Heating Up: Navigating growth barriers in Swiss district heating

District heating will be instrumental in the decarbonisation of the Swiss energy system 

Currently supplying only 7% of national heating demand, district heating will need to expand significantly to meet the federal government’s target of 24% by 2050. Delivering on this ambition will require substantial investment in infrastructure and the development of low-carbon, low-temperature heat sources, such as lake water and waste heat. Public-private partnerships are already taking shape across the country. 

Stable pricing is another critical element in supporting the expansion of district heating. In contrast to fossil-based heating systems, district heating prices tend to remain stable even when global energy prices are volatile. That said, our analysis shows that operators often underprice district heating, particularly in the early years of operation. While this improves the competitiveness of the offering, it also limits operators’ capacity to invest in further development. 

A fragmented landscape undermines investment attractiveness 

The Swiss district heating market remains highly fragmented. Most of the country’s 1,500+ networks are operated at the local level, with limited integration or interoperability between them. Furthermore, district heating remains largely under public ownership, whether through cantonal utilities or municipal energy departments. 

Limited scale, combined with unclear risk-sharing and return structures, undermines the investment attractiveness of the market. This, in turn, hampers the development of new infrastructure, especially in greenfield or semi-urban areas. M&A activity has been limited so far, partly due to a lack of large, investable targets, and partly because public shareholders are reluctant to sell off assets. That said, a number of attractive investment opportunities exist, particularly in new, low-temperature greenfield networks, industrial campus solutions, and integrated heating and cooling systems for new housing developments. Energy-as-a-Service (EaaS) solutions also present a promising avenue, as they enable the development of scalable, bankable district heating assets. 

Well-aligned strategies and targeted investments will be key to success 

For energy providers, strategic alignment between investment, stakeholder expectations, and long-term operating performance will be key. This means prioritising infrastructure that meets industrial and residential demand while enhancing cost and energy efficiency. Additionally, it means navigating complex permitting and land acquisition processes, particularly for high-temperature systems, and addressing capacity constraints in skilled labour and engineering resources. 

Fourth generation heating technologies, including waste heat capture, low-temperature networks, and combined heat and power systems, are also becoming increasingly attractive from a risk-return perspective. At the same time, operators must focus on operational efficiency, starting with accurate heat demand modelling, digitalisation of planning and operating processes, and modularisation of network design. 

How Eight Advisory can support you 

In the district heating sector, Eight Advisory provides specialised support through its Strategy & Operations Energy & Infrastructure team, focusing on four key areas: network acquisition, performance improvement, operational excellence, and complex financial modelling. 

Our pan-European team combines deep sector knowledge with hands-on implementation capabilities. Whether you are planning new infrastructure, improving existing networks, or seeking investment, we are ready to help you achieve your goals. 

Download our whitepaper to learn more about the Swiss district heating sector and how Eight Advisory can support your growth and decarbonisation journey.