The 2025 edition offers a snapshot of the European market at the end of 2023, following the Ukraine war and the launch of the REPowerEU plan, and clearly shows that the sectors' decarbonisation is accelerating.

For the first time, fossil fuels declined significantly, with the contribution of coal and natural gas down respectively by 12.3% and 3.7%. Renewable energy and waste heat sources now represent 44.1% of the district heating and cooling energy mix, an increase of 9.4% since 2022. Whilst the share of biomass stabilised around 34.7%, mainly by decarbonisation efforts in Poland, the most impressive figures relate to the development of electrification and waste heat recovery. Compared to 2022, the share of large heat pumps and electric boilers in total district heat supply increased by 44% and 80%, respectively, while the waste heat supply grew by 20%, reaching 4.1% of the energy mix.

Heating and cooling networks also beat the odds in terms of infrastructure growth. Despite a 3% drop in heat sales due to mild weather and efficiency measures driven by high energy prices, district heating and cooling networks continued to expand in 2023. Over 3,500 km were added, with Italy, Austria and Denmark reporting growth above 2.5%, and 31,200 new buildings connected in Germany. By 2030, energy and climate plans from major EU markets (Germany, France, the Netherlands, Poland) forecast at least 8.5 million additional household connections.

According to Eurostat, 10.6% of Europeans could not keep their homes warm in 2023, six million more than in 2022. In this context, district heating offers a lifeline for cities and industry, replacing fossil fuels with local, reliable, renewable and waste heat sources. Unused excess heat alone (from industry, wastewater, data centres, supermarkets, metros and tertiary buildings) could meet the EU’s entire heat and hot water demand for homes and service buildings.

“This year’s edition shows that our sector is on the cusp of a revolution, with a real breakthrough in waste heat recovery and electrification. It also demonstrates the importance of stable and supportive regulatory frameworks to deliver projects and investments on the ground. The upcoming EU strategy on heating and cooling must now support the implementation of the Fitfor55 package and propose robust instruments and funding programmes to help our sector reach its full potential, for the benefit of our citizens and industries."

Aurélie Beauvais, Managing Director at Euroheat & Power

“The report shows a step forward in decarbonisation, in response to the EU energy crisis and REPowerEU plan. It is even more encouraging as the report does not yet reflect the expected benefits of the implementation of the Fitfor55 package, which sets ambitious targets for the increase of renewable and waste heat shares in our sector. Continuous improvement in data collection for the heating and cooling sectors remains essential, especially to highlight the potential of system integration (i.e. power-to-heat solutions and waste heat recovery), at the EU level.”

Eloi Piel, Market Intelligence Director at Euroheat & Power

DHC market outlook 2025 out! Fossil fuels shrink, waste heat and electrification on the rise