This is how green Heat as a Service can accelerate the energy transition

Europe is striving to be the world’s first climate-neutral continent by 2050. But on the way to climate neutrality, green heat solutions are still lagging. Regenerative Heat as a Service partnership can become a game changer for speeding up the energy transition. Here’s how it works. 

"Just as power purchase agreements have transformed the ability of businesses to source electricity from renewables, Heat as a Service enables businesses to access renewable heat solutions without having to make the initial investment," summarizes Mariana Heinrich, Director Energy, World Business Council for Sustainable Development (WBCSD).

Let’s take a closer look at the share of renewable energy in Germany as one of the biggest countries in the EU: While 52% of electricity in Germany was already generated from renewable sources in 2023, according to the Federal Environment Agency, no more than 19% of Germany's heat supply came from renewable energies. The situation is even worse for process heat, which is required for industrial production and accounts for around two-thirds of energy consumption in German industry. Just six percent of the energy required for process heat is currently covered by renewable energies.

Why are green heat solutions still lagging behind?

The slow implementation of the heat transition is not least because renewable heating solutions for companies or municipalities usually mean high investments, high operating costs, and high risk. For example, investments have to be made in expensive, highly complex, and not widely established technology, as well as in maintenance and servicing. In addition, staff has to be hired and specially trained for operation. Last but not least, the few options for green heat already available to companies are far from easy to implement for every industry. For example, very high temperatures are required for process heat in industry or food production, where many renewable heating technologies fail. Process heat is a necessary production factor whose instability will close down the factory and, therefore a highly sensible subject to discuss.

This is where climate-neutral Heat as a Service (HaaS) solutions come into play. The World Business Council for Sustainable Development published a detailed practical guide explaining the principle of HaaS and highlighting the extensive benefits such models offer companies. It describes HaaS as an "innovative business model and financing mechanism that companies can use to integrate green heat solutions into their operations without making the upfront investment."  

How exactly does Heat as a Service work?

It involves two parties entering into a HaaS partnership: A company or municipal utility that wants to decarbonize its heat supply or heating network and an energy service provider, that produces and provides climate-neutral heat. The energy provider takes care of designing a suitable heat solution, covers the investment costs, constructs and operates the systems, and feeds the heat into the existing heat network. 

Probably the biggest obstacle for companies when switching to green heat - the high investments that must be made - is eliminated during a HaaS partnership. It also offers another advantage, which is particularly important given the highly fluctuating energy prices: the heat can be offered at stable prices under long-term contracts.

Sounds good in theory, but what does HaaS actually look like in practice?

Let’s look closer at climate-neutral HaaS solutions based on pyrolysis technology and Biochar Carbon Removal. This enables companies to use this complex method of heat generation without having to build up new expertise. 

Green heat through pyrolysis is particularly climate-friendly: in the pyrolysis process, biomass is carbonized, producing biochar and regenerative surplus energy. The main part of carbon present in the biomass is bound and stored in the biochar. This allows CO₂ to be removed from the atmosphere in addition to heat production. Energy service providers specialized in the distribution of biochar ensure that the captured carbon is added to a permanent sink, such as agricultural soil or concrete. 

The energy provider also organizes the biomass supply, which might be another barrier for companies since it requires additional skills that might not have a strategic fit to their core business. In the case of Biochar Carbon Removal, it’s also possible to integrate the service of recycling biomass. Usually the pyrolysis plant can be implemented within a relatively short period of 12 months.

HaaS best practices: Decarbonizing industry and making district heating greener

There are already examples of biochar-based green HaaS partnerships in Germany, both for industry and for municipal utilities. A large manufacturer of slewing bearings integrated a pyrolysis plant into its production site in 2022, enabling the company to switch almost half of its site heating requirements from fossil fuels to renewable heat generation. Climate-neutral heat is used as hot water for the heating circuit, which heats offices and production halls, as well as the shower water in the employees' social rooms.

Thanks to a HaaS partnership, the municipal utility of Grevesmühlen in north-east Germany since 2023 feeds green heat generated through pyrolysis into the town's district heating network, thereby making the supply of around 1,800 connected households greener and increasing the share of renewable energy from 60% to 75%. 

Who should consider a HaaS partnership?

In general, any municipal utility or company with continuous heat consumption should consider a HaaS partnership as part of its decarbonization strategy. Biochar-based green HaaS solution can be provided in the form of warm water, hot water or process steam depending on demand and can therefore also cover the high temperatures required for industrial production. In any case, companies should have a certain pioneering spirit, be open to innovative technologies and want to actively promote climate neutrality. 

Just recently, the municipal utilities of the German city Bochum announced, that it will be sourcing climate-neutral heat from a biochar-producing pyrolysis plant from 2025 on. This makes them the first municipal utility in a major German city to source climate-neutral heat from biochar production for its district heating network using the HaaS model – a major step not only for the heating transition in Germany but also on the way to reaching climate neutrality in the EU, that many other climate pioneers will hopefully follow. 

This article is also published on the author's blog. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.