Espoo, Finland's second largest and fastest-growing city, has committed to becoming carbon neutral by 2030. District heating, which represents the highest portion of Espoo's CO2 emissions together with mobility, is central to this strategy.
The city collaborates with Fortum, the company responsible for district heating production and distribution in the Espoo area, to reduce emissions and enhance energy efficiency through innovative solutions. These solutions range from recycled waste heat from sewage waters, to heat pumps, heat accumulators and electric boilers.
Nevertheless, there is one example that sits at the centre of Espoo’s decarbonisation strategy – capturing waste heat from a large data centre. Through the Espoo Clean Heat programme, Fortum aims to achieve carbon-neutral district heating before 2030. Use of coal in district heating production ended in April 2024.
Espoo Clean Heat
The collaboration between Espoo and Fortum spans over a decade and has resulted in multiple strategic partnerships to achieve carbon neutrality. The Espoo Clean Heat Strategy is a key outcome of this collaboration, focusing on transitioning district heating to sustainable and carbon-neutral sources. Overall, the city aims at reducing 92% of the emissions that stem from energy production in the territory, compared to the levels in 1990.
Recently, Microsoft joined Espoo’s carbon-neutrality work to start building a new data centre there in the autumn of 2024, with two other data centres to be built in neighbouring municipalities.
These data centres will collect waste heat generated from cooling the servers, which will then be integrated into the district heating network. This innovative approach is expected to supply around 40% of the district heating needs in the area and reduce CO2 emissions by 400,000 tonnes annually compared to using coal. The initiative also involves using waste heat from other sources, such as Espoo's wastewater treatment process and smaller data centres.
What were the key drivers supporting the implementation?
- Political: Finland has a strategy for attracting data centres, including a lower energy tax rate for data centres using more than five megawatts of power, and lower tax rate for heat pumps connected to a district heating network. Espoo’s 2030 climate neutrality target is also a key driver.
- Multilevel governance: The national climate and energy strategy acknowledges the key role of district heating and cooling. The national government encourages the combination of district heating and local energy production.
- Geography and infrastructure: Espoo’s Nordic climate and excellent digital infrastructure makes it an ideal location for data centres, and its preexisting district heat system means that the capture of waste heat is possible at scale.
- Multistakeholder collaboration: Long-term collaboration with Fortum and recent partnerships with Microsoft and Caruna, Espoo’s DSO. These partnerships help in the creation of a sustainable and integrated energy system.
- Economic: The project is expected to create direct and indirect employment and training opportunities from the construction and operation of data centres.
- Legal: Espoo owns the public housing company Espoon Asunnot, with 17,000 homes, and on top of that there are over 100 city-owned buildings that are now under the provision of the district heating network already using the carbon-neutral heat product.
- Financial: Espoo continues to be attractive to companies and projects like data centres, which supports the vitality of the fast-growing city.
- Land use: One of the key factors allowing the use of waste heat is the proximity to the data centres which, in Espoo, have been strategically located.
And what were the challenges and barriers?
- Technical: Managing collaboration among multiple stakeholders, including private companies and different city departments.
- Social: Ensuring community support and handling public complaints, particularly regarding new infrastructure developments. Energy citizenship promotion, need to increase public knowledge on energy and emissions.
- Technological: Fast-paced electrification of both district heating production and mobility is a challenge for local electricity grid development and may create obstacles for new companies in locating in Espoo. This requires active discussion with all stakeholders.
Potential for replication
The Espoo model offers valuable insights for other cities looking to enhance energy efficiency and reduce emissions through district heating. The potential for replication is very high.
Transferable aspects include:
- Establishing high-level commitments and collaborative frameworks with energy providers.
- Using waste heat from data centres and other sources for district heating.
- Coordinating city planning and permitting processes to facilitate energy projects.
- Multistakeholder collaboration: establishing relationship with companies, academia and other organisations, focusing on development work that boosts recognition of the city's value as a partner. The city has six active strategic partnerships – with Forum, the Finnish National Technical Research Centre (VTT), Aalto University, Caruna energy company, the University of Helsinki, and Microsoft –but collaborates in its Climate City Contract with 25 climate partners.
Lessons learned and recommendations
- Political support from the highest levels in both the city administration and partner companies is crucial for successful collaboration. This ensures alignment of goals and commitment to the project's success.
- Effective communication is essential; establishing designated points of contact and maintaining open channels of communication with partners helps streamline project implementation and resolve issues promptly.
- Flexibility is another key lesson; continuously updating plans and being open to new technologies and approaches is vital for long-term success.
- Engaging with the community and addressing their concerns transparently can significantly enhance public support for energy initiatives, fostering a cooperative environment for implementing sustainable solutions.
https://www.fortum.com/data-centres-helsinki-region
Espoo Clean Heat in English: https://www.fortum.com/services/heating-cooling/espoo-clean-heat
Espoo Clean Heat in Finnish: https://www.fortum.fi/yrityksille-ja-yhteisoille/lammitys-ja-jaahdytys/kaukolampo/espoo-clean-heat
Municipal info on data centre: https://www.espoo.fi/en/hepokorvenkallio-data-centre
Carbon neutral Finland 2035 – national climate and energy strategy: https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/164323/TEM_2022_55.pdf?sequence=4&isAllowed=y
District heating information: https://www.fortum.com/about-us/blog-podcast/forthedoers-blog/clean-district-heating-public-transportation
Sustainable Espoo development programme: https://www.espoo.fi/en/city-and-decision-making/espoo-story/sustainable-espoo-development-programme