Case Study: How Finland is turning excess heat from Data-Centres into Neighbourhood Heating Programmes (and what the UK's urban landscapes can learn)

Finland is fast becoming the world’s leading laboratory for an elegant climate idea: capture the heat rejected by data-centre servers and feed it straight into district-heating networks to warm homes, schools and businesses. The approach is already moving beyond pilots into city-scale projects, notably Google’s Hamina scheme and Microsoft/Fortum partnerships around Helsinki, and offers a practical way for local authorities to reduce fossil-fuel use, cut system emissions and create steady local value from digital infrastructure.

Below is a short, practical case study of how the system works, why it matters for net zero, what local government leadership needs to do, and whether it could work in the UK.

The Hamina Scheme:

The Hamina scheme refers to a novel heat-recovery project by Google at its data-centre campus in Hamina, Finland. Rather than waste all the heat generated by its servers, Google, in partnership with the local energy company Haminan Energia, will route that waste heat into the town’s district-heating network.

The plan will begin operating in late2025, following construction of a new heat-pump plant and connection pipeline to the existing district-heating network. With Google providing the heat to the Haminan Energia free of charge.

According to Google and Haminan Energia, this arrangement is expected to supply 80% of Hamina’s annual district-heating demand, heating homes, public buildings and schools, significantly reducing the town’s reliance on fossil fuels for heat.

The Microsoft/Fortum Partnership:

In March 2022 Microsoft announced that it would build a new data-centre region in the Helsinki metropolitan area, in the municipalities of Espoo and Kirkkonummi. Fortum, the main district-heating utility for much of the region, committed to capturing the waste heat produced by the cooling of Microsoft’s server farms and injecting it into the local heating network, to supply homes, businesses and public buildings across the region.

Fortum describes the collaboration as “the world’s largest data-centre waste-heat recycling project.” Once fully operational, the data-centre heat is expected to cover roughly 40% of the district-heating demand in the Espoo–Kirkkonummi–neighbouring area, which would provide heating to some 250,000 users!

Fortum has committed an estimated €225 million (2023–2027) investment to build necessary heat-pump plants, pipeline connections and upgrades to integrate the waste-heat flow into the district network.

How the heat-recovery system works, the technical and commercial process (a near idiot's guide!):

1. Capture the waste heat at source

   • Servers produce a lot of low-grade heat as they do computations. Data-centre operators collect this heat via air or liquid cooling systems and route it through heat-exchanger systems rather than simply venting it to atmosphere or sea. Google’s Hamina and Microsoft projects capture waste heat at scale for this reason.

     
     

2. Boost temperature to district-heating standards

   • Server heat is often low-temperature (e.g., 25–40°C). To supply standard district-heating networks (which commonly run at 60–90°C), operators use heat-pump systems and/or cascade heat-exchanger configurations to raise the temperature to a useful level. Some Finnish projects are using modern large-scale heat pumps and thermal elevation technologies to achieve this reliably.

     
     

3. Integrate with the local district-heating operator

   • A commercial agreement is struck between the data-centre owner and the municipal/utility district-heating company. The heat is injected into the network and credited against the utility’s supply, reducing the need for fossil or biomass boilers and stabilising district-heat prices. Fortum’s partnership with Microsoft is a central example where the utility is the aggregator and buyer of heat.

     
     

4. Seasonal balancing and hybrid supply

   • In summer months or during low demand, surplus heat can be stored (short-term thermal stores) or used for other processes (industrial users, greenhouses) or exported to other flexibility markets. In winter, the recovered heat provides a reliable baseload, displacing higher-carbon fuels.

     
     

5. Control, metering and accountability

   • The system requires metering, telemetry and contractual arrangements to ensure heat volumes and temperatures are guaranteed, emissions reductions are verifiable, and billing/crediting flows to the right parties.

     
     

Why these schemes matters for net zero, urban resilience and sustainable infrastructure:

• Turns a liability into an asset: Data centres are often criticised for their huge energy consumption and heat waste. In Hamina, that waste becomes a renewable-energy asset that powers heating across an entire community.

• Reduces fossil-fuel dependency in heating: By supplying 80% of the district heating demand, the scheme largely displaces traditional fossil- or biomass-based heat, helping the town decarbonise its heating.

• Demonstrates a circular, efficient model: Rather than producing heat separately (often by burning fuel), the model reuses waste heat, improving resource efficiency and lowering primary energy demand.

• Economic and social benefit: For residents, communities, schools, it's cheaper and greener heating. For the utility, lower operating costs and reduced exposure to fuel-price volatility. For Google/Microsoft, a stronger sustainability profile, contribution to global net zero targets and improved social licence to operate.

• Scalable blueprint for other cities:The scheme provides a replicable model for other towns, especially where data-centre or industrial heat exists and district heating networks are present (or can be developed).

What’s required — and why not every place will automatically benefit

• Proximity of heat source and heat demand: Data centre needs to be close enough to homes or public buildings for pipeline connection to be feasible and cost-effective.

• A district-heating network or plans for one: Without a network to absorb and distribute heat, the recovered heat can’t reach end users.

• Temperature-elevation technology and investment: Low-grade waste heat needs boosting (e.g., via heat pumps) for compatibility with district heating; that requires capital investment, technical expertise and good design.

• Regulatory and commercial frameworks: Contracts between data-centre operators, utilities and local governments; metering and pricing mechanisms; infrastructure build-out supervision.

• Long-term planning and local authority leadership:Local government must coordinate urban heating demand, building stock, retrofits, social tariffs, and treat heat recovery as part of climate and infrastructure planning.

Could this work in the UK (and should local authorities act now?)

Yes, in principle,but only where conditions align. The Hamina scheme is not magic; it is simply carefully planned, smart systems integration. For UK local authorities, the path to replicating it would involve:

• Identifying existing data-centres or other industrial heat sources located close to towns or urban centres.

• Mapping local heating demand: e.g., social housing estates, council housing, schools, public buildings, or planned district heating developments.

• Investing in district-heating infrastructure and connecting pipelines. Many UK cities have legacy heating systems or fragmented heat supply; the benefit of data-centre heat increases with network coverage.

• Adapting regulations and contracts to allow sale/transfer of waste heat, and designing heat-purchase agreements (HPAs) with long-term commitments and fair tariffs.

• Aligning with local climate and decarbonisation strategies and using waste heat as part of energy transition, not as a side benefit.

Given rising electricity demand (from data centres, AI, remote work, electrified transport) and the urgent need to decarbonise heating, UK local authorities ignoring this opportunity would miss out. Where data-centre clusters exist, or are planned, integrating waste-heat recovery and district heating could accelerate decarbonisation, reduce energy costs for residents, and provide stable long-term heat without fossil fuels.

In short, the UK can do it, especially in urban centres and where public sector estate can be aggregated as early anchor demand, but it will require active local government leadership, regulatory clarity from central government, and new financing models (regional sustainability bonds, blended finance, or GB Energy/National Wealth Fund support).

Position of UK's Data Centres:

The UK's data centres are primarily clustered in London, which has the most facilities, but are also heavily concentrated in other major hubs like Manchester, Slough, Birmingham, and Cardiff. Other important locations include Leeds, Glasgow, and Farnborough, with an emerging cluster of planned facilities in the East Midlands and Yorkshire near the Humber. 

Primary clusters:

• London: By far the largest hub, with over 38% of the UK's data centres. It benefits from being a major international digital and financial hub.

• Manchester: The second-largest data centre market, serving as a major technology hub in the north.

• Slough: A significant location due to its proximity to London and strong connectivity.

• Birmingham: A central location with strong transport links, making it a growing data centre hub.

• Cardiff: A key market with a notable concentration of data centres, especially with planned expansions. 

Other significant locations:

• Leeds: A growing market with multiple facilities.

• Glasgow: A hub with robust infrastructure and investments in renewable energy.

• Farnborough: Another area with a concentration of data centre facilities.

• Cornwall: A critical landing point for many submarine cables connecting the UK to North America and Europe. 

Emerging areas:

• There is a significant amount of new construction and planning in the north of England, particularly in the East Midlands and Yorkshire regions, with several new data centre projects planned. 

Final verdict: A practical net-zero win, but only with local leadership and a new mindset

Finland shows the route: design data-centre clusters as part of the urban energy system, not as isolated industrial loads. That requires municipal vision, utility partnership and commercial frameworks that reward heat reuse.

For UK local authorities, the opportunity is threefold:

• to secure low-cost heat for citizens,

• to reduce local carbon emissions, and

• to capture economic value from the growth of the data-centre sector.

If UK cities want to combine digital growth with climate action, data-centre heat recovery is one of the clearest, practical opportunities to do so — but it will only succeed where local authorities lead, central government enables, and industry and communities share the benefits.