350 million building units connected to district energy networks by 2030, provide about 20% of space heating needs

District energy networks are a key stepping stone to meeting zero-carbon heating and cooling, with 350 million connections in cities globally targeted by 2030. The expansion of these systems is projected to provide about 20% of global space heating needs. That compares to around 15% of space heating needs in 2020. In other words, further expansion of district heating network plays a crucial role in achieving net zero emissions by 2050. District energy networks are fuel flexible, thus, they future-proof heating and cooling supply choices.

In existing and new networks, integration with low-temperature district energy (flow temperatures of 70°C and below) can boost the penetration of heat pumps, solar thermal, and other renewable energy sources such as deep geothermal. It can therefore complement several other IEA milestones on the road to Net Zero Emissions by 2050 (NZE Scenario) such as 400 million dwellings using solar thermal and 600 million heat pumps deployed by 2030.

Directly or together with large-scale heat pumps (powered by green electricity) and thermal storage systems, district energy enables extensive use of secondary heat sources that are already available from renewable energy sources (e.g. river and sea water), urban and tertiary sector waste heat (e.g. sewage water, data centre cooling, underground metro cooling) and industrial waste heat (e.g. from steel and paper industries). In the near future, excess heat from carbon capture and Power-to-X processes, an umbrella term for the conversion of electricity into an energy carrier or material, will also play a role. Where necessary, temperatures are increased by heat pumps (large-scale or at the building level) and heating/cooling is distributed by network.

District energy networks are a cost-effective solution for meeting net zero emissions for dense urban environments. Once installed, the district energy infrastructure can utilise heat from any source so that investment in heat networks allows for future fuel flexibility. Consequently, existing thermal networks can progressively decarbonise just as electricity networks can.

District energy networks unlock the potential for thermal renewable energy sources, e.g. renewably supplied heat pumps and recyclable thermal energy. They also provide for individual and community involvement in the evolution of sustainable local networks with both consumers and prosumers (where consumers can become producers depending on real-time circumstances).

Modern district energy systems help to deliver energy security, increasing independence from energy imports, while also creating jobs, and raising associated tax revenues and regional revenues.

Together with storage, district energy networks offer substantial balancing of future electricity systems with high power market saturation.

District energy encompasses a very wide range of systems that differ in magnitude, type of buildings/communities served, climatic circumstances, utilisation of heat source(s), operational temperatures and pressures. 

District energy networks are already a proven solution with effective systems in many countries, and currently cover around 10% of global heat demand in buildings. In some countries, district heating is already the majority heat supply. For example, in Denmark, 65% of heat demand in buildings is covered by district heating. There are many district energy systems in operation that show the efficacy of low-temperature district heating as a way to maximise the integration of renewable and secondary energy sources, demonstrating the flexibility of district energy solutions. District cooling, while less prevalent than district heating, is emerging as a sustainable alternative to conventional air conditioning systems. Some countries are developing both district heating and cooling networks, including those with very different climates, such as Spain and Finland.

Many countries (importantly this includes countries with very little tradition of district energy) are trying to increase the penetration of district energy, often accelerating this with financial support programmes.

Over the lifetime of a district energy system, consumers linked to a network are likely to pay less for their heating as a service than non-district consumers who bear the local investment costs, maintenance and risks themselves.

Despite being cost-effective over the long term, district energy infrastructure is highly capital intensive for utilities, and costs are often even more in countries with non-mature district energy markets. Long-term cost-benefit methods, as well as support measures, are required to overcome this discrepancy.

There is often a skills shortage in countries that are trying to establish district energy systems, and in particular for workers who can deliver new, or adapt existing, systems that integrate low/zero-carbon technologies. This underscores the need for the ongoing research effort being delivered by the IEA District Heating and Cooling (DHC) TCP, and training programmes such as the International DHC+ Summer School.

District energy systems are based at a town or city level so that there is a dearth of structured data and absence of the political and lobbying “clout” of national level electricity companies. They may also lack the resources and skills base to integrate new techniques such as Artificial Intelligence that could help reduce their operational costs.

New district energy systems based on non-fossil fuels are evolving too slowly; policy frameworks tend to be structured according to the fossil fuel-based society. In order that fossil fuel district heating can be phased out before 2050, research work on integration of renewables needs to continue.

Existing district heating systems that need to transition (to lower temperature operation, and to integrate more renewables) often lack the resources to do so quickly enough, and regulatory frameworks lack the economic drivers for decarbonisation. Research efforts devoted to such transitions need to stay a major focus over the current decade.

The transition from old, often very large, district energy networks presents a significant organisational and financial challenge. This is an issue of scale that requires time.

Greater attention to the correct commissioning and operation of internal heating systems on the customer side of substations is required in order to derive the full benefit from district heating systems.

The benefits of district energy systems are also not fully known across the buildings construction industry. For instance, not using available low-carbon heat sources within heat networks will likely increase electricity demand and costs and delay decarbonisation. The contribution of heat networks to a future integrated sustainable energy system needs to be highlighted more frequently.

• Decreasing district heating temperatures: definition of transition strategies to lower temperature operation of district heating systems.
• Integration of solar and other renewable energy, recycled heat sources, heat pumps and thermal storage. Develop business models to reflect the benefits of future non-fossil low-temperature district heating, and enable them to flourish.
• Assess long-term availability of usable waste heat sources.
• Increase the understanding of how digitalisation can improve all operational aspects.
• Optimisation of systems including not only the heat network itself and substations, but also customer internal distribution systems including radiators; in this way all links in the chain can be successfully integrated.
• Synergy with other energy vectors, including future hybrid energy networks and the role of DHC for sector coupling.
• Improvement of components in terms of cost and environmental performance, including pipes, installation, maintenance, substations, and controls.
• Raising awareness on the opportunities that district heating can provide; learning from the experience of district heating markets to deploy district cooling. Developing guidelines on energy efficiency of district cooling.
• Establishment of new, and expansion and transitioning of existing, district energy networks based on non-fossil renewable energy sources (RES) and waste heat sources.