Veolia, the French utilities group, has told investors and partners it is pursuing about £1bn of district heating and cooling projects across the UK that are expected to be awarded by 2030, as it seeks to expand its presence in the country’s low‑carbon heat market.
The projects form part of a new UK offering the company calls an “Ecothermal Grid”, which mixes sources such as waste heat, geothermal energy and heat recovered from data centres to deliver heating and cooling with a reduced carbon footprint.
Heat for buildings, including space heating, industrial processes and hot water, accounts for roughly 37% of the UK’s CO2 emissions, according to government data cited by Veolia. Yet only around 3% of UK heat demand is currently met by district heating networks. The Government has set an ambition for that figure to reach 20% by 2050, a scale-up that market analysts estimate could represent an £80bn opportunity for networks, installers and operators.
Veolia said its £1bn pipeline covers schemes across Wiltshire, London, Bristol, Yorkshire and Cambridgeshire, and includes about £210M of projects it has already been awarded for 2025. The company is calling on the UK Government to introduce policy changes it says are needed to unlock district heating growth.
Among developments recently completed by Veolia is Phase One of the Southwark 2.0 district heat network in south London. The extension will build on an existing network that already supplies heating to more than 2,500 homes and reportedly saves about 8,000t of CO2 annually. When the Southwark extension is complete, Veolia says the network will supply nearly 7,000 homes with heat recovered from its Southwark energy‑from‑waste facility, saving a further 14,000t tonnes of CO2 each year. Phase Two is scheduled to begin in March 2026, subject to regulatory approvals.
Veolia has also been selected as the preferred partner by the Wellcome Genome Campus in Cambridgeshire to design and build a “fifth‑generation” heating and cooling system. The scheme is planned to use recovered geothermal heat alongside waste heat from a data centre to serve an expanding campus that the Wellcome Trust is developing as a major hub for genomics and data science research.
Calls for regulatory reform
To accelerate deployment, Veolia is urging the UK Government to introduce a package of policy measures. The company suggests energy‑from‑waste facilities should receive incentives under the UK Emissions Trading Scheme (ETS) to supply heat to local networks , in Veolia’s words, through reductions in ETS allowance liability for heat supplied to communities. It is also calling for new long‑term funding mechanisms to replace or succeed existing grant schemes such as the Green Heat Network Fund, and for mandatory connection and use of heat networks by certain new and some existing buildings, to provide stable demand.
Policy experts and local authorities have long debated how best to scale district heating. Supporters argue networks can be efficient and cheap to run at scale and enable the use of low‑carbon heat sources that would otherwise be wasted. Critics point to the high upfront capital costs, the planning and regulatory complexity involved, and concerns about who bears the cost and risk of supplying heat to customers.
The UK government has committed to reducing emissions from buildings as part of its net zero pathway, and recent policy has included funding and regulation for heat networks, though delivery has been slower than many supporters hoped. If Veolia’s pipeline materialises and government interventions are enacted, the company and others in the sector could play a larger role in the decarbonisation of UK heating over the next decade.
Veolia chief executive officer Estelle Brachlianoff said: “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. In so doing, we will deliver a direct route to carbon-neutral heating and cooling, using a diverse range of energy sources and integrating AI-driven smart controls and energy storage technologies to create the most reliable and flexible networks. In order for this to happen, we need – across Europe and in the UK – funding mechanisms that provide certainty, and stable regulatory frameworks.”
Veolia senior executive vice president, Northern Europe zone Gavin Graveson said: “Veolia is investing heavily in new and existing heating networks. To encourage further investment in decarbonised heat in line with its 2050 targets, the government could use the UK Emissions Trading System (ETS) to incentivise electricity producers to supply local heating networks. 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.”
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