This report provides Transforma Insights’ view on the use of IoT to support Community Heating. Community Heating (CH) involves generating heat in a centralised location and then distributing the heat across businesses, residences, and industrial facilities. Community heating is most common in colder countries, particularly the Nordic countries, China, Russia, and some parts of North America. Some of the prominent advantages of community heating solutions are energy saving, reduced carbon emissions, and improved load balancing when compared to traditional heating solutions. Government initiatives and schemes have supported the expansion of the community heating market, recognising its environmental benefits in densely populated areas and its potential to create jobs due to significant infrastructure investment.
AI-driven data centres are a major source of recent growth. These facilities are increasingly being designed not just for computing power but also as sources of community heating, with waste heat from servers being redirected into district heating networks to warm homes, campuses, and even farms.
Community heating and cooling systems are gaining traction, yet their deployment is still far behind individual solutions. This is because of several disadvantages, including lack of scalability in less densely populated areas, billing complexities, irregular heat distribution, lack of user control, and issues such as overheating in less sophisticated systems.
To improve efficiency, CH systems are increasingly using smart heat meters to measure consumption, detect faults remotely, support load balancing, and reduce carbon emissions.
The report provides a detailed definition of the sector, analysis of market development and profiles of the key vendors in the space. It also provides a summary of the current status of adoption and Transforma Insights’ ten-year forecasts for the market. The forecasts include analysis of the number of IoT connections by geography, the technologies used (including splits by 2G, 3G, 4G, 5G, LPWA, short range, satellite and others), as well as the revenue split between module, value-added connectivity and services. A full set of forecast data, including country-level forecasts, sector break-downs and public/private network splits, is available through the IoT Forecast tool.
The report examines key factors that are influencing the development of the community heating market, including:
As the heading points out, this section of the report first defines community heating and then discusses its evolution and increasing adoption in colder and more developed regions, such as the US, China, and Japan.
It then shifts its focus to the current categorisation of CH systems as third-generation ones. It discusses the features of such third-generation CH systems, explains their features (like improvements in grid insulation), and also explains how they differ from fourth-generation ones. This section ends with a passing comment about the current development of fifth-generation CH solutions and their benefits.
This section primarily focuses on utility providers, who are reluctant to adopt these solutions, mostly because utility providers are conservative organisations and an apt implementation of smart community heating solutions requires joint efforts from technology suppliers, community heating service providers, asset owners, manufacturers, and government officials. It also charts the downsides of CH systems, like high infrastructure costs with extensive installation and maintenance requirements.
This section first explains why measuring the heat supplied to end users is a necessity for a utility, and adds that heat meters are mostly used for this purpose. It also adds that in many CH systems, water meters are used instead of heat meters, since they are cheaper.
It then discusses the features of smart heat meters (like remote meter readings and real-time data monitoring) and their benefits (like detecting losses in the distribution network). For instance, it is estimated that by using smart meters, CH providers can reduce network losses by up to 12% and lower temperatures by up to 10°C while providing sufficient heat to consumers.
It then talks about how AMR (Automatic Meter Reading) meters are used in most operational metering deployments, and explains how AMR technology works and how it differs from AMI (Advanced Metering Infrastructure) meters.
This section first explains the benefits of smart grids over their traditional counterparts (like remote monitoring and improving the stability of grid systems). It then discusses how grid and meter data can be integrated to forecast consumer demand.
This section states that natural gas remains one of the most widely used heating fuels and suggests that expanding district heating networks to connect gas-fired households could significantly reduce CO₂ emissions and other air pollutants. It further highlights that community heating has the potential to fully decarbonise building heating; for example, approximately 86% of Europe’s community heating already relies on a mix of recycled and renewable energy sources.
The section also outlines the cost advantages of community heating systems, noting that the UK government estimates potential fuel bill reductions of up to 30% for residential and commercial users. Additionally, it argues that geopolitical developments (such as the Russia–Ukraine conflict and disruptions to the key energy supply route of the Strait of Hormuz) have strengthened the case for reducing energy import dependence, thereby accelerating interest in community heating solutions.
This section of the report explains that since the supply of renewable energy sources, utilities and governments that rely heavily on renewable sources will look for alternatives that allow them to influence demand in response to changes in supply, reiterating the importance of modern CH systems.
This section first talks about how data centres are currently the most significant source of waste heat, since they are proliferating rapidly due to the booming demand for AI. It then talks about how many companies have started using the huge amount of heat generated from their data centres to heat adjacent buildings and towns. For instance, Microsoft’s headquarters in Seattle uses the heat generated from its data centres to heat the adjacent three buildings.
It also claims that European countries (like Sweden and Finland) are leading this chart. It further adds that nuclear power plants are also emerging as another source of waste heat, although, at present, less than 1% of the heat generated from nuclear reactors globally is used for district heating.
This section talks about the increasing usage of geothermal heat pumps, especially in the European region. For instance, by 2023 end, 401 geothermal district heating and cooling systems had been installed in Europe. It also mentions the deployment of geothermal heating systems in the US and the US government’s investment plans for three more projects in the states of Oregon, California, and Utah.
This section of the report explains how governments and local authorities are the main drivers of district heating and cooling solutions around the world. It also claims that major district heating initiatives are in Europe, where all new district heating and cooling meters have been required to be remotely readable across the European Union since October 2020.
In a tabular format, it then charts the district heating schemes and policies in countries and regions including Austria, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, China, Czech Republic, Croatia, Denmark, the European Union, Finland, Germany, Ireland, Kazakhstan, Kosovo, Kyrgyzstan, Moldova, the Netherlands, North Macedonia, Poland, Romania, Russia, Serbia, Sweden, the UK, Ukraine, the United States, and Uzbekistan. Case in point, in the US, Washington passed the ‘House Bill 2131’ in March 2024, that allows electric and gas utilities in the state to provide thermal energy using thermal energy networks. The bill further grants funding of USD25 million for gas utilities on their pilot projects related to thermal energy networks.
This section charts the communication technology used in heat meters. It explains why relying on a local network (like Wi-Fi) or public networks is not a viable option for CH systems and how the concentration of CH deployments encourages private or city-wide LPWA networks and discusses the benefits and challenges of such private networks. For instance, while private networks provide reliable and secure connectivity, they can be costly, may face coverage limitations over large areas, and often involve significant administrative overhead.
The final section of the ‘Market development’ segment of the report provides some examples of relevant IoT deployments in this application, including Enercity in Hanover deploying Danfoss’ Leanheat solution for temperature and peak load control across homes in Ostland.
The key vendors section lists some of the main providers of products and services related to the community heating market, such as Danfoss, Veolia, Vattenfall, State Power Investment Corporation, Vital Energi, Cetetherm, Landis+Gyr, and Engie SA. The report provides profiles of the various vendors, including aspects most relevant to this Application Group, such as product offerings, pricing, financial results, and technology.
In the market forecasts section, we provide a summary of the Community Heating Application Group forecasts from the Transforma Insights IoT Forecast Database:
The report charts the growth in the number of devices, which will grow from 42.4 million in 2025 to 98.1 million in 2035.
Transforma Insights forecasts are compiled on a country-by-country basis. This report includes a regional summary, showing splits between Australasia, Greater China, North America, Europe, Japan, Latin America, MENA, Russia & Central Asia, South East Asia, South Korea, India & South Asia, and Sub-Saharan Africa.
Transforma Insights’ IoT forecasts include splits between the various connectivity technologies as follows: 2G, 3G, 4G, 5G mMTC, 5G non-mMTC, LPWA (non-mMTC), Satellite, Short Range, and Other.
This section discusses which technologies will be used in the Community Heating Application Group.
This part of the report discusses the market growth in terms of revenue (module revenue, service wrap revenue, and VAC revenue). Transforma Insights estimates that the revenue in the Community Heating Application Group will grow at a CAGR of 10%.
