Large-scale heat pumps and the municipal heat transition: How cities are decarbonising their heat supply

Why do district heating networks urgently need to be transformed?

Heating networks form the backbone of urban heat supply — yet their dependance on fossil fuels remains high. The buildings sector accounts for around 35 per cent of total final energy consumption in Germany, yet only 20 per cent of this is covered by renewable energy sources. The Heat Planning Act 2024 stipulates that a heat plan must be drawn up by 30 June 2026 at the latest for all municipal areas with more than 100,000 inhabitants (as at 1 January 2024). The federal states may subsequently delegate this obligation to municipalities or other planning authorities through state legislation. In practice, this means that cities and municipalities are required to carry out—or commission—heat planning, creating a regulatory framework that is now compelling municipal utilities and energy planners to take action.

District heating networks offer decisive advantages over decentralised supply:

• Balancing local energy surpluses and demand
• Integration of large-scale renewable heat sources
• The possibility of seasonal heat storage
• No need for consumers to operate their own heating systems
• Scalability for densely populated areas

According to a study by the Fraunhofer Institute for Energy Economics and Energy System Technology (IEE), the share of final energy supplied by district heating networks must rise from 10–15 per cent to around 35 per cent by 2030 in order to meet climate targets. Large-scale heat pumps play a central role in this.

What heat sources can a large-scale heat pump utilise?

Large-scale heat pumps tap into a wide range of heat sources — including many that are technically and economically inaccessible to decentralised individual systems. As the Federal Ministry for Economic Affairs and Energy explains, large-scale heat pumps can convert river and lake water, waste water, industrial waste heat, geothermal energy and ambient air into climate-neutral heat.

The following matrix evaluates heat sources according to planning-relevant criteria:

The choice of heat source has a significant impact on system efficiency, investment costs, and permitting requirements. River-water heat pumps are particularly attractive when existing infrastructure can be utilized, helping to reduce both capital expenditure and project implementation efforts — as demonstrated by the BMWE using the example of the river heat pump on the Rhine, which is calculated to supply around 3,500 households. As enercity explains, cascading several large heat pumps can result in systems in the two- to three-digit megawatt range — a scaling advantage that decentralised systems do not offer.

Of particular interest to municipal utilities and local authorities, waste heat from data centers is becoming an increasingly important heat source — including for municipal buildings and facilities. The available temperature level typically ranges between 20°C and 40°C, making it well suited for integration into a large-scale heat pump system connected to a downstream district heating network.

How much does a large-scale heat pump cost — and what subsidies are available?

The investment costs depend heavily on the capacity, heat source and system integration. Depending on the configuration, systems in the range of 350 kW to 3 MW typically cost between several hundred thousand and several million euros. As the German Heat Pump Association (BWP) explains, from around 2 MW upwards, all large-scale heat pumps are custom-built — and costs vary considerably as a result.

An individual cost-benefit analysis is recommended, as electricity prices, the heat source and operating hours have a significant impact on the payback period. Anyone wishing to take advantage of the BEW operating cost subsidy should ensure that the system design meets the eligibility criteria at an early stage — subsequent adjustments are often time-consuming.

When is a large-scale heat pump the right choice?

The decision to opt for a large-scale heat pump can be systematically assessed using five parameters:

Step 1 — Heat demand: Is the demand below 200 kW? → Consider a decentralised heat pump instead. From 200 kW upwards, a large-scale heat pump generally makes sense.

Step 2 — District heating network: Is a district heating network in place or under development? → Yes: proceed to Step 3. No: clarify whether network planning is a prerequisite.

Step 3 — Heat source: Can a suitable heat source be tapped within a reasonable distance? → Yes: proceed to Step 4. No: consider an air-to-water variant or a hybrid solution (assess technical and economic feasibility on a case-by-case basis).

Step 4 — Flow temperature: Is the required flow temperature above 75 °C? → Plan for a high-temperature heat pump (e.g. thermeco2 up to 90 °C).

Step 5 — Funding: Is a BEW grant application planned? → Tailor the system design to ensure eligibility for funding at an early stage.

Less suitable if:

• there is no district heating network and no expansion is planned
• there is no suitable heat source within reach
• the heat demand is significantly below 200 kW

Within a district heating network, a large-scale heat pump can be operated in monovalent or multivalent mode as part of an integrated CHP solution. According to Bosch, if it is also connected to the electricity grid and operated to support the grid, this helps to make the electricity grid more flexible and stable – a key aspect of sector coupling.

What role do large-scale heat pumps play in the decarbonisation of heating networks?

“At present, district heating networks are still predominantly supplied by fossil fuels. ‘Around 70 percent of the corresponding energy supply still comes from natural gas and coal today,’ explains Andreas Kuhn, Key Account Manager for Industrial & Commercial Heating at ENGIE Refrigeration. ‘Large heat pumps play a pivotal role in this regard.’

When large-scale heat pumps are operated in a grid-friendly manner, they gain in importance as a flexibility component for the electricity sector. If renewable energies temporarily generate more electricity than is consumed, this surplus electricity can be fed into the district heating network as heat via large-scale heat pumps – thereby specifically linking the electricity and heating sectors in line with the principle of sector coupling. The Fraunhofer Institute for Energy Infrastructures and Geotechnologies (IEG) and Agora Energiewende estimate that up to 70 per cent of the heat in German district heating networks could come from large-scale heat pumps in future. This flexibility advantage can be further enhanced by integrating heat storage systems.

Practical examples: Large-scale heat pumps in municipal projects

Bordeaux, France: In a new residential development covering 40,000 square metres, a SPECTRUM Water heat pump with a thermal output of one megawatt is providing the heating supply. The system utilises renewable heat sources with a source temperature of approximately 12 °C.

Braunschweig, Germany: In the ‘Heinrich der Löwe’ urban district, comprising 600 residential units, BS Energy is using a thermeco2 high-temperature heat pump. This EU-funded pilot project demonstrates the efficient utilisation of waste heat in an existing urban neighbourhood and delivers flow temperatures of up to 90 °C — a figure that conventional heat pumps cannot achieve.

Ludwigsburg, Germany: The Ludwigsburg District Office is using a thermeco2 heat pump to perform heat recovery from its in-house data center. The waste heat from the data center is harnessed as a heat source — an example of the economical use of industrial waste heat in municipal properties.

Solutions for municipal heating networks

For cities and local authorities wishing to integrate a large-scale heat pump into their heating network, ENGIE Refrigeration offers two product ranges.

SPECTRUM Water is available in twelve basic models with a nominal heating capacity ranging from 350 to 3,100 kW. The system is characterized by cooling medium outlet temperatures of up to 65°C, an oil-free machine design with magnetically levitated turbo compressors, and an optional smart grid interface for grid-supportive operation.

thermeco2 is the high-temperature heat pump for flow temperatures of up to 90 °C — using the natural refrigerant CO₂. Available in capacity ranges from 90 to 1,000 kW, it is particularly suitable for existing networks with high temperature requirements and for waste heat utilisation schemes in neighbourhoods and municipalities.

The transformation of the heating supply requires careful planning — from heat source analysis and system design to a strategy for securing subsidies. Our experts support cities, local authorities and energy suppliers at every stage of this process.

Find the right solution for your project with our experts now