But what if all that excess heat could be captured and reused to warm nearby homes and businesses instead?

That’s the premise behind “Can Data Centers Heat Our Buildings? Using Thermal Energy Networks to Reuse Data Center Waste Heat,” a recent policy brief by Ashley Besic, who studies how communities can turn this energy challenge into an opportunity.

We sat down with Besic to talk about why thermal energy networks (TENs) could be the missing link in America’s clean-energy transition, and what the U.S. can learn from countries already putting data center heat to work.

“Policymakers can strike the right balance by ensuring that local stakeholders are meaningfully involved in the planning, permitting, and negotiation processes,” says Ashley Besic. “If communities are part of the discussion from the start, you can create pathways for data centers to not only bring economic investment but also contribute to community resilience and decarbonization.”

Besic’s team argues that the path to scaling heat-reuse projects isn’t just technological - it’s political, requiring new frameworks that connect data centers, utilities, and local communities.

She points to Minnesota’s thermal energy network (TEN) legislation as a strong policy example that encourages waste-heat recovery and community benefits.

And while the U.S. is just dipping its toes into heat-reuse projects, Sweden, Denmark, and Ireland have already connected data centers to district heating systems that warm thousands of homes.

“One of the biggest barriers in the U.S. is that developers are still largely unfamiliar with thermal energy networks and tend to default to conventional cooling options,” Besic says. “To change that, we need more education, policy pilots, and demonstration projects that prove the model’s value.”

She adds that scaling up also depends on market growth, expanding the drilling workforce, and increasing heat-pump manufacturing capacity. As more projects succeed, developers and policymakers will start to see these systems as practical, reliable solutions with long-term economic and environmental payoffs.

How It Works…

For data centers designed with water-cooled systems, heat recovery is relatively simple. “Instead of a cooling tower using water to dissipate heat to the air, that rejected heat goes to the next building in a thermal loop,” Besic explains.

But older, air-cooled data centers are tougher to retrofit for heat reuse. The takeaway, she says, is that planning for recovery should start early—when a new facility is still on the drawing board.

Neighborhoods with a mix of large, consistent heat sources and nearby heat users are ideal candidates for pilot systems. “A data center can be connected to low-temperature-dependent industrial facilities—like food and beverage processing—or to residential buildings for space and water heating,” she says. “This setup allows waste heat to be recovered and reused rather than vented.”

A great example, she notes, is Con Edison’s pilot project in New York, which proposes using data center waste heat to provide space heating to an affordable housing building just a block away.

Germany recently began requiring new data centers to make their waste heat available to district heating suppliers. That experience could be a useful template for U.S. policymakers.

“Policymakers in the U.S. should see that this idea is not theoretical. It is already in use,” she says. “Germany shows the value of treating waste heat as a public resource. U.S. policymakers could set expectations for data centers to share waste heat, support utilities or third parties in using it through thermal energy networks, and pair requirements with incentives to speed adoption.”

The key is flexibility. “The key risk to avoid is a rigid mandate where no nearby heat demand exists,” she adds. Instead, she says, agencies should focus on thermal mapping—identifying where heat is produced and where it can be reused most effectively.

Many data centers still rely on diesel or methane backup generators, raising questions about how sustainable they truly are. That issue isn’t being downplayed, but waste-heat recovery still provides measurable progress.

“The ideal scenario is connecting a thermal energy network to a data center powered by clean electricity,” Besic explains. “Even if the grid isn't 100% clean yet, thermal energy networks still deliver net environmental benefits by eliminating gas furnaces in surrounding buildings and reducing overall energy demand through heat pumps.”

The people passionate about TENs projects hope that regulators view heat reuse as one piece of a larger transition plan - one that brings immediate local benefits while continuing to push operators toward fully renewable power.

Putting Communities First and the Future

In her brief, Besic highlights a case in Memphis where a proposed data center triggered community concerns over environmental impacts. She says such tension can be productive if it drives better planning.

“Communities can push for stronger protections and benefits by ensuring that data center projects begin with meaningful stakeholder engagement,” she says. “The approach for a thermal energy network tied to a data center will look different in a residential neighborhood compared to a campus, commercial district, or industrial zone, so it’s essential to start by understanding the priorities of local building owners and occupants.”

That foundation, she adds, can lead to community benefit agreements that ensure nearby residents see tangible rewards. “With clear planning and engagement requirements in place, data centers can be designed to serve surrounding communities rather than compete with them for resources,” she says.

Asked what the next decade might bring, Besic looks ahead optimistically.

“Over the next 10–15 years, I see waste heat recovery from data centers and all other sources becoming an opportunity for neighborhood-scale decarbonization,” she says. “If local sustainability teams, city and state energy managers, tech companies, utilities, and regulators align now, they can build projects that show how data center heat can sustainably serve nearby homes and businesses and potentially industry.”

She also predicts that as utilities experiment with shared thermal networks, waste heat could become a tradable resource. “The future is a thermal market where utilities, whether investor-owned or public, will likely continue to be the distributors of thermal energy to buildings, but they will be able to buy heating and cooling from merchants,” she says. “Those could be data centers, but could also be from anyone that has waste heat or cooling to sell to the loop.”

The message is simple: waste doesn’t have to be wasted. Data centers, if planned wisely, can become hubs of shared energy rather than silent resource drains.

“Over the next few years, we can turn what is currently a waste stream into a community asset—improving grid reliability, advancing environmental justice, and reshaping digital infrastructure into a backbone for cleaner, more resilient neighborhoods,” she says.