According to International Energy Agency (IEA) website publication on Renewables 2022 Analysis and forecast to 2027 report:
Given the policy landscape as of September 2022, global heat consumption – excluding ambient heat harnessed by heat pumps – is projected to grow almost 14 EJ (+6%) during 2022-2027. Increasing industrial activity drives this trend, with China and India together representing 60% of industrial heat demand growth, while energy efficiency improvements allow building heat consumption to decline 4% globally. The traditional use of biomass is anticipated to decline by more than 3 EJ (-13%) over the outlook period, mostly in China and India, owing in part to the deployment of improved biomass cookstoves.
Modern renewable heat consumption is expected to increase by almost one-third during 2022-2027, raising the modern use of renewables in heat from 11.4% to 14% by 2027. In both the industry and buildings sectors, using renewable electricity for heating contributes the most to renewable heat uptake over the outlook period, owing to the combination of greater use of electricity for heating, including through heat pumps, and rising shares of renewables in the power sector.
Nevertheless, renewable heat developments are insufficient to contain fossil fuelbased heat consumption, which expands in industry and leads to a 7% (+1 Gt CO2) growth in total annual heat-related CO2 emissions by 2027. For comparison, to align with the IEA Net Zero Emissions by 2050 Scenario, renewable heat consumption would have to advance 2.4 times more quickly, and wide-scale behavioural change and much larger energy and material efficiency improvements would be required to reduce heat demand in both buildings and industry.
Industry
Electrification of thermal processes gains traction, but demand growth outpaces renewable heat progress
Annual industrial heat consumption is projected to rise 17 EJ during 2022-2027, with chemical manufacturing contributing the most to this increase. Renewable energy sources are expected to fuel only one-quarter of this growth, with their share in industrial heat demand rising to 13% by 2027, less than a two percentage-point increase from 2022. Thus, decarbonising industry will require greater renewable heat uptake and significantly faster energy and material efficiency improvements.
China, which accounts for more than 40% of industrial heat demand growth, also makes the most progress in renewable heat consumption, followed by the European Union, India and the United States. Together, these regions are responsible for two-thirds of renewable heat developments in industry over the outlook period.
Renewable electricity becomes the largest contributor to renewable heat progress in industry globally, accounting for three-quarters of growth. The acceleration of process heat electrification is the main driver globally, with electricity being used to produce 9% of industrial heat consumed by 2027, up from less than 4% in 2021. Most electricity demand growth comes from both greater reliance on heat pumps and direct electricity use in non-energy-intensive industries and chemical production, and to a lesser extent from the expansion of scrap steel recycling using electric arc furnaces. After China, the largest increases in renewable electricity use for process heat are expected in the European Union, the United States and India. Together, these four regions account for three-quarters of global developments.
Bioenergy is expected to remain the foremost renewable heat source in industry, with its consumption expanding by almost 1 EJ over the outlook period – the second-largest absolute increase after renewable electricity. More than one-third of this growth takes place in India and Brazil – the two largest industrial bioenergy consumers – owing primarily to greater use of bagasse in the sugar and ethanol industries as well as biomass in the food and beverage subsectors. In the latter, the trend is partly driven by a few large multinational companies seeking to reduce their fossil fuel consumption to meet their voluntary carbon reduction targets. Another quarter of the growth takes place in West-, middle- and Eastern African countries, due partly to expanding waste use in the cement subsector. Biogas injected into the gas grid or directly consumed represents only a marginal share of bioenergy use, but developments continue to gather momentum.
Meanwhile, solar heat for industrial processes (SHIP) remains a niche market, accounting for less than 0.02% of global industrial heat consumption. A few largescale projects dominate the sector in terms of installed capacity, with the world’s largest SHIP plant – the Miraah in Oman, dedicated to enhanced oil recovery – on its own accounting for more than one-third of global capacity.
Yet, interest in SHIP continues to grow, with at least 71 new projects installed worldwide in 2021, raising total operational capacity by 5% to nearly 826 MWth. France, China and Spain led capacity additions in 2021, while Mexico, the Netherlands and Austria were the most dynamic markets in terms of number of new plants. While the main SHIP application sectors are currently mining, food and textiles, large-scale developments are also envisaged in the aluminium subsector.
“Heat-as-a-service” business models for SHIP are also emerging, with France and Mexico having launched the first large systems with heat purchase agreements in 2021. The use of concentrating solar heat for industrial applications is also expanding strongly, with Spain in the lead thanks to grants available under the Thermal Energy Production scheme. By 2027, the industrial use of solar heat is projected to increase more than twofold globally. Well suited to a variety of industrial applications with low- to medium-temperature heat requirements, the global potential for solar heat in industrial processes is still largely untapped, owing partly to lack of awareness and low policy support.
Buildings
Heat pump market expansion and the rollout of improved biomass stoves boost modern renewable heat use in buildings
Although building stocks are expanding worldwide, global consumption of heat in buildings (excluding ambient heat) is projected to drop 3.6 EJ during 2022-2027. This decline results mostly from a decrease in the inefficient traditional use of biomass (especially in China and India), efficiency improvements to buildings and heating appliances, and the deployment of heat pumps. China and the European Union demonstrate the largest absolute reduction in building heat consumption, together accounting for more than 80% of the total, followed by Russia, the United States and India.
Over the same period, the modern use of renewable heat in buildings is anticipated to grow almost 30% (+3.2 EJ) globally, with its share in total heat consumption rising from 12% in 2021 to near 16% by 2027 – excluding ambient heat. China alone is responsible for one-third of this growth, while sub-Saharan Africa, the European Union and the United States together contribute almost 40%.
Almost half the growth in renewable heat use in buildings globally is expected to result from a stronger renewable electricity presence as the share of renewables in power generation expands and electric heat pump deployment accelerates. China, the European Union and the United States together account for two-thirds of the 1.6-EJ increase in the use of renewable electricity for thermal purposes in buildings over the outlook period.
In 2021, the European Union registered record 34% growth in heat pump sales, with France, Italy, Germany, Spain and Sweden leading in unit sales, bringing total units in operation in Europe by the end of the year to an estimated 17 million. Heat pump uptake gained further traction in the first half of 2022, with sales up onequarter in Germany, 80% in Finland, 96% in Poland and 114% in Italy (for hydronic heat pumps).
In addition to high gas prices and growing consumer willingness to reduce dependency on Russian gas, policy support for electric heat pumps in the European Union and the United States is expected to significantly boost deployment in these markets. However, strategic co-ordination and robust, diversified supply chains for components, as well as job-training programmes, will be needed to avoid bottlenecks and secure the skilled manufacturing and installation labourers needed to enable rapid market expansion.
The second-largest increase in renewable heat consumption in buildings comes from modern bioenergy use, which represents nearly one-quarter of growth in the outlook period. Most developments in this domain are expected in China, India and sub-Saharan Africa, where improved biomass stoves displace the traditional use of biomass. In contrast, even though wood pellet heating appliances sales expand, bioenergy consumption in historically large markets such as Europe and the United States stagnates or even declines slightly owing to building efficiency improvements and falling heat demand. Following seven consecutive years of decline, the global solar thermal market rebounded in 2021 with a 3% increase in installed collector area, representing 25.6 GWth of new installations and 21 GWth of net capacity additions. Growth was made possible by the stabilisation and slight upturn of the Chinese market, which is by far the largest one, representing 83% of global additions, with India, Türkiye and Brazil primarily responsible for the remaining fraction. In relative terms, Italy, the United States, Greece and Poland also experienced remarkable year-on-year market growth. Small-scale domestic water heaters are the most common solar thermal applications globally, followed by solar combi systems. However, these technologies are facing increasing competition from heat pumps and solar PV systems in large parts of Europe and China. By 2027, solar thermal heat consumption in the buildings sector is projected to increase nearly 40% (+0.6 EJ). One-third of this growth occurs in China alone, while the Middle East, the European Union and the United States together account for half. Meanwhile, a one-quarter increase (+0.3 EJ) in geothermal heat consumption in buildings is expected during 2022-2027, with China accounting for more than three-quarters of new developments. While the upfront expenses of geothermal heating systems are generally high, recent innovative techniques for installing underground heat exchangers could reduce their cost while limiting disruption for customers. Together with the development of alternative business models (e.g. heat-as-a-service), these new methods could accelerate expansion in geothermal heat use.
District heating
In 2021, district heating networks supplied 3% more heat than in the previous year, furnishing 6% of total heat consumed globally. However, the decarbonisation potential of district heating networks remains largely untapped because fossil fuels still dominate district heat production, especially in China and Russia, the world’s largest markets.
Renewables (mostly bioenergy, including biogenic waste) were used to produce 8% of district heat supplies globally in 2021, and the use of solar thermal resources, though still limited, continues to progress, with almost 300 solar district systems (total capacity of 1.6 GWth) in operation worldwide at the end of 2021 (+10% year-on-year). China has led solar district system developments since the Danish market – historically the largest – collapsed in 2020 following a shift in policy. Beyond China, solar thermal district systems are garnering increasing interest in Germany, Sweden, Austria, Poland and France.
Other innovative technological combinations are also being developed, based on the integration and coupling of distributed reversible heat pumps, thermal storage and variable renewables in efficient low-temperature networks. These systems offer promising options to optimally supply heating and cooling to buildings across an entire neighbourhood in densely populated areas.
The share of renewables in district heating is expected to remain stable globally during 2022-2027, while district heat consumption expands 4%. Two-thirds of projected growth in renewable district heat consumption is in the European Union, as greater bioenergy use and the integration of large-scale heat pumps raise the share of renewables by two percentage points to 37%. Most of the remaining growth is expected to take place in China, where district heat consumption – most of which is in the industry sector – expands 13% over the outlook period.
