Created 5.2.2026
Updated 5.2.2026

A recent LUT University study confirms that a low-temperature district heating network would significantly improve the cost-efficiency of district heat production. The energy- and cost-efficiency of waste heat sources and heat pumps connected to the network would improve, heat losses would decrease, and heat could be stored more affordably than at present – for example, in pit thermal energy storages. 

This so-called fourth-generation district heating network would also save electricity and reduce costs and strain on the electrical grid. The electricity consumption of heat pumps needed to utilise low-temperature waste heat would drop to one-third compared to current district heating networks. The peak electricity demand of heat pumps would also drop by at least half.

District heating temperatures could be lowered

”Current third-generation district heating networks were designed for combustion-based production, which has no limitations on generating high temperatures. However, we’re moving away from combustion and its emissions by electrifying district heat production,” says Junior Researcher Altti Meriläinen.

”For example, heat pump solutions become less cost-efficient at higher temperature lifts. Current energy efficiency requirements have also changed building design so that district heating temperatures could be lowered.”

The competitiveness of district heating is facing challenges, because electricity prices have returned to pre-2020 levels after the energy crisis, while the price of fuel wood, which is widely used in district heating production, has risen. In many cases, individual heat pumps and hybrid systems are now the most affordable ways to heat both new and older buildings. New solutions are needed for district heating to remain competitive.

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Energy companies should speed up the transition to fourth-generation district heating 

”The best place to start with low-temperature district heating is in new developments or sections of the network due for renovation. District heating infrastructure is built to last decades, so we need to account for future needs today,” says Antti Kosonen, professor of renewable electricity generation.

District heating could serve as a heat source for individual heat pumps, which have already been installed for cooling in many buildings. They would also enable two-way district heating, meaning consumers could also feed heat into the network, just as with solar photovoltaics.

District heating network temperatures should not be based on a few individual buildings needing high-temperature heat if that is not cost-efficient for the system as a whole. For example, underfloor heating in new buildings requires water at 25–35°C, and about 80% of the heat demand of Finnish buildings consists of space heating. Therefore, 90°C supply water in the district heating system is not necessarily justified. Energy companies could guide consumers by adjusting pricing; for instance, they could offer lower energy rates for buildings with lower temperature needs.

Industry and data centres provide significant opportunities for recovering low-temperature waste heat, especially for district heating production.

”The transition to fourth-generation district heating should be a top priority for energy companies as a way to strengthen the competitiveness of district heating. Without district heating, waste heat cannot be utilised at an industrial scale either,” Kosonen points out.

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