise can play a fundamental role in establishing a network that is fit for purpose while stimulating market expansion and growth opportunities.

Connect for sustainable growth in global markets

Our teams in Europe have local knowledge, market expertise and established industry networks to help you expand your sales and market share. Contact us to be part of the global push to provide connected and sustainable district heating.