The heating transition is under great pressure: heating networks must be built faster, CO₂ emissions must fall, and supply costs must remain stable. But how should heat be provided – centrally via large infrastructures, or decentrally with solutions close to the district? Both approaches are justified. The right choice depends on the project context: urban or rural, new construction or existing buildings, high or low connection density. International strategies – such as those of the EU Commission, the IEA, and the IPCC – emphasise that it is not a question of either-or, but rather a flexible toolbox for a climate-friendly heat supply.
Three developments make the topic particularly relevant:
This blog explains what centralised and decentralised heating mean – and what the implications are technically, economically, and for planning.
Central district heating is based on the principle that energy is generated in large plants and distributed via a supra-regional network. Typical examples include combined heat and power (CHP) plants, large heat pumps, or geothermal plants. The heat generated is transported at up to 130 °C through insulated pipelines – using the so-called supply-and-return principle. Control is centralised, and the system only becomes economical with a high connection density.
Decentralised systems, on the other hand, produce heat where it is needed – for example through heat pumps, CHP units, biomass, or solar thermal energy directly on the building or within the neighbourhood. Pipeline lengths are shorter, temperatures are lower (usually between 35 °C and 70 °C), and energy losses are reduced. Responsibility for planning, operation, and maintenance also lies locally.
The boundaries are fluid. Small local heating networks with pipeline lengths of just a few hundred metres are often considered decentralised, even if they are structurally similar to centralised systems. The difference lies less in definition and more in function: grid size, generation structure, flexibility, and scalability.
Central systems rely on large generation units with high output – from CHP plants to large-scale heat pumps. The heat generated is transported over long distances through insulated pipelines. This can result in heat losses of up to 15%, depending on pipe length and insulation. The control system is centralised, and operation is efficient – but it depends on stable demand and a high connection density.
Decentralised systems consist of many small heat generators: heat pumps, solar thermal systems, pellet boilers, or combined heat and power plants. They have a modular structure, are flexibly scalable, and offer advantages in planning speed, security of supply, and integration of renewable energy sources. The short pipeline lengths not only reduce losses but also lower requirements for temperature resistance and materials.
Central heating networks place high demands on materials, insulation, and compressive strength. In decentralised networks, modular installation, rapid assembly, and high energy efficiency are crucial. Plastic piping systems – made of polypropylene (PP), for example – offer advantages here: they are corrosion-resistant, easy to install, and particularly suitable for medium temperature ranges.
The Hamburg real-world laboratory IW³ (“Integrated Heat Transition Wilhelmsburg”) is an example of an innovative decentralised supply concept. Around 50,000 people in the Wilhelmsburg district are supplied by an intelligent heating system.
In Veksø, north of Copenhagen, around 400 houses will be connected to a new district heating network. The pipe system spans a total of 15 kilometres and is crucial for the project’s efficiency.
The city of Gateshead in the northeast of England expanded its existing district heating network by 1.3 kilometres in 2018. The aim was a cost-efficient implementation with minimal disruption to residents and traffic.
The choice of system depends heavily on structural, economic, and technical conditions. Both approaches have specific strengths and weaknesses:
Economical
Technical
Ecological
Operational
Strategic
| Criterion | Central district heating | Decentralised heat supply |
|
Investment |
High (grid & central generation) |
Lower (modular, building-integrated) |
|
Operating costs |
Cheap with high occupancy |
Depending on system type and maintenance requirements |
|
Energy losses |
Increase with cable length |
Low due to short distribution |
|
Flexibility |
Low – grid-connected |
High – scalable, open to different technologies |
|
Planning complexity |
High – long-term infrastructure r |
Medium – object-related optimisation possible |
|
Grid dependency |
Complete |
None – self-sufficient systems possible |
|
Scalability |
Economical from approx. 30 connections/km |
Individual buildings to district solutions |
|
Maintenance |
Centrally organised |
Decentralised, higher effort per building |
|
Integration of renewables |
Large-scale (geothermal energy, waste heat) |
Small-scale (PV, solar thermal energy, biomass) |
|
Typical suitability |
Dense urban districts, municipal facilities, new buildings |
Rural areas, existing buildings, projects that can be implemented quickly |
It is not the system that decides, but the context. The choice between centralised and decentralised district heating depends heavily on the location, building structure, and objectives of the project.
A central heat supply makes sense if many buildings can be supplied within a short distance – for example, in urban districts with a high connection density. Even in new development areas, where the heating network and generation are planned together from the outset, a central system shows its efficiency advantages. Municipal properties such as schools, swimming pools, or hospitals benefit from a stable, centrally controlled supply. Central solutions are also suitable for industrial areas if usable waste heat sources are available. In such cases, a central system provides high overall efficiency, integrated infrastructure, and reduced planning effort per building.
Decentralised systems, on the other hand, are particularly suitable for existing buildings where a grid connection is not technically or economically feasible. They are also advantageous in rural regions, where the line costs per connection would be disproportionately high. Decentralised concepts can be implemented more quickly – for example, in short-term projects where constructing a network would take too long. They are ideal for self-sufficient concepts such as plus-energy houses or KfW 40 buildings, where the supply is planned directly at the building. Decentralised systems offer high scalability, short implementation time, and flexible integration of renewable energies.
Hybrid solutions
The future is not about either-or. Increasingly, projects are relying on hybrid systems that combine centralised and decentralised generation. Example: dynamically distributed district heating networks, in which parts of the network are temporarily separated from the central network and supplied locally, e.g., via large heat pumps or seasonal storage systems..
Smart grids and digitalisation
Digital control systems make it possible to regulate flow temperatures, consumption peaks, and energy flows in real time according to demand. This reduces losses, increases efficiency, and facilitates the integration of fluctuating sources.
Integration of renewable energies
Solar thermal energy, industrial waste heat, geothermal energy, and biomass are increasingly incorporated into heating projects. Particularly in Scandinavia and Eastern Europe, current projects demonstrate that economic decarbonisation is possible, provided that grid infrastructure is modernised.
Investment needs and climate targets
The conversion of existing grids to CO₂-neutral generation requires significant investment. Studies predict a double-digit billion-euro sum for Germany alone by 2030 – a feat that requires long-term planning security.
Centralised or decentralised district heating? There is no universal answer – it always depends on the project context. The denser the development, the more economically a central heating network can operate. Conversely, the more individual and flexible the requirements, the more a decentralised system shows its advantages.
Key factors include connection density, building type, availability of renewable energies, project timeframe, and economic viability. In many cases, hybrid approaches are the most sustainable option, combining security of supply with flexibility.
aquatherm as a partner for centralised and decentralised heating networks
Whether it’s a district heating network, a local heating system, or a hybrid concept, choosing the right piping system is crucial for efficiency, durability, and investment security. aquatherm offers modular, corrosion-resistant plastic piping systems made of PP that can be flexibly integrated into both central and decentralised structures. At medium operating temperatures, they excel with:
Planning a heating project?
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