Smart Thermal Networks in the European Union - 2025 Status Report on Technology Development, Trends, Value Chains and Markets

Modern district heating and cooling (DHC) networks, referred to as smart thermal networks in this report, are essential for decarbonising the EU's heating sector and for achieving global net zero emissions by 2050, as outlined in the IEA's Net Zero by 2050 Roadmap. The role of DHC networks is changing, as an increasingly active and dynamic part of the wider energy system. Key technologies driving this transition include the integration of largescale heat pumps and thermal energy storage systems. The European district heating value chain is considered robust, with European companies predominantly serving as the largest suppliers and manufacturers of key components for ongoing projects in the EU. These components include district heating grids, thermal energy storage, largescale heat pumps, and geothermal districts. Despite the sector's strength, challenges such as a shortage of skilled labour, high upfront costs, and fragmented financing frameworks persist, necessitating stable policy support and a long-term strategic outlook for successful deployment and modernisation.