Data Center Waste Heat Recovery Market Size, Share & Forecast to 2035

The Data Center Waste Heat Recovery Market covers the heat pumps, heat exchangers, heat recovery modules, interconnection piping, thermal storage, controls and services that capture heat rejected by data centers and deliver it to district heating networks, buildings, industrial processes and pools. DC Market Insights values the global Data Center Waste Heat Recovery Market at USD 316.59 million in 2025 and forecasts USD 1.76 billion by 2035, a CAGR of 18.74%. The 2025 value is built from projects: about 121 MW of new heat recovery capacity (megawatts thermal, MWth) commissioned in 2025 at roughly USD 2.09 million per MWth of equipment gives USD 252.59 million, and engineering, operation and monitoring services on an installed base of about 574 MWth add USD 64.00 million. Liquid cooling systems are the fastest-growing segment at 30.32% a year because direct-to-chip loops return water warm enough to need little or no temperature lift, and Asia Pacific is the fastest-growing region at 23.97% a year as liquid-cooled AI halls in China and Japan add heat offtake from a small base.

Executive Summary

The Global Data Center Waste Heat Recovery Market size was valued at USD 101.75 million in 2020, reached USD 316.59 million in 2025, and is anticipated to reach USD 1.76 billion by 2035, at a CAGR of 18.74% during the forecast period.

Report attribute	Details
Historical Period	2020-2024
Base Year	2025
Forecast Period	2026-2035
Data Center Waste Heat Recovery Market Size 2025	USD 316.59 Million
Data Center Waste Heat Recovery Market, CAGR	18.74%
Data Center Waste Heat Recovery Market Size 2035	USD 1.76 Billion

The market grew at 25.49% a year between 2020 and 2025, and 2025 alone added 34.0% over 2024 as utility-scale heat pump plants in Finland and Denmark moved into construction. Growth stays high at 18.74% a year to 2035 because EU and German rules turn heat reuse from a voluntary project into a design requirement.

The base is still small: the European Commission reports that only about 1.8% of data center heat in the European Union is reused, and only 67 data centers reported any reuse in the first reporting period. DC Market Insights models installed recovery capacity rising from about 574 MWth in 2025 to about 4,714 MWth in 2035, close to 20 terawatt-hours (TWh) of heat a year, well below the up to 300 TWh of space heating that the International Energy Agency (IEA) says reused data center heat could supply by 2030 to buildings within 5 km if fully integrated into district heating.

Market Scope: What Does the Data Center Waste Heat Recovery Market Cover?

The Data Center Waste Heat Recovery Market covers every piece of equipment and every service needed to move heat from a data center cooling system to a paying or contracted heat user, valued at first sale in current US dollars, with 2025 as the base year and forecasts to 2035. DC Market Insights sizes it at USD 316.59 million in 2025.

Included. Heat pumps that raise data center heat to network temperature; heat exchangers, heat recovery chillers and heat recovery modules; the pumps, valves and pipe that connect the site to the heat user; dedicated thermal storage and controls; and engineering, operation and monitoring services.

Excluded. Data center cooling equipment that would be installed anyway, the district heating network beyond the connection point, electric boilers in a shared plant, the value of the heat itself, and civil works.

How the segments fit together. The component split adds equipment and services to the total; the cooling technology, heat application and data center type splits each re-cut the same USD 316.59 million.

Market Drivers: What Drives the Data Center Waste Heat Recovery Market?

Three drivers explain most of the growth in the Data Center Waste Heat Recovery Market: regulation that makes reuse mandatory for large sites, utilities that need low-carbon heat to replace fossil district heating, and a doubling of data center electricity use that multiplies the heat available.

German Law Requires 10% Reused Energy in New Data Centers from July 2026

Germany’s Energy Efficiency Act (Energieeffizienzgesetz, EnEfG) requires data centers that start operating from 1 July 2026 to reach a reused-energy share of at least 10%, and sites starting operation from 1 July 2027 and 1 July 2028 to plan for 15% and 20%, alongside a power usage effectiveness (PUE) of 1.2 or lower. A draft amendment keeps those thresholds unchanged and adds flexibility in how they can be met. DC Market Insights estimates that Germany becomes the largest country market in 2025 at USD 42.44 million and grows 18.97% a year to 2035, the fastest rate among the large European markets.

Utilities Need Low-Carbon Heat for Fossil District Heating

The IEA notes that district heating supplies around 10% of global building heat demand and that around 90% of global district heating supply is produced from fossil fuels today. In Finland, Fortum’s investment in its heat pump plants at two Microsoft data center sites totals approximately EUR 225 million, and data center waste heat is expected to cover approximately 40 per cent, once fully implemented, of the 2 terawatt-hour yearly heat demand of the 250,000 heat users in the area. District heating is worth USD 203.25 million (64.2%) of the Data Center Waste Heat Recovery Market in 2025, according to DC Market Insights estimates.

Data Center Electricity Use Doubles by 2030

Almost every kilowatt-hour a data center consumes leaves the building as heat. The IEA puts data center electricity consumption at 415 TWh in 2024, around 1.5% of world electricity consumption, and expects it to more than double to around 945 TWh by 2030; it estimates that around 70-80% of that heat is recoverable using heat pumps. Data centers in the European Union consumed 68 TWh in 2024, and the Commission expects 114 TWh by 2030. DC Market Insights models annual heat recovery additions rising from 121 MWth in 2025 to 392 MWth in 2030 and 646 MWth in 2035.

Market Trends: How Is Data Center Heat Reuse Changing?

The Data Center Waste Heat Recovery Market is moving from one-off pilots to utility-scale plants, from air-cooled to liquid-cooled heat sources, and toward packaged recovery modules.

Heat Pump Plants Grow to 180 MW

In May 2026, Fortum started heat production at two large data center sites in Finland whose plants combine 72 water-to-water heat pumps producing up to 180 megawatts of district heating with thermal storage of 800 megawatt-hours. Meta’s Odense data center in Denmark, operating since late 2019, sends approximately 45 MW of heat into the Odense district heating network, which according to the engineering firm behind it provides heat to more than 12,000 homes.

Liquid Cooling Raises Recovery Temperatures

Air-cooled data halls reject low-grade heat. Alfa Laval notes that low-grade heat, often 25–50 °C, requires energy-intensive heat pumps. Direct liquid cooling returns warmer water: Lenovo’s Neptune direct water cooling is designed to operate at water inlet temperatures up to 45°C, which allows for efficient reuse of the generated heat energy. At Infomaniak in Geneva, heat is recovered at approximately 40–45°C and Trane heat pumps raise it to 67°C in summer and up to 85°C in winter. DC Market Insights forecasts heat recovery from liquid cooling systems to grow at 30.32% a year, from USD 67.75 million in 2025 to USD 957.46 million by 2035, overtaking air-cooled sources by 2035. The cooling loops are covered in the Data Center Liquid Cooling Market report.

Packaged Heat Recovery Modules Shorten Projects

Suppliers now sell recovery as a product rather than a design. Danfoss offers a Heat Recovery Module designed in the size of a 40ft High Cube container, and HeatChain builds data boilers in 1 MW, 2 MW and 5 MW units, using Alfa Laval heat exchangers, that maintain an optimal 75–80 °C temperature. HeatChain-owned or operated data boiler facilities delivered 50 GWh of district heating energy in 2025 at an annualized Energy Reuse Factor (ERF) of 64%. Heat exchangers and heat recovery modules are worth USD 50.52 million (16.0%) in 2025 and grow at 18.52% a year, faster than heat pumps at 15.41%.

Market Challenges: What Holds the Data Center Waste Heat Recovery Market Back?

Only about 1.8% of data center heat in the European Union is reused today, and two constraints explain most of the gap: the cost of upgrading and moving the heat, and the lack of a heat user near many sites.

Upgrading and Transporting Heat Costs About USD 2.09 Million per MWth

The European Commission names the need to invest in upgrading and transferring the heat to off-takers as one of the challenges behind limited waste heat reuse. The Danish Energy Agency estimates the investment cost of high-temperature heat pumps at 1.55 million euros per MW of capacity. DC Market Insights estimates full-chain equipment cost at about USD 2.09 million per MWth of recovered heat in 2025 and expects it to fall only about 1.4% a year to USD 1.81 million by 2035.

Many Data Centers Have No Heat Network Nearby

DC Market Insights assumes that most hyperscale campuses in the United States and Asia have no heat network nearby. Regulation also lags in places: in Denmark, only around 13% of surplus heat is utilized, and the government agreed to remove the price cap on surplus heat only from 1 July 2025. Enterprise and edge data centers grow slowest, at 15.06% a year, because small sites rarely justify a connection.

Market Opportunities: Where Are the New Revenue Pools?

The two largest new revenue pools in the Data Center Waste Heat Recovery Market are recurring services on a fast-growing installed base, which grow at 24.92% a year, and industrial and agricultural heat users, which grow at 23.30% a year.

Services Grow to USD 592.08 Million by 2035

Every heat recovery plant needs monitoring, maintenance and heat metering for 15 years or more; Digital Realty, for example, has signed a 15-year contract with Samson AG in Frankfurt, with heating scheduled to begin in October 2026. DC Market Insights models services at USD 64.00 million (20.2%) in 2025 and USD 592.08 million by 2035, when they become the largest component at 33.6% of the market.

Industrial, Agricultural and Pool Heat Users

Heat users do not need to be cities. Industrial and agricultural processes such as greenhouses, fish farms and drying are worth USD 34.51 million in 2025 and USD 280.36 million by 2035 in the DC Market Insights model. Small edge sites can heat pools: Octopus Energy has invested £200 million in Deep Green, which plans hundreds of edge data centers within pools and district heating systems. Operators weighing these options alongside renewable power and efficiency targets can compare them with the wider Green Data Center Market.

Pricing: How Much Does Data Center Heat Recovery Cost per MW?

A complete data center heat recovery installation costs about USD 2.09 million per MWth of delivered heat in 2025, of which heat pumps account for about USD 0.98 million. These are DC Market Insights estimates for equipment at first sale, excluding the district heating network and civil works.

Cost per MWth (USD million)	2020	2025	2030	2035
Full equipment chain	2.24	2.09	1.95	1.81
Annual services per MWth installed	0.11	0.11	0.12	0.13
New capacity added (MWth)	36	121	392	646

Published projects sit inside this range. Fortum’s heat pump plants at the Microsoft sites cost approximately EUR 225 million for heat pumps producing up to 180 MW alongside electric boilers and storage, about EUR 1.25 million per MW of heat pump output on a DC Market Insights calculation.

Standards and Regulation: Which Rules Shape Data Center Heat Reuse?

Four sets of rules decide how much data center heat is reused: the EU Energy Efficiency Directive, the EU data center reporting scheme, Germany’s EnEfG and the ISO/IEC Energy Reuse Factor standard.

EU Energy Efficiency Directive (EU) 2023/1791. Data centers with a total rated energy input exceeding 1 MW must use their waste heat or other waste heat recovery applications unless they can show that it is not technically possible. Operators with an installed IT power demand of at least 500 kW must make their energy information publicly available as of 15 May 2024.

Delegated Regulation (EU) 2024/1364. The EU data center rating scheme required reporting operators to submit key performance indicators by 15 September 2024, then by 15 May 2025 and every year after. Waste heat reused is a reported indicator, and the ERF is calculated as waste heat reused divided by total data center energy. The Commission is preparing a legislative proposal on minimum performance standards for data centers.

Germany EnEfG. New data centers must reach a PUE of 1.2 or lower and a reused-energy share of at least 10% from 1 July 2026, 15% from 1 July 2027 and 20% from 1 July 2028. Existing data centers must reach a PUE of 1.5 or lower from 1 July 2027 and 1.3 or lower from 1 July 2030 under the current text; a draft amendment would ease these targets to 1.6 and 1.4.

ISO/IEC 30134-6. The ISO/IEC 30134-6 standard specifies the energy reuse factor as a key performance indicator that quantifies the reuse of the energy consumed in a data center, defined as the energy reused divided by all energy consumed.

Market Segmentation: Which Segment Leads the Data Center Waste Heat Recovery Market?

Heat pumps lead the Data Center Waste Heat Recovery Market with 37.5% of 2025 value, air-cooled systems supply 78.6% of the heat recovered, district heating takes 64.2% and hyperscale data centers lead buyers with 46.3%. Liquid cooling systems are the fastest-growing segment at 30.32% a year, because warm-water loops at 40–45°C cut the lift a heat pump must provide and make reuse viable at sites where it was not before.

By Component: Heat Pumps Lead with 37.5%

Component	2025 (USD million)	Share 2025	2035 (USD million)	CAGR 2025-2035
Heat Pumps	118.71	37.5%	497.76	15.41%
Heat Exchangers and Heat Recovery Modules	50.52	16.0%	276.40	18.52%
Piping, Pumps and Interconnection	58.10	18.4%	255.32	15.96%
Thermal Storage and Controls	25.26	8.0%	141.72	18.82%
Services	64.00	20.2%	592.08	24.92%

Heat pumps hold the largest equipment share because most data center heat leaves the building below network temperature. Their share falls by 2035 as liquid-cooled sources need less lift.

By Cooling Technology: Liquid Cooling Systems Grow Fastest at 30.32%

Cooling technology	2025 (USD million)	Share 2025	2035 (USD million)	CAGR 2025-2035
Air-Cooled Systems	248.84	78.6%	805.82	12.47%
Liquid Cooling Systems	67.75	21.4%	957.46	30.32%

Air-cooled halls still supply most recovered heat in 2025 because the installed base was built before liquid cooling. DC Market Insights forecasts liquid cooling systems, including direct-to-chip and immersion, to reach 54.3% of the market by 2035 as AI halls are built liquid-cooled from day one.

By Heat Application: District Heating Leads with 64.2%

District heating is worth USD 203.25 million in 2025 and reaches USD 1.03 billion by 2035, growing at 17.62% a year. Building and campus heating, where heat warms offices, universities or neighboring buildings on the same site, is worth USD 55.72 million (17.6%) and grows at 19.59% a year to USD 333.26 million. Industrial and agricultural processes grow fastest, at 23.30% a year, from USD 34.51 million (10.9%) to USD 280.36 million, as operators in rural and Nordic locations sell heat to greenhouses, aquaculture and food processing. Pools and other uses hold USD 23.11 million (7.3%) and grow at 17.90% a year to USD 119.90 million.

By Data Center Type: Hyperscale Data Centers Lead with 46.3%

Hyperscale data centers spend USD 146.58 million in 2025 and USD 874.59 million by 2035, growing at 19.56% a year, because their steady heat justifies a dedicated utility plant, as the Microsoft, Google and Meta schemes in Finland and Denmark show. Colocation data centers, where Equinix, Digital Realty and NTT sign heat supply contracts for metro sites, hold USD 121.89 million (38.5%) and grow at 18.98% a year to USD 692.97 million. Enterprise and edge data centers hold USD 48.12 million (15.2%) and reach USD 195.72 million by 2035.

DC Exclusive: The Heat Recovery Cost per MWth Model and Component × Heat Application Matrix

At USD 83.10 million in 2025, heat pumps for district heating are the single largest cell of the matrix and 26.2% of all data center waste heat recovery spending. The matrix below cross-tabulates what is bought against where the heat goes. It is a DC Market Insights model, not a shipment count: it is built from 44 inputs: 16 annual capacity cohorts (2020 to 2035), 16 annual equipment cost points per MWth, 4 component cost shares, 4 heat application splits, 2 services rates and 2 published utility plant costs used as a cross-check.

2025, USD million	District Heating	Building and Campus	Industrial and Agricultural	Pools and Other	Total
Heat Pumps	83.10	15.43	11.87	8.31	118.71
Heat Exchangers and Modules	26.27	13.64	6.06	4.55	50.52
Piping, Pumps and Interconnection	41.25	7.55	5.81	3.49	58.10
Thermal Storage and Controls	14.66	5.05	3.28	2.27	25.26
Services	37.97	14.05	7.49	4.49	64.00
Total	203.25	55.72	34.51	23.11	316.59

District heating projects spend 40.9% of their budget on heat pumps and 20.3% on piping and interconnection, because heat must be raised to network temperatures of up to 85 °C and carried to the network. Building and campus projects spend a larger share, 24.5%, on heat exchangers and modules, since many reuse heat at lower temperatures on site.

The model multiplies new recovery capacity (121 MWth in 2025) by equipment cost per MWth (USD 2.09 million) and adds services on the installed base. The model, its bound checks and its assumptions are explained on our research methodology page.

Regional Insights: Which Region Leads the Data Center Waste Heat Recovery Market?

Europe leads the Data Center Waste Heat Recovery Market with 68.4% of 2025 value, and Asia Pacific is the fastest-growing region at 23.97% a year, because Europe has both the heat networks and the rules, while Asia Pacific starts from a small base.

Europe Leads with 68.4% Share

European heat recovery spending was USD 216.55 million in 2025 and is forecast to reach USD 968.04 million in 2035, a CAGR of 16.15%. The Nordic countries host several of the largest plants: Fortum’s heat pump plants at the Microsoft sites in Finland, Meta’s Odense scheme in Denmark, and Google’s Hamina project, where the recovered heat represents an estimated 80% of the town’s district heating needs. Europe loses 13.5 points of share by 2035 as other regions catch up, not because its volume slows.

North America Holds 15.2% Share

North America is worth USD 48.12 million in 2025 and USD 357.95 million by 2035, a CAGR of 22.22%. DC Market Insights expects most North American projects to heat campuses, universities and neighboring buildings, a pattern that suits heat recovery chillers.

Asia Pacific Holds 12.6% Share and Grows Fastest

Asia Pacific is worth USD 39.89 million in 2025 and USD 342.08 million by 2035, a CAGR of 23.97%. China and Japan account for 64.9% of the region in 2025, and DC Market Insights expects liquid-cooled AI halls in northern China, Japan and South Korea to drive most growth, with heat sold to buildings, greenhouses and industrial users.

Middle East and Africa Holds 2.1% Share

The Middle East and Africa is worth USD 6.65 million in 2025 and USD 56.42 million by 2035, a CAGR of 23.84%. DC Market Insights expects recovered heat in the region to go mainly to absorption cooling and industrial uses, because demand for space heating is low.

Latin America Holds 1.7% Share

Latin America is worth USD 5.38 million in 2025 and USD 38.79 million by 2035, a CAGR of 21.84%, which DC Market Insights expects to come mainly from campus heating and industrial projects.

Country Analysis: Which Countries Reuse the Most Data Center Heat?

Germany is the largest country market for data center waste heat recovery at USD 42.44 million in 2025, 13.4% of global value, followed closely by the United States at USD 42.10 million (13.3%) and Denmark at USD 36.16 million (11.4%). The 12 largest countries account for 85.6% of 2025 spending.

Rank	Country	Region	2025 (USD million)	Share 2025	2035 (USD million)	CAGR 2025-2035
1	Germany	Europe	42.44	13.4%	241.04	18.97%
2	United States	North America	42.10	13.3%	317.14	22.38%
3	Denmark	Europe	36.16	11.4%	131.65	13.79%
4	Finland	Europe	34.43	10.9%	118.10	13.12%
5	Sweden	Europe	27.72	8.8%	100.68	13.77%
6	Netherlands	Europe	17.11	5.4%	80.35	16.73%
7	China	Asia Pacific	17.07	5.4%	137.52	23.20%
8	Norway	Europe	13.64	4.3%	66.79	17.22%
9	France	Europe	12.13	3.8%	61.95	17.71%
10	United Kingdom	Europe	11.26	3.6%	59.05	18.02%
11	Japan	Asia Pacific	8.82	2.8%	67.39	22.55%
12	Switzerland	Europe	8.23	2.6%	33.88	15.20%

China is the fastest-growing country market at 23.20% a year, ahead of Japan at 22.55% and the United States at 22.38%. The Nordic markets of Denmark, Finland and Sweden grow more slowly, at 13.12% to 13.79% a year, because their largest data center sites are already connected. The country figures are a DC Market Insights allocation of the regional totals, weighted by estimated recovery and data center capacity.

Forecast Scenarios: How Could the 2035 Forecast Change?

The Data Center Waste Heat Recovery Market reaches USD 1.76 billion by 2035 in the base case, with a range of USD 1.25 billion to USD 2.19 billion across the low and high scenarios.

Scenario	Assumption from 2026	2035 (USD billion)	CAGR 2025-2035
Low	Recovery capacity additions 28% below base; equipment cost 5% lower	1.25	14.70%
Base	Additions rise to 646 MWth a year by 2035	1.76	18.74%
High	Additions 22% above base; equipment cost 4% higher	2.19	21.35%

The low case keeps reuse concentrated in the Nordics; the high case assumes planned EU minimum performance standards make heat reuse routine for new large sites.

Competitive Insights: Who Leads the Data Center Waste Heat Recovery Market?

• Danfoss
• Johnson Controls
• Trane Technologies
• Vertiv
• Schneider Electric
• Alfa Laval
• Kelvion
• Oilon
• Swegon
• MAN Energy Solutions
• Mitsubishi Electric
• Carrier
• Fortum
• HeatChain
• Deep Green

The market is fragmented: DC Market Insights estimates that the five largest equipment suppliers hold about 38% of 2025 equipment value, because utilities tender heat pump plants project by project and local suppliers often win (basis: named contract awards and supplier disclosures). Oilon was selected as heat pump supplier for Fortum’s heat recovery from a major data center complex, with two plants producing nearly 40 MW of district heating at an output temperature of 85 °C and a total system coefficient of performance (COP) of 6.6. Danfoss reported total 2025 sales of EUR 9.4 billion, with global data center sales reaching approximately 7% of total sales, almost doubling year on year. Trane supplies heat pumps at Infomaniak in Geneva, where the system recovers 1.7 megawatts of heat at full capacity, and Alfa Laval supplies heat exchangers to HeatChain’s data boilers and heat pump components for an Odense data center heat recovery project that it says will help recover 100,000 MWh of energy per year.

Recent Developments

• In May 2024, Google announced a EUR 1 billion expansion of its Hamina, Finland data center campus together with a heat recovery project whose recovered heat represents an estimated 80% of Hamina’s district heating needs (Source: Business Finland news release).
• In April 2025, NTT agreed with Quartierswerk Gartenfeld to supply 8 MW of waste heat capacity from its 17 MW Berlin 1 data center (Source: Data Center Dynamics report).
• In November 2025, atNorth agreed to supply heat from its 22.5 MW DEN01 site in Ballerup, Greater Copenhagen, to heat more than 8,000 homes from 2028 (Source: atNorth press release).
• In February 2026, Johnson Controls previewed the YORK YK-HT two-stage centrifugal chiller, which enables heat pump and heat recovery applications and produces 140°F hot water (Source: Johnson Controls press release).
• In April 2026, Microsoft signed a heat reuse deal with Danish heat transmission firm VEKS covering the annual heating needs of approximately 6,000 households in Høje-Taastrup (Source: Data Center Dynamics report).
• In May 2026, Fortum started heat production at two large data center sites in Finland, with 72 heat pumps producing up to 180 MW of district heating; recovery of waste heat from the Microsoft sites begins step by step the following year (Source: Fortum press release).

We follow these heat supply contracts, plant openings and rule changes as they happen in our data center industry updates.

Methodology: How We Built the Data Center Waste Heat Recovery Market Model

DC Market Insights built this market as a niche model with bound checks, because no supplier discloses data center heat recovery sales. The model starts from about 165 MWth of recovery capacity installed at the end of 2019 and adds 16 annual capacity cohorts (2020 to 2035), each priced at USD 2.24 million per MWth in 2020, falling 1.4% a year. Services were added at USD 0.11 million per MWth of installed base a year. Every split sums to the total, and the result was checked against three bounds. First, a floor from named projects: Fortum’s approximately EUR 225 million plant investment alone, spread over 2023 to 2027, is below the modeled European value in each year from 2023. Second, a consistency check against reported reuse: the modeled installed base at the end of 2024 of about 453 MWth delivers about 1.90 TWh a year, consistent with the Commission’s estimate that about 1.8% of EU data center heat is reused. Third, two ceilings: modeled European heat pump spending stays below the cost of the large heat pumps that the European Heat Pump Association, citing Euroheat & Power, expects to be added to heating and cooling networks (2.5 GWth installed, rising at least 80% by 2030, at the Danish Energy Agency’s 1.55 million euros per MW), and the global market stays well below the data center sales of a single thermal supplier such as Danfoss. The analyst named on this page built the model, and the reviewer checked the arithmetic, the sources and the dates before publication.