Green district heating costs less than fossil fuel-based district heating

October 8, 2026

Source: E & M powernews

According to “co2online,” district heating from renewable energy sources and waste heat is, on average, more cost-effective than heat from networks powered primarily by fossil fuels.

District heating from networks with more than 90 percent renewable energy or waste heat costs, on average, 2 cents/kWh less than heat from networks powered primarily by fossil fuels. This is according to an analysis by “co2online.” The nonprofit consulting firm examined the prices of more than 700 district heating networks published on the transparency platform of the Energy Efficiency Association for Heating, Cooling, and Cogeneration (AGFW). The data was weighted according to the amount of heat generated and evaluated with regard to the share of renewable energy and waste heat, according to the report.

For an average single-family home, the consulting firm calculated a price of 15 cents/kWh for district heating derived primarily from renewable energy sources and waste heat. For networks powered primarily by fossil fuels, the price was 17 cents/kWh. For multi-family homes, the prices worked out to 14.1 and 16.4 cents/kWh, respectively.

Less than 10 cents/kWh

The three lowest district heating prices in the analysis illustrate just how much prices vary between individual networks. In Mücheln, Saxony-Anhalt, a kilowatt-hour costs 8.5 cents. There, heat has been generated using wood chips since 2008.

In Dortmund-Scharnhorst, the price is 9.6 cents per kilowatt-hour. Among other sources, industrial waste heat is utilized there. In Schwandorf, Bavaria, a kilowatt-hour costs 9.7 cents. There, the heat comes, among other sources, from the processing of biological waste at a local waste-to-energy plant. “The data shows that climate protection does not automatically have to lead to higher costs for district heating. In places where renewable energy and waste heat already play a central role today, heat is actually cheaper on average,” says Tanja Loitz, managing director of “co2online.”

In the long term, the consulting firm predicts a five-figure cost savings advantage with district heating compared to heating systems using natural gas or oil. Over a 20-year period, it estimates the cost savings at around 20,000 euros.

In its analysis published in April of this year, the AGFW put the average price for a 160 kW consumption level (multi-family building) at 15.6 cents/kWh. This is an average weighted by district heating sales—large networks carry more weight than small ones. “Prices ranging from 12.5 cents/kWh to 17.5 cents/kWh apply to nearly all heat sales,” the association wrote. According to AGFW’s calculations at the time, 29 percent of total district heating production was climate-friendly. It was reported that 314 of the 710 registered subnetworks are at least 30 percent climate-friendly.

Author: Manfred Fischer