June 17, 2025, 4:40 am | Read time: 7 minutes

Climate Transition, Energy Transition–and Heat Transition: The goal is always to stop producing climate-damaging gases in the future. In the heating sector, district heating is expected to play a significant role. However, the path to climate neutrality is still long.

What is district heating?

District heating is heat that is not generated in the residential building but comes from a nearby power or heating plant. Typically, water is heated there and then transported through insulated pipes to consumers. Once it reaches the residential building, hospital, or office building, the energy is transferred to the building’s heating circuit at a transfer station, providing room heat and hot water. Therefore, the buildings do not need their own heating system.

What are the advantages of district heating?

Households supplied with district heating enjoy high comfort. “The heat essentially comes from the wall, you don’t need a heating basement, and there’s little to worry about,” says Werner Lutsch, managing director of the Energy Efficiency Association for Heating, Cooling, and CHP.

What are the disadvantages?

Not everyone can access district heating. A connection to the regional network is required, which is usually only practical for multi-family homes in larger urban areas. “In a single-family house built to the latest standards, district heating wouldn’t be worthwhile,” says Lutsch. The consumption is too low. But it’s different in older multi-family homes.

Incidentally, those who buy a house or apartment in a district heating area often don’t have the option of an alternative heating system. “In some communities, there is a mandatory connection and use of district heating,” says Stefan Materne from the consumer center’s energy team. “This means the customer is permanently tied to the local district heating supplier and its prices.”

How is the price for district heating calculated?

The price for district heating consists of a basic price and a working price. The working price covers costs directly related to heat consumption–such as for fuels and pump electricity. The basic price includes costs for construction, maintenance, repair of technical systems, as well as administrative costs and maximum heat output.

It’s important to know: There are generally significant regional differences, as the price largely depends on the producer and the city’s district heating system. “In a flat area, it’s less complicated to transport district heating than, for example, in the Alps,” says Lutsch. This is reflected in district heating prices. Energy expert Stefan Materne confirms this: “There are areas where district heating is very expensive, and there are indeed some providers offering good prices.”

How is the heat generated in power plants?

According to the district heating association AGFW, it is currently mainly generated by burning natural gas and coal, mostly in so-called combined heat and power generation, where electricity is also produced alongside heat. About 70 percent of the energy comes from fossil fuels. The remaining 30 percent comes from heat generated by burning waste or biomass (wood chips) and from geothermal and other renewable sources.

How many district heating networks are there in Germany?

According to the district heating association AGFW, there are nearly 3,800. They are operated by around 500 companies. In 2020, the total length of the routes was over 31,000 kilometers. According to the energy industry association BDEW, in 2022, 14.2 percent of the 43.1 million apartments in Germany were heated with district heating, which is about one in seven apartments. The share has steadily increased over the past 20 years. In 2003, it was 12.4 percent.

How climate-friendly is district heating?

It varies greatly depending on the energy source, the efficiency of generation in the power plant, and the level of transmission losses, says the consumer center. “The use of combined heat and power generation has a high energy yield, and using waste heat, such as that generated during waste incineration, is sensible.”

Related: These are the alternatives to oil or gas heating

Can I switch to district heating?

It is generally possible, for example, to move away from an expensive oil or gas heating system. But for this, an energy supplier must be willing to expand its network and lay new connections, said Tim Geßler, editor and heating expert of the trade magazine “SBZ Sanitär.Heizung.Klima.” “Then it is, of course, a feasible and good option.”

However, it is a long-term decision. According to the consumer centers, due to legal peculiarities, district heating contracts can be signed for up to ten years. And switching between individual providers, for example, to get cheaper contracts, is not possible because the companies are always local monopolists, as it would be uneconomical to build a double infrastructure.

At least: If one were to switch completely to renewable energies at some point, the contract can–as of now–be terminated early. A two-month notice period applies.

Can households switch district heating providers like electricity?

No. “Switching the heat supplier is not possible with district heating,” explains the consumer center. Planning and operation of the power plant and the network are in the hands of one company. Building a double infrastructure by another company would be uneconomical. “Therefore, each district heating company is a local monopolist.” Consumer advocates point out that some municipalities require a connection and use of district heating for certain properties. “As an owner, you are then forced to supply your house with district heating.” The legal basis for district heating use is bundled in a separate regulation.

When is district heating suitable?

According to the consumer center, district heating is worthwhile when as many users as possible are connected to the heating network. “Because laying the networks and building the generation plants are usually associated with significant costs.” District heating is therefore particularly suitable in densely populated (new) areas.

How does the federal government assess district heating?

As very important. In the recently revealed first draft law for municipal heat planning, the Federal Ministry of Construction states: “The expansion of district heating and the decarbonization of pipeline-bound heat supply are of outstanding importance for achieving the federal climate protection goals.” In recent years, the necessary investments have not been made to the required extent. The expansion is to be enshrined in law: “Heating networks should be significantly expanded to achieve an economically cost-efficient climate-neutral heat supply, and the number of buildings connected to heating networks should be significantly and dynamically increased,” according to the draft bill.

In the planned Building Energy Act, the so-called Heating Act, there are also requirements for heating networks. There is to be an obligation to use at least 50 percent renewable heat or waste heat in existing heating networks by 2030. For new heating networks, a share of 65 percent is required.

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What does the industry think about expansion?

It considers three times as many heating network connections as today possible by 2050 under certain conditions. While currently 6 million of the 43 million apartments are heated with district heating, it could potentially increase to 18 to 20 million, especially in multi-family homes in cities and densely populated areas. “District heating is the key to the topic of climate-neutral cities in Germany,” says John Miller, deputy managing director of the AGFW association.

The association criticizes the timeline proposed in the Building Energy Act to convert existing heating networks to at least 50 percent renewable heat or waste heat by 2030. The association calls for longer transition periods and significantly more funding, especially for the “Federal Funding for Efficient Heating Networks” (BEW) program.

with material from dpa