Waste-heat recovery solutions harness thermal energy that would otherwise be discarded by industrial sites, data centers or other large energy users. This captured heat is transferred into district-heating networks via heat exchangers, heat pumps and insulated pipelines, where it can serve residential and commercial buildings. By turning low- and medium-temperature waste heat into a usable resource, these systems reduce primary-energy demand and reliance on combustion-based boilers. Data centers are particularly suitable for this approach: liquid-cooling technologies can provide a relatively stable stream of recoverable heat that can be upgraded to district-heating temperatures. Waste-heat utilization supports urban decarbonization by replacing fossil-based heat generation and improving overall energy efficiency in dense population centers.
According to the International Renewable Energy Agency (IRENA), waste-heat recovery from data centers remains a largely untapped resource that can reduce system-wide heating costs and emissions when connected to modern district-heating networks. IRENA also notes that pairing data-center waste heat with heat pumps raises output temperatures to district-heating standards, enabling scalable, low-carbon heat supply.[1]
Main outcomes of the solution
Key deployment and scaling factors
Case Study
Microsoft, Fortum and AFRY (2025), Finland
Fortum is developing a major data-center waste-heat recovery project by integrating Microsoft’s new hyperscale data centers in Espoo and Kirkkonummi into the regional district-heating network. Waste heat from Microsoft’s servers will be captured through liquid-cooling systems, upgraded via large-scale heat pumps and fed into the district-heating grid operated by Fortum Power and Heat Oy. Once fully operational, the recovered heat is expected to provide up to 350 MW of thermal capacity and supply around 40% of the district-heating demand across Espoo, Kauniainen and Kirkkonummi.
The system is being developed with AFRY providing engineering, procurement and construction-management (EPCM) services. Initial heat delivery is planned for 2025/2026 with phased expansion in subsequent heating seasons. According to Fortum and Microsoft, the project is among the world’s largest data-center heat-recovery initiatives and forms a key component of regional plans to decarbonize district heating. The project demonstrates how hyperscale data-center clusters can act as stable, long-term heat sources and accelerate the transition to carbon-neutral urban heating in northern climates.[2,3,4]
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