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Credit: Koen van Weel

Buildings and Cities

District Heating

Dutch king Willem-Alexander attends the opening of BioWarmteCentrale (bioheating station) in Purmerend, the Netherlands. It provides 80 percent green energy for 25,000 people, powered by 110,000 tons of biomass per year.

In district heating and cooling (DHC) systems, a central plant channels hot and/or cool water via a network of underground pipes to many buildings. Heat exchangers and heat pumps separate buildings from the distribution network, so that heating and cooling are centralized while thermostats remain independent. Rather than having small boilers and chilling units whir away at each structure, DHC provides thermal energy collectively—and more efficiently.

Copenhagen, Denmark, is the global standout in DHC. It now meets 98 percent of heating demand with the world’s largest district system, fueled with waste heat from coal-fired power plants and waste-to-energy plants. (In the coming years, biomass will replace all coal use.) Since 2010, Copenhagen has also tapped the waters of the Øresund Strait for district cooling.

Compared to individual heating and cooling systems, Tokyo’s district system cuts energy use and carbon dioxide emissions in half—a powerful example of DHC’s potential. Although a tried and tested technology, it is still new and unfamiliar in many parts of the world, and high up-front costs and system complexity continue to be obstacles. Municipal governments play the most essential role in taking this solution to scale.


New York Steam Company…Birdsill Holly: Gardiner, Beth. “Britain Looks to an Old Heating Technology in Fight to Cut Emissions.” New York Times. September 2, 2009.

University of Toronto: Freeman, Bill. The New Urban Agenda: The Greater Toronto and Hamilton Area. Toronto: Dundurn, 2015.

Soviets; Nordic cities: Johnson, Charlotte. “District Heating: A Hot Idea Whose Time Has Come.” The Guardian, November 18, 2014.

Copenhagen…world’s largest district system: Gerdes, Justin. “Copenhagen’s Ambitious Push to Be Carbon Neutral by 2025.” Yale Environment 360. April 11, 2013; UNEP. District Energy in Cities: Unlocking the Potential of Energy Efficiency and Renewable Energy. Nairobi: United Nations Environment Programme, 2015.

[impact of] Tokyo’s district system: UNEP, District Energy.

district cooling…in Paris: IEA. Linking Heat and Electricity Systems: Co-Generation and District Heating and Cooling Solutions for a Clean Energy Future. Paris: International Energy Agency, 2014; UNEP, District Energy.

view all book references

Technical Summary

District Heating

Project Drawdown defines district heating as: a centralized heating system and the distribution of generated heat to the buildings of a defined community, through a network of buried piped, to satisfy the demand for space and water heating. District heating replaces the conventional practice of heating indoor spaces and water individually, with heat generated on-site. Combining heating loads into larger totals allows for the installation of more efficient boilers and waste heat harvesting systems, which are often only available or cost-effective in larger sizes.

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 and water heating systems. The density of the demand area and average yearly temperature dictate the heat load density in an area. In order for district heating 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 (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[1]

The total addressable market for district heating systems using renewable energy sources is based on estimated global heat supply for commercial and residential heating in terawatt-hours from 2020-2050, derived from the International Energy Agency (IEA)’s 6°C Scenario (2016).

Current adoption of district heating from renewable sources represents around 0.2 percent of total district heating systems (2 terawatt-hours), and only 0.015 percent of total heat supply for commercial and residential heating (Greenpeace, 2015). Future adoption is not only focused on increasing the number of systems to meet demand, but also on using on-site heat exchangers instead of boilers and furnaces, and changing the fuel mix of existing and future systems to lower-carbon renewable sources such as geothermal and solar.

Adoption Scenarios[2]

The impacts of increased adoption of district heating from 2020-2050 were generated based on three growth scenarios, which were assessed in comparison to a Reference Scenario where the solution’s market share was fixed at the current levels.

  • Plausible Scenario: This scenario follows a customized adoption trajectory for the short term from IRENA (2016), and through 2050 follows the total district heating of the Reference Scenario from Greenpeace (2015).  
  • Drawdown Scenario: This scenario takes the growth adoption trajectory of the Greenpeace Energy [R]evolution Scenario until 2050.
  • Optimum Scenario: This scenario takes the growth adoption trajectory of the Greenpeace Advanced Energy [R]evolution Scenario until 2050.

The targeted market share in 2050 from the renewable energy sources within district heating is equal for the three scenarios, reaching the Greenpeace Advanced Energy [R]evolution Scenario’s projected share of solar and geothermal systems (75 percent of total district heating systems).

Financial Model

The financial inputs used in the model assume an average installation cost of US$1,570 per kilowatt,[3] determined through a variable meta-analysis. 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 and an availability factor of 61 percent are used for the solution, compared to 19 years and 27 percent for the conventional technologies, respectively. 


Increasing the use of district heating from approximately 0.015 percent in 2014 to 10.34 percent of world heat supply by 2050 would require an estimated US$568.85 billion in cumulative first costs. The results for the Plausible Scenario show that the net cost compared to the Reference Scenario would be US$457.07 billion from 2020-50, with nearly US$3.5 trillion in savings over the same period. Under the Plausible Scenario, this solution could reduce 9.38 gigatons of carbon dioxide-equivalent greenhouse gas emissions from 2020-2050, compared to a Reference Scenario where the solution is not adopted.

Both the Drawdown and Optimum Scenarios have similar adoptions of renewable district heating systems, with impacts on greenhouse gas emissions reductions over 2020-2050 of 11.38 gigatons and 13.39 gigatons, respectively.


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 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:

  1. 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;
  2. economic viability – the district heating system is economically viable only if the total heat requirement of the entire system exceeds a minimum level;
  3. location of buildings – to minimize connection length, the buildings should be within the minimum proximity of the existing heat network, resulting in lower investment and operational costs; and
  4. 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.

[1] For more on the Total Addressable Market for the Buildings and Cities Sector, click the Sector Summary: Buildings and Cities link below.

[2] To learn more about Project Drawdown’s three growth scenarios, click the Scenarios link below. For information on Buildings and Cities Sector-specific scenarios, click the Sector Summary: Buildings and Cities link.

[3] All the costs presented are in US2014$.

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