DBDH publishes Hot Cool, but the main business is helping cities or regions in their green transition. We will help you find specific answers for a sustainable district heating solution or integrate green technology into an existing district heating system in your region – for free! Any city, or utility in the world, can call DBDH and find help for a green district heating solution suitable for their city. A similar system is often operating in Denmark, being the most advanced district heating country globally. DBDH then organizes visits to Danish reference utilities or expert delegations from Denmark to your city. For real or virtually in webinars or web meetings. DBDH is a non-profit organization - so guidance by DBDH is free of charge. Just call us. We'd love to help you district energize your city!
SPECIAL COLLECTION EDITION 2, 2025
INTERNATIONAL MAGAZINE ON DISTRICT HEATING AND COOLING
DISTRICT HEATING Bringing together sources, solutions & society
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Contents Contents
THE CUSTOMER IS ALWAYS KING! GET THE PIPES IN THE GROUND! FRAMEWORK CONDITIONS BIOMASS DIGITALISATION THIS EDITION'S FOCUS THEMES
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Editorial CHILL: A PRAGMATIC WAY TO GET TO 100% RENEWABLE HEAT – FASTER By Morten Jordt Duedahl
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Closing the Loop: HOW INDUSTRIAL-UTILITY SYMBIOSIS IN ODENSE FORGES A BLUEPRINT FOR DE- CARBONIZATION By Ronak Monga
BIOMASS STRENGTHENS SUSTAINABLE FORESTRY – and contributes to green goals in the future energy supply By Anders Frandsen, and Klara Brockstedt
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From pipes to people: UNDERSTANDING LOCAL ACCEPTANCE OF DISTRICT HEATING By Marie Aarup
THE ADVANTAGES OF DISTRICT HEATING By John Tang Jensen
A HOLISTIC APPROACH TO CORRECTLY EVALUATE ENERGY EFFICIENCY IN DISTRICT HEATING SYSTEMS By Oddgeir Gudmundsson, and Jan Eric Thorsen,
WHEN A DIGITAL TWIN BECOMES INTELLIGENT AI and District Heating are the future By Bo Stig
Podcast: EMBEDDING SOCIAL SUSTAINABILITY IN THE DISTRICT ENERGY BUSINESS MODEL By Hanne Kortegaard Støchkel
OWNERSHIP MATTERS FOR DISTRICT HEATING By Magnus Skovrind Pedersen, and Lasse Skou Lindstad
FROM CONSUMER TO FLEXUMER By Lone Pie Kelstrup, and Kristian Honoré
DBDH Stæhr Johansens Vej 38 DK-2000 Frederiksberg Phone +45 8893 9150
Editor-in-Chief: Lars Gullev, VEKS
Total circulation: 5.000 copies in 74 countries 10 times per year
Grafisk layout Kåre Roager, kaare@68design.dk
Coordinating Editor: Linda Bertelsen, DBDH lb@dbdh.dk
info@dbdh.dk www.dbdh.dk
ISSN 0904 9681
https://www.districtheatingdivas.com/
EDITORIAL CHILL:
a pragmatic way to get to 100% renewable heat – faster
By Morten Jordt Duedahl, DBDH
Keep a cool head – CHILL. In the green transition, not every step is the destination, but some steps get us off the worst path today and onto the right one tomorrow. Transitional fuels like natural gas and sustainably sourced biomass are not the endgame; they’re stepping stones that replace coal and oil now, stabilise our systems, and buy time to scale the real winners: large heat pumps, geothermal, surplus heat, and storage. Stepping stones, not detours.
What CHILL means in practice The CHILL mindset is simple: move decisively with solutions that cut emissions today while designing everything for an easy upgrade to fully renewable heat. Don’t wait for the perfect; build the path toward it. If we refuse stepping stones, we risk standing still. Progress now – or zero next. Time horizons matter Our sector works on long horizons. Many networks plan over 20–25 years – the lifetime of major assets. That means we can take smart, staged decisions: retire the worst fuels, use transitional ones sparingly to stabilise supply and prices, and phase in more renewables as they become available and cheaper. The aim stays crystal clear: 100% renewable heat. We simply reach it by crossing the river on stones rather than trying a single giant leap. Small moves, big impact A little stable renewable capacity goes a long way in unlocking larger change. Early steps – like modest heat pumps, initial storage, or nearby surplus heat – create confidence, lower risk, and extend networks. That reach then makes bigger, cheaper, more distant low-carbon sources viable. Do one area now, then many more; the compounding benefits show up quickly. For existing networks: phase down, power up Look at how many systems have already moved: coal gave way to biomass; now biomass is giving way – step by step – to heat pumps, electric boilers, geothermal, and high-grade surplus heat. The pattern is consistent: use less of the worse, more of the better, every year. Keep backup capacity for rare peaks, but let cleaner sources dominate more of the hours. It’s an orderly, affordable, dependable transition. For new networks: start lean, design for upgrade New systems don’t need to wait for the final configuration. Start with a core of renewable production and top up with a transitional fuel to guarantee reliability and competitive prices from day one. Use that position to extend the pipe grid and connect larger, cheaper, renewable sources as they come within reach. Build the network that future heat sources want to connect to.
10% of a city 100% renewable heat soon, or 100% of the city 50% renewable heat now and lift that to 70, 90, 98% over time? CHILL chooses scale and momentum: deliver meaningful decarbonisation to everyone immediately, and then ratchet up the renewable share year by year. That is how you build public trust and real climate impact. Design once, upgrade often CHILL is not just about fuels; it’s about architecture. Specify assets and hydraulics that are “future-proofed”: low-temperature networks, space for big heat pumps and geothermal, interfaces for surplus heat recovery, and room in the control strategy for sector coupling and tomorrow’s options – from electro-thermal storage to opportunities linked with hydrogen production and CCS/U. Flexibility is the insurance policy that keeps us out of dead ends. Address the perception gap Transitional fuels can look like backsliding. They aren’t – if used with discipline and a plan. Communicate clearly: we cut emissions immediately versus the current baseline, we guarantee affordable and reliable service, and we lock in an infrastructure that is ready for 100% renewable heat. Tell citizens what happens this winter, next winter, and the one after that – show the staircase, not just the penthouse.
The invitation If you agree that momentum beats paralysis, the game is on:
Retire the worst fuels first.
Use transitional fuels sparingly and transparently.
Extend networks to unlock larger renewable sources.
Standardise “upgrade-ready” design.
Report the step-ups annually – heat share by technology, hours run, emissions avoided.
CHILL, and we will get there — in the best and fastest way possible. The destination does not change. The path becomes walkable. Let’s step onto the first stone and keep moving.
Fairness and scale: who gets green heat first? Here’s a hard choice we should state plainly: is it better to give
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CLOSING THE LOOP: HOW INDUSTRIAL- UTILITY SYMBIOSIS IN ODENSE FORGES A BLUEPRINT FOR DECARBONIZATION
By Ronak Monga, Head of Sales Development CBS, District Energy
The global imperative to decarbonize industrial processes, particularly the heat that accounts for nearly one-fifth of global energy consumption, remains a primary challenge of the energy transition. This report examines a landmark project at the Envases packaging factory in Odense, Denmark, that offers a powerful and replicable solution with district heating.
the vast, untapped potential of surplus heat across Europe and beyond.
Through a strategic partnership with the local utility, Fjernvarme Fyn, and the implementation of advanced, commercially available technology from Grundfos, Envases has created a model for a circular energy economy. The project replaced the factory's fossil-fuel boilers with a direct connection to the city's district heating network, complemented by a sophisticated on-site heat recovery system. This dual strategy not only secures a greener energy supply but also transforms the factory from a consumer into a "prosumer" of energy, exporting its surplus process heat back into the grid. The results are definitive: an annual energy cycle of 37 GWh, comprising 23 GWh of recycled heat and 14 GWh of direct savings, and an abatement of 3,000 tonnes of CO2 per year. This article concludes that the tripartite model demonstrated in Odense, a proactive industrial partner, a capable utility, and accessible smart technology, is a highly scalable blueprint for industrial decarbonization, offering a clear pathway to unlock
The foundation for innovation: Odense's District Energy Ecosystem
Utility with a vision: Fjernvarme Fyn The success of any heat integration project depends on a capable and visionary utility partner. In Odense, Fjernvarme Fyn, one of Denmark's largest district heating companies, is a model of a forward-thinking energy provider. Its vast infrastructure, including over 2,200 km of distribution lines, creates a robust marketplace for heat. Crucially, Fjernvarme Fyn is driven by an ambitious commitment to decarbonization, with firm targets to phase out coal by 2024/2025 and support Odense's goal of carbon neutrality by 2030. This transforms the utility from a passive
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creating a positive feedback loop that encourages further collaboration.
operator into an active agent of the green transition.
Beyond traditional utility: An energy system integrator
Deep Dive case study: The Envases factory trans formation Previously, the Envases factory, a manufacturer of metal cans, operated in an energy silo. Its heating needs were met by an on-site gas boiler system, exposing the company to volatile gas prices and creating a significant carbon footprint. The primary source of waste heat was the coatings workshop, where industrial ovens used for curing and drying lacquers generated a continuous stream of high-value surplus heat that was vented to the atmosphere. The solution architecture: A symbiotic dual-strategy The solution was a holistic, dual-pronged strategy that re- engineered the factory's relationship with energy. 1. Connection to District Heating: The inefficient gas boilers were decommissioned, and the factory was connected to Fjernvarme Fyn's DH grid. This replaced a volatile, carbon-intensive energy source with a stable, secure, and progressively greener supply of heat. 2. Internal heat recovery and export: An internal heat recovery loop was installed to capture high-temperature surplus heat from the production ovens. This captured energy is first
Fjernvarme Fyn's strategy is not a simple replacement of its central coal plant but a sophisticated approach centered on a diverse portfolio of decentralized, flexible assets. This embraces sector coupling, integrating heat from municipal waste, biomass, large-scale electric boilers, and advanced heat pumps that utilize surplus heat sources. A prime example is the utility's landmark project with Meta's hyperscale data center in Odense. Fjernvarme Fyn captures enormous quantities of low-grade surplus heat (around 27°C) from the data center. This water is "boosted" to a grid-suitable 70-75°C by large, electrically driven ammonia heat pumps. When fully operational, this system will provide carbon-free heat for over 12,000 homes. The successful execution of the massive and technically complex Meta project demonstrated Fjernvarme Fyn's capabilities, serving as a crucial form of risk mitigation for other potential industrial partners like Envases. An industrial facility needs confidence that its utility partner can reliably receive and utilize exported heat. By proving the concept at an unprecedented scale, Fjernvarme Fyn established a track record that lowered the perceived risk for subsequent partners,
The industrial energy challenge and the surplus heat opportunity
The global imperative for industrial decarbonization
sites located within a 10-kilometer radius of existing DH networks. This subset represents the "low-hanging fruit" of industrial decarbonization, as it relies on connecting existing assets rather than building new infrastructure. This readily available energy is sufficient to supply approximately 8% of the EU's total district heat demand, displacing an equivalent amount of fossil fuel generation. The Envases case study validates how this theoretical potential can be transformed into a practical, economically viable reality. The Danish context: A national hotbed of potential Denmark, a pioneer in district heating, provides fertile ground for industrial heat recovery. The nation's manufacturing industry alone has an estimated excess heat potential of 22.58 PJ per year, equivalent to 21% of its final energy consumption. The food and beverages industry, a critical part of the supply chain for a packaging manufacturer like Envases, is particularly energy-intensive and has historically relied on fossil fuels, making its decarbonization a strategic priority. Recognizing this, the Danish government has fostered a supportive policy environment. In January 2022, the parliament abolished a tax on the utilization of surplus heat for certified businesses. This legislative action directly improved the financial business case for projects that capture and sell waste heat, encouraging the kind of industrial-utility collaboration seen in Odense.
Industrial heat constitutes two-thirds of all industrial energy demand and nearly 20% of total global energy consumption. The overwhelming majority is generated by burning fossil fuels on-site, making it a primary source of direct CO2 emissions. Unlike the electricity sector, where transitioning large power plants to renewables has wide- reaching effects, industrial heat is decentralized. It is generated and consumed within individual facilities, each with unique requirements. This distributed nature makes top-down solutions difficult. Meaningful carbon reduction in this sector demands innovative, site-specific, and collaborative solutions that integrate industrial facilities as nodes in a larger, circular energy system.
Unlocking Europe's wasted resource: The scale of surplus heat
Within this challenge lies an immense opportunity: surplus heat. Across the European Union, industrial processes release vast quantities of thermal energy as an unwanted byproduct. A comprehensive analysis by the sEEnergies project quantified this potential, revealing that a staggering 425 Petajoules (PJ) of excess heat is available annually from heavy industry at 95°C or higher - a temperature directly compatible with most existing district heating (DH) systems.
The analysis further identified that 151 PJ of this high- temperature surplus heat is generated by industrial
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Two freshly installed mixing loops with Grundfos MIXITs and MAGNA3 at Envases
traditional mixing loop is a cumbersome assembly of 8 to 12 separate components from multiple vendors, making design, installation, and commissioning a specialized and costly endeavor. The MIXIT unit is an all-in-one, "plug-and-play" solution that integrates these functions into a single, pre-assembled component, cutting installation and commissioning time by up to 50%. This simplifies energy optimization, allowing facility managers to implement a standardized, reliable
used to satisfy the factory's own demand for space heating. The vast majority remaining is then transferred via a heat exchanger to the district heating network, turning a waste stream into a revenue-generating asset and transforming Envases into an energy "prosumer." The technological core: The MIXIT solution The operational success of this dual-mode system hinges on precise energy management, achieved by replacing traditional mixing loops with the advanced system. A
Metric
Before retrofit (boiler system)
After retrofit (DH + heat recovery)
Primary energy source
Natural gas
District Heating (from diverse sources) & recycled process heat
Energy security
Exposed to volatile gas market prices Stable, long-term pricing from DH utility
Annual CO2 emissions
High (unspecified, but significant)
Reduced by 3,000 tonnes/year
Energy flow
Unidirectional (consumption only)
Bidirectional (consumption & export) - prosumer model Recycled internally & sold to DH grid (valuable asset) Granular, dynamic, zone-based control via BMS Leader in circular economy and industrial symbiosis
Waste heat
Vented to atmosphere (wasted asset)
System control
Basic, static control
Sustainability profile
Standard industrial operation
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The view from the factory floor Beyond the data, the project delivered profound qualitative benefits. The MIXIT system provided a level of operational intelligence that was previously unattainable. "We can now control our heating system down to the smallest detail," stated Daniel Bagger, Facility Supervisor at Envases. This granular control empowers the management team to move from reactive maintenance to proactive, continuous optimization, fine-tuning the system in real-time to maximize both economic returns and environmental benefits. Scaling the model: From Odense to Europe. The Envases project is a proven pilot for a much larger European strategy, demonstrating a practical method for tapping into the 151 PJ of high-grade surplus heat near existing DH networks. The total annual energy contribution from this single factory is 37 GWh (approx. 0.133 PJ). A simple calculation reveals the power of replication: a portfolio of roughly 1,100 similarly sized projects could theoretically capture the entire 151 PJ of "low- hanging fruit." This reframes the solution not as a single mega- project, but as the mass replication of smaller, proven, local successes. Future-Proofing with 4th Generation DH This model is also aligned with the future of district heating, which is moving towards lower operating temperatures (4th Generation District Heating, or 4GDH). These advanced
product without requiring a team of specialist engineers. As noted by Envases Facility Supervisor Daniel Bagger, it makes sophisticated energy management accessible. Each MIXIT unit communicates wirelessly with a high-efficiency MAGNA3 / TPE3 circulator pump and can integrate with the factory's Building Management System (BMS) for centralized monitoring and control.
A trifecta of savings: Energy, emissions, and cost The project yielded remarkable, quantifiable results:
Energy recycled: The system captures and recycles 23 GWh of thermal energy annually, equivalent to the heat consumption of approximately 1,300 Danish households. This energy is now a valuable commodity sold to the DH grid. Energy saved: The system provides a further 14 GWh in direct energy savings for the factory's own operations, as captured heat displaces the need to purchase heat from the grid. CO2 abated: The combined energy savings of 37 GWh annually result in a direct reduction of 3,000 tonnes of CO2 emissions every year. This is roughly equivalent to the annual emissions from 670 gasoline-powered passenger vehicles.
Installing a MIXIT unit and a MAGNA3 circulation pump for the Envases HVAC system
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Installing a Grundfos MIXIT at Envases in Odense, Denmark.
that can be integrated into a community's energy supply. By closing the loop between industrial waste and community warmth, this model saves money, enhances energy security, and delivers dramatic CO2 reductions. It is a model that must be championed and replicated to accelerate the green transition on a meaningful scale.
networks minimize heat loss and better integrate low- temperature renewable sources.
This trend is highly beneficial for industrial heat recovery. As the required temperature of DH networks decreases, the pool of viable industrial surplus heat sources expands. The sEEnergies report shows that available heat potential from industry more than doubles, from 425 PJ to 940 PJ, if the target utilization temperature drops from 95°C to a 4GDH-compatible 25°C. This creates a virtuous cycle: modernizing DH networks makes more industrial heat recovery projects viable, and the availability of this cheap, low-carbon industrial heat strengthens the business case for utilities to invest in modernizing their networks. The Envases project proves that the path forward is collaborative, built on the three pillars of a proactive industrial partner, a capable utility, and accessible technology. It shows that industrial waste heat is not a liability but a valuable asset
For further information please contact: Ronak Monga at rmonga@grundfos.com
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Intelligent district heating solutions for today and tomorrow's demands
Get optimal, energy-efficient district heating systems To achieve net-zero emissions by 2050, we need to increase energy efficiency and accelerate the energy transition. District heating is set to play a key role here – and at Grundfos, we offer a range of intelligent and efficient pump solutions that can help optimise all district heating systems. Our solutions increase energy efficiency and reliability today – and make sure you’re equipped to handle the challenges of tomorrow. As your strategic partner, we’re dedicated to helping you achieve a seamless energy transition. From advanced system management and increased efficiency to minimised heat loss and optimal pressure management, we’re ready to help you elevate your district heating operations. Let water flow smart
Read more about our district heating solutions at grundfos.com/UK/DH
THE ADVANTAGES OF DISTRICT HEATING
By John Tang Jensen, District Heating Specialist
Heating is one of the largest contributors to energy consumption and carbon emissions in cities, yet it often receives less policy attention than electricity or transport. With climate targets tightening and energy costs fluctuating, policymakers face the challenge of securing affordable, reliable, and sustainable heating solutions for households and businesses alike. District heating (DH) offers a proven pathway. By replacing thousands of individual boilers and heat pumps with a shared, centralized network, DH enables cities to tap into surplus industrial heat, waste-to-energy plants, renewable technologies, and efficient combined heat and power (CHP). This integrated approach not only reduces emissions and fuel consumption but also lowers system-wide costs, improves energy security, and enhances public health through cleaner air.
For planners and decision-makers, DH represents more than just a heating option—it is a strategic tool to stabilize energy prices, unlock new investments, and future-proof urban infrastructure. This article outlines the key advantages of DH across technical, economic, environmental, and societal dimensions, highlighting why it deserves a central role in energy and climate strategies. General benefits of district heating DH can harness heat from multiple sources: surplus industrial heat, combined heat and power (CHP) plants, waste-to- energy facilities, and renewable sources such as solar thermal. Heat sources can be categorized into high-grade (higher temperature) and low-grade (lower temperature) depending on their usability. Compared to individual systems, DH provides utilization of these resources. While network heat losses exist, the overall benefits outweigh this disadvantage. In dense urban environments, DH becomes especially competitive and efficient. The system also reduces hidden costs borne by society, such as health and climate damages from pollution. These externalities are rarely priced into individual heating solutions but are mitigated when surplus or renewable heat is used collectively. Energy efficiency and resource savings Combined Heat and Power (CHP) CHP plants generate both electricity and heat simultaneously, making them significantly more fuel-efficient compared to separate production. A CHP plant may consume slightly more fuel than a power-only plant, but the captured heat eliminates the need for cooling systems and provides heating for buildings. In urban areas where individual boilers are replaced by a CHP-based DH network, total fuel savings of 30–40% are achievable. These savings benefit both consumers who enjoy lower heating costs and electricity producers who gain higher profitability and competitiveness, as well as the society which saves resources. Surplus and ambient heat Industrial processes, waste incineration, and cooling systems often produce large amounts of excess heat that would otherwise be wasted. DH networks can capture and redistribute this energy, reducing the demand for additional fuel-based production. This not only cuts emissions but also avoids unnecessary investments in new energy infrastructure. Surplus heat is generally cheaper than fuel-based heating, which lowers consumer costs and offers revenue opportunities to industries that supply the excess heat. Efficiency of district heating technology Centralized technologies typically outperform small-scale individual systems: Large boilers in DH networks achieve around 5-10% higher efficiency due to advanced flue gas condensation systems. While they are often used for peak load or reserve capacity,
they benefit from reduced maintenance costs compared to managing many individual boilers.
Large-scale heat pumps are often more efficient than individual heat pumps, particularly when they use waste heat sources with higher temperatures than ambient air. Including network losses, DH-based heat pumps generally remain more efficient overall. Cost comparison: Per kilowatt of heating capacity, DH boilers and heat pumps are almost twice as cost-effective to install compared to individual units. Capacity optimization Avoiding oversizing Individual heating systems must be dimensioned to meet the maximum expected load on the coldest days, which often results in oversizing. DH, however, benefits from demand diversity: not all buildings peak at the same time. With thermal storage and strategic temperature adjustments, the total investments needed are 30–40% lower than the sum of individual solutions. Figure 1 shows an example of this from the city of Viborg in Denmark.
1.600 houses of 6,25kW 10 MW effect from individual heat pumps
Simultaneity factor: 0,62 (for homes): 6,2 MW effect from large scale renewable sources
Cost effect: Large heat pump investment costs 50% per MW compared to individual heatpumps. (Total cost reduction 31% of individual heat pumps)
Figure 1: Simultaneity effect/factor (Investment costs). Source: Tom Diget, Viborg Varme
Classic design principle Investment costs can be reduced by installing base-load capacity covering 70-80% of demand and using cheaper boilers for peak demand. Storage further reduces the need for oversized capacity by decoupling production from consumption. Combining technologies Integrating multiple technologies (e.g., gas-fired CHP and electric heat pumps) enables operators to select the most economical option depending on real-time energy prices. For example, CHP is optimal when electricity prices are high, while heat pumps are more efficient when electricity prices are low.
This flexibility becomes even more valuable as renewable electricity from wind and solar increases market volatility.
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Interaction with the electricity system DH is not only a heating solution but also a crucial tool for balancing electricity markets. Avoiding curtailment of renewables When wind or solar generation exceeds demand or export capacity, renewable power may need to be curtailed. DH systems with electric boilers or large heat pumps can absorb this surplus electricity by converting it into heat, which can be stored or used immediately. This avoids wasting renewable energy and provides additional system value. Grid investment savings Transitioning from gas boilers to individual electric heat pumps significantly increases electricity grid demand, requiring costly upgrades. DH systems mitigate this by using high-voltage heat pumps (10–60 kV) that are more efficient and cheaper to connect than thousands of low-voltage (0.4 kV) individual units. Furthermore, DH plants can provide demand-side flexibility by ramping electricity consumption up or down depending on grid needs, supported by integrated heat storage. This reduces the need for costly high-voltage lines and interconnectors. Operation and maintenance costs The total operation and maintenance costs over the life time of the system for DH systems are 6–10 times lower than for individual solutions, which further increases their competitiveness. Economic advantages Cost reductions for consumers and producers DH enables heat and electricity producers to share fuel cost savings, resulting in lower energy prices for end-users. When CHP plants set the electricity price, consumers benefit from reduced marginal electricity costs. Investment savings By capturing surplus heat, reducing capacity demand, and optimizing production, DH systems save significant investments in fuel-based plants, renewable electricity capacity, and infrastructure. Participation in electricity markets DH operators can participate in balancing markets, deliver capacity reserves, and frequency response services. When equipped with both electricity-consuming and producing technologies, along with storage, they can profit from multiple revenue streams while supporting grid stability. Societal and environmental benefits Lower emissions: By replacing fossil-fuel boilers and maximizing surplus heat, DH reduces CO2 and pollutant emissions, improving air quality and public health. Lower external costs: Although externalities like climate damage and healthcare costs are often not priced into fossil fuels, DH helps avoid them, representing significant indirect savings for society.
prices, DH strengthens industrial competitiveness, supporting jobs and economic growth.
Integration of future technologies: High-temperature heat pumps, hydrogen plants, carbon capture, and bioenergy facilities can all integrate with DH, making energy systems more flexible and future-proof. Financial and practical considerations DH companies usually secure better financing conditions than individual households, leading to lower interest rates and improved affordability. Moreover, converting a building to renewable individual heating often requires costly retrofits (additional radiators, floor heating, ventilation systems) due to lower system temperatures. In contrast, DH can deliver water at 60 °C, avoiding such expenses and making the transition more practical for existing buildings. Conclusion DH is far more than just an alternative to individual heating - it is a cornerstone of efficient, integrated, and sustainable energy systems. By combining multiple heat sources, optimizing capacity, balancing electricity markets, and reducing environmental impacts, DH delivers value to consumers, producers, and society.
Its advantages can be summarized as follows:
1. Energy efficiency: CHP, surplus heat, and large-scale heat pumps reduce fuel use and emissions.
2. Cost-effectiveness: Lower installation, O&M, and investment costs compared to individual systems, including networks.
3. Grid integration: Balances fluctuating renewable electricity systems, avoids curtailment, and saves grid investments.
4. Environmental and societal benefits: Cleaner air, reduced climate costs, and improved competitiveness.
5. Financial practicality: Easier financing, lower interest rates, and less need for building retrofits.
For policymakers and planners, recognizing and utilizing the full potential of DH makes it possible to achieve overall lower energy prices for consumers and improve industrial competitiveness.
For further information please contact: John Tang, jhntj@ens.dk
Industrial competitiveness: By stabilizing electricity and heat
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A HOLISTIC APPROACH TO CORRECTLY EVALUATE ENERGY EFFICIENCY IN DISTRICT HEATING SYSTEMS
By Oddgeir Gudmundsson, Director, Danfoss A/S, Climate Solutions, Nordborg and
Jan Eric Thorsen, Director, Danfoss A/S, Climate Solutions, Nordborg
District heating is a cornerstone of the clean energy transition, particularly for the sustainable utilization of low-temperature energy sources. However, with the shift toward low-temperature renewables, such as heat pumps, narrow investment evaluations underestimate long-term benefits, like reduced emissions, lower primary energy demand, and improved system resilience. This article proposes a holistic, end-to-end framework for guiding stakeholders in creating the long-term foundation for the transition.
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Introduction Historically, district heating (DH) systems relied on fossil fuels, where downstream efficiency improvements had little effect on heat generation efficiency. As a result, traditional approaches have focused on localized gains, often overlooking the broader benefits of more efficient heat generation, distribution, and consumption practices. As the DH system transitions from carbon-intensive fuels to long-term sustainable renewables, a paradigm shift occurs, where efficiency measures in one system element can have a substantial impact on heat generation and the primary fuel supply chain in general. This creates an opportunity to rethink decision-making, impact evaluations, and investment strategies. To capture these benefits—such as lower energy costs, reduced emissions, and improved system resilience— decision-makers must apply a wide system boundary for investment impact evaluations. This article compares two hypothetical systems: one with a heat pump as the baseload, and the other with a biomass boiler as the baseload. The case studies illustrate how a holistic approach can reveal major differences in energy efficiency, costs, and emissions from identical improvements. Understanding how system setup affects the benefits of efficiency solutions allows policymakers, planners, and DH companies to make better decisions and plan long-term to maximize future returns. The Importance of System Boundary Selection The perceived effectiveness of improvement measures depends on how system boundaries are defined, as these boundaries determine which system elements are included in the assessment. Traditionally, boundaries focus on individual elements—such as heat plants, pipelines, or end- user installations—because upstream impacts were minimal, especially on heat generation efficiency. In decarbonized DH networks, a broader boundary encompassing the entire supply chain—from primary energy to end-user—provides a clearer view of benefits. This wider perspective helps reveal how localized improvements affect overall performance, reduce primary energy consumption, lower costs, and support environmental sustainability. The thermal energy supply system can be divided into seven elements, grouped into three categories: (1) primary system, (2) thermal system, and (3) final energy demand, as shown
in Figure 1. When assessing improvement measures, it is important to recognize that impacts may cascade within each group and across groups. Understanding how elements interact when parameters change in neighboring elements enables estimation of system-wide effects. For example, if the building’s technical installation is improved to achieve better cooling of the supply flow, this will reduce heat losses in the building, the energy transfer station, and the distribution network. The lower return temperature will also increase heat generation efficiencies, which in turn reduces the primary energy demand. Finally, the reduced primary energy demand lowers losses in the primary energy distribution and reduces, and potentially alters, the mix of primary energy generation. A detailed methodology is provided in [1]. Classification of Solution Improvement Impacts Many solutions can improve DH operation, but their impacts generally fall into four groups: Reduced oversupply – Oversupply refers to a situation where the delivered heat exceeds what is needed to fulfill comfort demands, or when a bypass maintains higher supply temperatures than necessary. Components that minimize oversupply include thermostatic radiator valves and building energy management systems. Reduced supply temperature – The minimum supply temperature is determined by end-user requirements or flow restrictions in the distribution network. Components affecting supply temperature include heat exchangers and heat emitters. Reduced return temperature – The return temperature depends on how efficiently components and control logic extract heat from the supply flow. Components such as heat exchangers, energy transfer station configuration, heat emitters, and control valves directly influence the return temperature. Reduced differential pressure – The distribution of the heat transfer fluid relies on the differential pressure between the supply and return pipes. Pipe networks, heat exchangers, control components, and other factors that affect operating temperatures or heat demand influence pressure requirements. Classifying the impact of improvement measures into these groups allows a generalized approach to assess their cascading effects across the entire heat supply system.
Figure 1: The three system categories and the seven elements of the thermal energy supply system.
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Distribution network operates at 80°C supply and 40°C return. Reference operation assumes a 10% relative network heat loss (12,700 MWh/year). Heat sources: Base load covers 60% of peak capacity, corresponding to 96% of annual demand; peak load natural gas boilers cover the remaining 40% of peak capacity, corresponding to 4% of annual demand. The total heat generation, including final heat consumption, building and distribution losses, is 127,000 MWh/year. Figure 2 shows the system duration curve. Table 1. Efficiencies, see [2], and the cost of primary energy (PE) sources. shows assumptions related to the primary energy (PE) supply. Considered Improvement Measures and Their Impact on Heat Generation To demonstrate the importance of wide system boundaries when evaluating the impact of efficiency improvements, two complementary solutions are considered:
Figure 2: Duration curve of the system heat demand.
Reference Systems To illustrate the value of a holistic approach, two reference systems are considered, identical except for the baseload heat source, which is either based on a biomass boiler or a CO2 heat pump. These two systems can be considered as two future alternatives for an existing fossil-based system. Alternatively, it can be viewed as an existing biomass-based system, with a planned future replacement by a CO2 heat pump. The holistic assessment framework empowers decision-makers to assess long-term investment impacts and plan accordingly. Key system data: Annual final heating demand: 100,000 MWh (80,000 MWh for space heating, 20,000 MWh for domestic hot water), plus 14,300 MWh losses in energy transfer stations and building heat distribution.
a) Temperature optimization of the distribution network, achieving a 5 °C reduction in supply temperature.
b) Heat exchanger replacement in energy transfer stations (substations), achieving a 5 °C reduction in return temperature.
Both solutions have a proven track record, yet have substantial implementation potential remaining.
PE harvesting, mining and processing efficiency
PE conversion efficiency
Distribution efficiency
Fuel source
Total efficiency Fuel cost [EUR/MWh]
Grid electricity
N/A
N/A
98%
72.2%
100
- Renewable electricity
100%
N/A
N/A
100%
N/A
- Gas-based electricity
88.6% (nGas)
50%
N/A
44.3%
N/A
Biomass
95%
N/A
98%
93.1%
40
Natural gas
90%
N/A
98.5%
88.6%
41
Table 1. Efficiencies, see [2], and the cost of primary energy (PE) sources.
Impact on heat generation
Heat source
Reference efficiency [3]
T supply / Efficiency
T return / Efficiency 1°C ↓ / 3% ↑ 1°C ↓ / 0.2% ↑ 1°C ↓ / 0.16% ↑
1°C ↓ / 2% ↑ 1°C ↓ / 0% 1°C ↓ / 0%
CO2 heat pump [4]
350%
Biomass boiler
115%
Natural gas boiler
103%
Table 2. Expected impact from reduced operating temperatures on the heat generation efficiency.
16 HOTCOOL SPECIAL COLLECTION edition 2, 2025
both improvements across the two reference systems. With a wider system boundary, the higher-order benefits may justify solutions that seem unjustifiable under a narrow boundary, such as an improved heat exchanger in heat interface units of heat pump-supplied systems. Comparing Table 3 and Table 4. Impact analysis for a wide system boundary, including all elements of the thermal supply system. reveals that for sources sensitive to operating temperatures, such as heat pumps, a narrow system boundary can significantly underestimate the benefits of efficiency improvements, including cost, emissions, and primary energy savings. For high-temperature sources, such as fuel boilers, a narrow boundary may suffice for supply temperature reductions. However, when solutions lower the return temperature, the boundary should at least include the heat source to capture potential efficiency gains from flue gas condensation.
Table 2 illustrates the approximate effects of changes in the system operating temperatures on the heat generation plants.
Expected Impact of Improvement Measures Traditionally, the impact of these solutions is evaluated only within the distribution network (double-outlined in Figure 1), as lowering operating temperatures in high-temperature, fossil-based systems primarily affects distribution losses. Table 3 illustrates the potential impact of this narrow system boundary on both temperature optimization and return- temperature reduction through an improved heat exchanger. Table 3 suggests that the cost savings potential is limited, making it challenging to justify investment-heavy improvements, such as upgrading heat exchangers in energy transfer stations. In contrast, system solutions, like software- based temperature optimization, appear more attractive. Extending the system boundary to the full thermal supply system shown in Figure 1 reveals higher-order benefits, which include impacts from upstream and downstream efficiency improvements, as well as changes in the fuel mix. Table 4. Impact analysis for a wide system boundary, including all elements of the thermal supply system. shows results for
System Efficiency First: Framework for Future Proofing District Heating
DH is a cornerstone of the clean energy transition, particularly for the sustainable utilization of low-temperature energy sources. However, with the transition toward low-temperature
Cost savings [EUR/year]
Reference system efficiency
System efficiency after improvements
Heat savings [MWh/year]
CO2 eq reduction [ton CO2 eq /year]
Base load source
Either supply or return temperature is reduced by 5°C
Biomass boiler
90%
90.5%
715
32.7
25,000
Heat pump
90%
90.5%
715
162.7
20,700
Table 3. Impact analysis for a narrow system boundary, only including the distribution network.
Cost savings [EUR/year]
Reference system efficiency
System efficiency after improvements
Primary energy savings [MWh/year]
CO2 eq reduction [ton CO2 eq /year]
Base load source
Distribution system temperature optimization – 5°C reduction in supply temperature
Biomass: 670 nGas: 710
Biomass boiler
83.6%
84.2%
450
29,200
Green power: 0 nGas: 9,380
CO2 heat pump
189.7%
216.1%
5,770
368,500
Improved heat exchanger at energy transfer stations – 5°C reduction in return temperature
Biomass: 1,430 nGas: 960
Biomass boiler
83.6%
84.9%
620
67,400
Green power: 0 nGas: 12,930
CO2 heat pump
189.7%
229.4%
7,950
517,700
Table 4. Impact analysis for a wide system boundary, including all elements of the thermal supply system.
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renewables, such as heat pumps, narrow investment evaluations underestimate long-term benefits, like reduced emissions, lower primary energy demand, and improved system resilience. A holistic, end-to-end framework is therefore recommended for guiding stakeholders in creating the long-term foundation for the transition. The objectives of the guidelines should be to:
Promote integration of renewables and surplus renewable electricity through tariff structures or grid- balancing mechanisms.
For Municipalities and Urban Planners 1. Introduce zoning for sustainable heat use
Direct new urban development to low-temperature- capable, DH-ready buildings.
Promote system-wide efficiency gains rather than localized optimizations.
Prioritize low-temperature building zones near renewable or waste heat sources.
Align investment decisions with long-term decarbonization strategies.
Designate high-temperature zones for buildings and industries that require elevated supply temperatures
Promote modernization that prepares infrastructure for low-temperature operation at both supply and demand sides.
2. Integrate district heating into broader urban sustainability strategies Align DH expansion with climate neutrality roadmaps, air quality targets, and resilience planning.
Promote urban energy planning that supports integration of renewable and waste heat sources.
Encourage partnerships between municipalities, utilities, and industries to utilize excess low-grade heat.
Existing EU policies such as the EED, RED, and EPBD provide a solid foundation for supporting DH. However, they could be further strengthened to unlock the sector’s full decarbonization potential. Recognizing the importance of holistic, system-wide evaluation for future investments, the following recommendations are proposed as supplements to existing EU policies.
For District Heating Utilities 1. Adopt wide-boundary assessment tools
Shift internal investment criteria from localized payback time to system-wide efficiency, fuel substitution, and emission reductions.
For National Governments 1. Mandate holistic evaluation frameworks
Standardize evaluation of improvements under multiple heat generation scenarios.
Require DH investment proposals to assess impacts on conversion efficiency, distribution, and end-use, while acknowledging that upstream fuel supply impacts may fall outside the operator’s control. Incorporate multiple future scenarios (e.g., biomass vs. heat pump baseload) into cost-benefit and socio- economic analyses. 2. Incentivize low-temperature building installations, design, and retrofits Provide subsidies, tax incentives, or mandatory building codes for low-temperature-ready heating systems (efficient energy transfer stations, emitters, insulation).
2. Prioritize long-term equipment standards
Require building installations, energy transfer stations, and control systems to be compatible with future low- temperature operation.
Phase in temperature optimization software and predictive control systems across networks.
Expected Outcomes Energy savings: Significant reductions in primary energy use, up to 2% per degree reduction in operating temperatures. Carbon reduction: Accelerated decarbonization by unlocking upstream efficiency benefits and better usage of low-carbon energy vectors.
Tie renovation supports schemes to compatibility with DH efficiency goals.
Economic benefits: Lower lifecycle system costs and greater resilience against volatile fuel prices.
3. Support flexible generation and integration of renewables Create frameworks that reward utilities for lowering operating temperatures to enhance system efficiency.
18 HOTCOOL SPECIAL COLLECTION edition 2, 2025
References [1] O. Gudmundsson and J.E. Thorsen. The importance of system boundaries when evaluating the energy efficiency of district heating systems. Danfoss A/S, 2025. https:// www.danfoss.com/en/about-danfoss/articles/dhs/the- importance-of-system-boundaries-when-evaluating-the- energy-efficiency-of-district-heating-systems/ [2] O. Gudmundsson and J.E. Thorsen. “Source-to-sink efficiency of blue and green district heating and hydrogen- based heat supply systems,” Smart Energy, vol. 6, May 2022. https://doi.org/10.1016/j.segy.2022.100071 [3] Danish Energy Agency. Technology Data Catalogue for Electricity and District Heating Production - Updated May 2025. Danish Energy Agency, 2025. https://ens.dk/ en/analyses-and-statistics/technology-data-generation- electricity-and-district-heating [4] I. Rangelov, M. Karampour, and T. Lund. ”CO2 Heat Pumps: System Solutions and Applications Mapping,” IIAR Natural Refrigeration Conference & Heavy Equipment Expo, March 2025.
Future-proofing: Ensuring infrastructure and building stock remain compatible with long-term renewable-based heat supply. Conclusion Decarbonizing DH offers a key opportunity to rethink how energy efficiency improvements are evaluated. A holistic, end- to-end assessment framework enables decision-makers to capture benefits that are often overlooked, as demonstrated by the presented cases, ensuring investments are not only cost- effective locally but also support the long-term vision of the system. Efficiency improvements can generally be assessed using four impact groups: reduced oversupply, lower supply temperature, lower return temperature, and reduced differential pressure. Expanding the assessment to include more system elements reveals the true effects on efficiency, fuel mix, energy costs, and emissions. A holistic approach for evaluating investment alternatives leads to smarter investments, greater energy savings, lower costs, and faster progress toward a sustainable, low-carbon energy system. The transition to sustainable DH requires a mindset shift, from local efficiency to system efficiency. By mandating holistic evaluations, incentivizing low-temperature readiness, and embedding DH into urban planning, politicians can create conditions that enable utilities and cities to make smarter, future-proof investments. This approach not only delivers near-term cost savings but also maximizes the integration of renewable energy, supporting national decarbonization targets.
For further information please contact: og@danfoss.com
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