What is district heating? Everything you need to know
The energy transition demands sustainable alternatives to natural gas. One of the most important solutions gaining momentum is district heating. But what exactly is district heating, how does it work technically, and why are more and more municipalities, businesses and households choosing it? This article gives you a complete overview.
What is district heating?
District heating – also known as a heat network – is a collective system in which heat is generated centrally and distributed via underground pipes to homes and commercial buildings.
Instead of having an individual gas-fired boiler, each building receives heat that has been produced elsewhere, for example from industrial waste heat, waste incineration, or renewable sources such as geothermal energy or biomass.
The idea is simple: instead of every building producing its own heat, you use one shared infrastructure. This reduces fossil fuel consumption and helps lower CO₂ emissions.
Learn more in our related article: Heat Networks in the Netherlands and Regulations from 2026.
How does district heating work technically?
A heat network consists of three main components:
1. Heat Source
Heat can come from multiple sources — for example, industrial waste heat, waste-to-energy plants, geothermal systems, or large-scale heat pumps.
2. Distribution Network
Through an underground, well-insulated pipe system, hot water is transported to buildings. The insulation ensures that as little heat as possible is lost during distribution.
3. Heat Interface Unit (HIU)
Each connected building contains a heat interface unit that safely and efficiently transfers the heat from the network to the internal heating and hot water systems.
Want to know how heat consumption is measured?
Read our blog: How Is District Heat Consumption Measured?
Key benefits of district heating
- Sustainability – By using waste heat and renewable sources, CO₂ emissions can be significantly reduced.
- Space saving – No need for individual boilers or gas connections in each building.
- Safety – No combustion inside homes, which reduces the risk of carbon monoxide incidents.
- Future-proof – Heat networks can be easily connected to new sustainable heat sources as they become available.
Challenges of district heating
Despite its advantages, district heating also comes with challenges:
- Limited choice – In most areas, there is only one designated heat supplier.
- Costs – Although prices are regulated, users sometimes experience higher costs compared to gas.
- Dependency – If a network malfunction occurs, many buildings are affected at once.
- Transparency – Tariffs and efficiency data are not always clear to end users.
Who benefits from district heating?
Municipalities
For municipalities, district heating is an effective way to make neighborhoods natural-gas-free and meet climate goals. It is scalable and fits well within long-term heating transition plans.
Read also: What Will Change in District Heating from 2026?
Businesses and Institutions
Organizations with multiple buildings — such as housing corporations, healthcare facilities, or business parks — benefit from reliable, sustainable heating. It can also support reporting obligations such as ESG and CSRD compliance.
Read more: District Heating for Businesses
Households
For residents, district heating offers comfort and convenience: no maintenance, no individual boiler, and consistent access to sustainable heat.
Practical examples
The Netherlands already has hundreds of active heat networks. Large-scale systems in cities such as Amsterdam, Rotterdam, and The Hague supply heat to tens of thousands of homes.
At the same time, smaller local initiatives are emerging — for example, using heat from a greenhouse or data center to warm nearby buildings.
This mix of large and small networks shows how flexible and adaptable district heating can be to local needs.
District heating and the future
District heating will play an increasingly important role in the coming years. From 2026, the Dutch Heat Act 2026 will give municipalities greater control and require more transparency in pricing. Integration with other sustainable technologies, such as energy storage and heat pumps, will also grow.
The goal: a reliable, affordable and sustainable heating system for a gas-free future.
The role of district heating in the energy transition
District heating demonstrates how collective solutions can accelerate decarbonization. While challenges remain around cost and transparency, the potential is huge.
By further developing and connecting networks to renewable sources, district heating will become a cornerstone of the Dutch energy system in the years ahead.
Frequently Asked Questions (FAQ) about district heating
What is district heating in simple terms?
It is a system where heat is generated centrally and distributed through pipes to buildings, replacing the need for individual gas boilers.
How sustainable is district heating?
That depends on the heat source. Waste heat and geothermal energy are far more sustainable than gas-fired plants.
What will change in 2026 for district heating?
Under the new Heat Act, municipalities will have more authority, tariffs will become more transparent, and public participation will be mandatory.
Is district heating cheaper than gas?
It depends on the situation. Prices are regulated, but users may sometimes face higher costs compared to gas.
Who is district heating most suitable for?
Municipalities aiming to decarbonize neighborhoods, organizations managing multiple buildings, and households seeking comfort and sustainability.