February 2026
Authored by Reshape Strategies
Sponsored by the Ministry of Foreign Affairs of Denmark, NYSERDA, and IDEA
Data centers are major electricity consumers, and nearly all the electricity they consume ultimately winds up rejected as waste heat. In years to come, the amount of electricity consumed by data centers will increase significantly. Not only will their waste heat volumes grow in magnitude, but the quality of that waste heat will also increase, as changes in data centre design and operations mean that data centers will reject higher temperature waste heat, making it more favorable for heat re-use in the district heating sector. At the same time, there will also be increasing demands placed on the electric grid from decarbonizing heating and transportation. This presents both a challenge and an opportunity.
• Challenge: How can the electric grid keep pace with the demands from data centers, as well as electrifying heating and transportation, while meeting climate targets, at the least cost while maintaining reliability?
• Opportunity: Re-using waste heat from data centers helps avoid using fossil fuels to heat buildings (helping meet climate targets), and can also reduce the burden on the electric grid (reducing costs and supporting reliability).