Data Centers: the new heating plants of the city

There is, however, another side to the equation: almost all of this energy ultimately becomes heat, which, in most facilities, is released into the environment.

This is beginning to change. Large organizations operating their own data centers—including banks, hospitals, universities, and major corporate facilities—can recover the heat generated by computing systems and use it for other needs within the same property or across an entire complex.

From Energy Waste to an Asset

The applications are not limited to universities. Hotels, hospitals, food-processing facilities, and pharmaceutical manufacturing plants are considered particularly suitable, as they have consistent demand for hot water and low- to medium-temperature heat.

Northern Europe is currently the most mature market for such applications, supported by extensive district heating networks. The Uptime Institute has identified nearly 60 heat-recovery projects across hyperscale, enterprise, colocation, and high-performance computing (HPC) data centers.

The Challenge Is Temperature

The equation, however, is not as straightforward as it may initially appear. The heat generated by data centers is typically low-temperature heat. European market sources frequently cite temperatures in the mid-20s Celsius, meaning that heat pumps are required to raise the temperature to levels suitable for building heating or hot-water production.

Furthermore, older cooling systems were not designed with heat recovery in mind. Retrofitting existing facilities can therefore require significant investment as well as operational modifications.

Another metric is also becoming increasingly important: the Energy Reuse Factor (ERF), which measures the proportion of energy that is reused outside the data center. Until now, the industry has focused primarily on Power Usage Effectiveness (PUE)—that is, how efficiently electricity is used within the facility. The next source of value for a data center may lie beyond its walls.

As electricity demand from AI and data centers continues to rise, pressure to make more effective use of every megawatt-hour (MWh) is intensifying. In the United States, the U.S. Energy Information Administration (EIA) is already forecasting new record highs in electricity consumption in 2026 and 2027, with data centers emerging as a key driver of this growth.

For real estate developers and investors, this means that the energy strategy of a project will no longer concern solely where its energy comes from, but also where the energy it generates as surplus is ultimately directed.