Veolia’s Strategy for UK Heat Networks and Data Centres

District heating is gaining renewed attention in the UK as utilities look to decarbonise buildings while supporting the rapid growth of energy-intensive infrastructure, including data centres. 

Veolia is positioning itself at the centre of this shift, with a billion-pound pipeline of projects designed to expand low-carbon heat networks and capture waste heat from industrial sites and digital facilities.

District heating operates on a simple principle – rather than relying on individual boilers, buildings are connected to a central heat source through insulated pipe networks.

The system can reuse thermal energy from energy from waste plants, power stations, heavy industry and increasingly data centres, reducing both emissions and overall energy waste.

With data centre operators facing scrutiny over power consumption and sustainability, integration into local heat networks offers a route to reuse excess heat that would otherwise be rejected into the atmosphere.

UK ambitions and investment

In the UK, district heating currently accounts for just 2-3% of heating supply, serving around 500,000 homes.

Most schemes are concentrated in dense urban areas such as London. However, the UK Government has set an ambition to expand heat networks to serve 18-20% of homes by 2050.

Meeting that target will require significant capital investment and regulatory alignment. Veolia has announced a US$1.3bn pipeline of district heating projects to be awarded by 2030 under its Ecothermal Grid programme in the UK.

In 2025 alone, the company secured US$273m of projects, with developments planned across Wiltshire, London, Bristol, Yorkshire and Cambridgeshire.

If the 2050 target is realised, the UK heat network market could be worth an estimated US$104bn, creating new opportunities for partnerships between utilities, local authorities and digital infrastructure operators.

Integrating waste heat from data centres

One of Veolia’s most prominent projects is the Southwark 2.0 District Heat Network in south London. Phase One has been completed and currently provides heat to more than 2,500 homes using energy recovered from a local energy-from-waste facility.

The scheme is estimated to save around 8,000 tonnes of CO₂ each year. When fully operational, it is expected to serve nearly 7,000 homes and deliver an additional 14,000 tonnes of annual carbon savings.

Beyond London, Veolia has been selected by Wellcome Genome Campus in Cambridgeshire to design and build a fifth generation heating and cooling network. The system will recover geothermal heat alongside waste heat from a data centre facility as the campus expands from 125 to 440 acres.

This approach reflects a growing trend in which data centres are integrated into local energy ecosystems. Rather than operating as isolated high load facilities, they can become anchor assets within district energy schemes, supplying consistent low grade heat to surrounding developments.

Policy and regulatory requirements

Veolia argues that investment alone will not deliver the scale required. Regulatory reform is needed to create certainty for developers and operators, particularly where data centres and energy from waste plants are involved.

“Veolia's ambition is to be at the forefront of a new wave of heating networks across Europe, and ultimately to become the number one player in urban heating in Europe,” says Estelle Brachlianoff, CEO of Veolia.

“In order for this to happen, we need – across Europe and in the UK – funding mechanisms that provide certainty, and stable regulatory frameworks.”

Estelle has also emphasised that long-term clarity around funding and carbon pricing is essential if utilities are to invest in large-scale network infrastructure.

Veolia is calling for changes to the UK Emissions Trading Scheme so that energy from waste facilities supplying heat to networks face reduced allowance liabilities.

It also supports long term funding mechanisms beyond the current Green Heat Network Fund and advocates mandatory connections requiring certain new and existing buildings to connect to local heat networks.

Gavin Graveson, Senior EVP for Veolia's Northern Europe Zone, links this to decarbonisation targets.

“To encourage further investment in decarbonised heat in line with its 2050 targets, the government could use the UK Emissions Trading System to incentivise electricity producers to supply local heating networks,” he says.

“Once the infrastructure is in place, the networks must also be fully utilised to optimise their profitability and carbon efficiency. Mandatory connections would guarantee operators stable demand.”

Such measures could formalise the role of digital infrastructure within urban heat strategies, ensuring that waste heat recovery becomes a standard element of new facility planning rather than an optional add-on.