District heating and cooling networks: Geopolitics and regulation

Heat plans, new regulators and a loosened German heating law

Heat does not cross borders, so the politics are national and municipal: fuel-mix rules, mandatory heat planning, consumer regulation and the cost of digging streets.

Tailwinds

Directive 2023/1791 Article 26 tightens the required share of renewables, waste heat and high-efficiency CHP in steps from 2028, 2035, 2040 and 2045, and allows only renewables and waste heat from 2050. Operators of systems above 5 MW that miss the criteria must prepare plans from 1 January 2025 and every five years after.¹¹

The Wärmeplanungsgesetz took effect on 1 January 2024; cities over 100,000 people had to submit heat plans by 30 June 2026, smaller ones by 30 June 2028.¹²

Ofgem began regulating heat networks in Great Britain on 27 January 2026, requiring fair prices, clear information and reliable service.¹³

Euroheat & Power reports that Germany, France, the Netherlands and Poland plan to connect over 8.5 million new households within five years, after networks grew 1.8% in trench length in 2023.²⁰

Headwinds

The JRC lists skilled-labour shortages, high upfront costs and fragmented financing as persistent barriers.¹⁴

The Bundestag passed the Gebäudemodernisierungsgesetz on 10 July 2026; it drops the rule that a replacement heating system use at least 65% renewables, substituting a rising minimum share of climate-friendly fuels for new gas and oil boilers from 2029. District heating remains a permitted option, but one driver for connections is weakened.³³

Con Edison's investigation found that the July 2007 Lexington Avenue rupture of a pipe installed in 1924 was caused by bubble-collapse water hammer, showing the safety cost of old mains.²²

The common thread is that networks are long-lived monopolies built on public streets, so they depend on stable planning rules and on trust that prices will be fair. National rules can pull in different directions, as in Germany, where mandatory municipal heat planning coexists with looser building rules.

Sources

1. Directive (EU) 2023/1791, Article 26: Heating and cooling supply (German text) gesetze.legal (text of the EU Official Journal), 2023
2. Kommunale Wärmeplanung: Ab wann wird sie Pflicht? FORUM Verlag, 2026
3. Countdown to the launch of new regulatory rules for heat networks Ofgem, 2026
4. Clean Energy Technology Observatory: Smart Thermal Networks in the European Union, 2025 Status Report European Commission Joint Research Centre, 2025
5. DHC Market Outlook 2025: The heat transition in action Euroheat & Power, 2025
6. Steam report: bubble-collapse water hammer caused Lexington Avenue steam main rupture Con Edison, 2007
7. Gebäudemodernisierungsgesetz (GModG) schafft GEG ab: Was sich ändert und was bleibt GÖRG Rechtsanwälte, 2026