Steam & Air-Conditioning Supply in European Union 2026: Industry Statistics & Trends

The Steam and Air-Conditioning Supply industry in the European Union focuses on the generation, collection, and distribution of steam, hot water, chilled water, and cooled air through localized pipeline networks for centralized district heating and industrial infrastructure. The sector is moving rapidly toward decarbonization, replacing fossil fuel systems with utility-scale electric heat pumps, biomass, and industrial waste heat recovery. According to official Eurostat figures, the EU's total gross production of derived heat reached 568 TWh in 2023 (Eurostat), while short-term industrial indexes showed that Euro Area producer prices for the industry reached 159.40 points in December 2023 (E

Industry snapshot

Key public data points

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What does the Steam & Air-Conditioning Supply in European Union industry cover?

This industry encompasses the operations classified under the NACE Rev. 2 system as Class 35.30, covering the production and distribution of steam and hot water for heating, power, and other utility purposes. It also incorporates the generation and piped transmission of chilled water or air for centralized district cooling networks, alongside the mechanical production of ice for both food and cooling applications.

• •Governed officially under NACE Rev. 2 economic classification code D35.30.
• •Includes industrial-scale combined heat and power (CHP) generation and dedicated boiler plants.
• •Excludes individual home heating installations or localized building-level HVAC repair.

Who operates in the industry and how is it structured?

The European market operates via regional monopolies or localized public-private concessions due to the high capital costs associated with physical pipeline infrastructure. Distribution networks are geographically concentrated in Northern, Central, and Eastern European member states where high urban density justifies the multi-million euro deployment of pipe networks.

• •Combined Heat and Power (CHP) plants accounted for approximately 57% of district heating installations in Europe by 2025.
• •Greenfield network development typically commands capital costs between EUR 800 and EUR 1,500 per meter of pipeline.
• •Networks expanded by over 3,500 kilometers across the European region in 2023 despite varying seasonal sales volumes.

What drives demand in the industry?

Demand is heavily dictated by seasonal climate fluctuations, urban density policies, and aggressive industrial decarbonization mandates across individual member state energy plans. Furthermore, the commercial and institutional sectors rely heavily on stable district cooling networks to regulate climate controls in large corporate offices and public buildings.

• •Residential consumers represented the largest application share at over 57% of total district heat usage in recent periods.
• •Energy poverty metrics track demand, with Eurostat reporting that 10.6% of EU citizens were unable to adequately warm their homes in 2023.
• •National energy and climate plans across Germany, France, Poland, and the Netherlands project an additional 8.5 million household connections by 2030.

Who are the notable companies in the industry?

The landscape features a mix of multinational utility operators, environmental service conglomerates, and localized municipal works ('Stadtwerke'). Companies leverage regional long-term concessions to maintain exclusive supply privileges over urban thermal grids while actively investing in fuel transition technologies.

• •E.ON SE operates extensive local thermal grids and energy infrastructure solutions across Germany and broader European regions.
• •Vattenfall AB manages substantial localized district heating and cooling infrastructure, maintaining prominent operations in Germany and Sweden.
• •Veolia Environnement SA handles municipal utility and specialized district energy networks through various regional European subsidiaries.
• •Fortum Oyj holds major centralized heating operations across Northern Europe, piloting large-scale corporate heat pumps and data-center waste-heat capture.

What are the recent trends and outlook?

The sector is witnessing a historical shift away from solid fossil fuels and natural gas toward renewable integration and advanced industrial symbiosis. Utilization of industrial excess heat, utility-scale electric boilers, and geothermal wells is accelerating to insulate regional grids against fuel price volatility.

• •Renewables and waste heat recovery grew to represent 44.1% of the European district heating and cooling energy mix by late 2023.
• •EU total gross production of derived heat from solid fossil fuels experienced an ongoing drop to 99 TWh in 2023.
• •The adoption of large-scale utility heat pumps and electric boilers within thermal networks jumped by 44% and 80% respectively in a single year.

How is the industry regulated?

Compliance structures are driven heavily by European Union climate packages, industrial emissions ceilings, and national sustainability taxonomies. Operators face tightening parameters on carbon expenditures alongside regional mandates that compel new construction projects to attach to municipal district energy grids.

• •Impacted directly by the EU Emissions Trading System (ETS) carbon pricing thresholds which influence fossil fuel baseline operational costs.
• •Regulated under EU taxonomy guidelines where NACE codes delineate the thresholds for environmentally sustainable utility networks.
• •Subject to individual member state alignment with the REPowerEU strategy to accelerate renewable energy deployment.

Government, statistical and trade sources used for this Claight analysis.

• Eurostat Electricity and Heat Statistics 2024 ·
• Eurostat Short-Term Business Statistics 2024 ·
• Euroheat & Power District Heating and Cooling Market Outlook 2025