Why Germany's Energy Efficiency Act makes waste heat recovery a national priority

Germany’s Energy Efficiency Act (EnEfG) represents one of the most ambitious pieces of legislation targeting data centre energy performance. In our original blog, we looked at the Act’s framework and its implications for operators. In this piece, we focus on what it means for waste heat recovery, as this has been positioned as a key component of the Act’s goal of achieving a low-carbon data centre environment.  

While the EnEfG sets clear targets for waste heat recovery, in practice, this isn’t straightforward. With the growth of artificial intelligence, data centres are operating at higher densities, generating heat in different grades and volumes than was the case when the law came into force. This means that for energy reuse to take place, careful technical planning and early-stage design integration must be considered, not just by operators and engineers, but also by adjacent real estate developers, utilities, technology providers, municipalities, and policymakers. 

A refresher on the Energy Efficiency Act

The EnEfG, which became effective from January 2024, introduced ambitious targets for energy reuse in all data centres with a connected load greater than 300kW. New facilities coming online from July 2026 must achieve an energy reuse factor (ERF) of 10%, rising to 15% in 2027 and 20% in 2028. ERF measures the proportion of energy redirected outside the data centre’s IT and infrastructure operations. For context, a 30MW IT data centre, with a PUE of 1.2, would need to supply more than 3.6 MW of recoverable heat annually to achieve 10% ERF, which would rise to 7.2MW annually a few years later.

There are exceptions. Facilities may defer these obligations if municipalities or energy suppliers commit to developing heat networks within 10 years, or if local networks are unwilling to accept residual heat. However, these exceptions rely on external decision-making, which reduces confidence in investing in the region. Non-compliance with the Act could, from July 2027, lead to pressure on licensing, as highlighted by the ISO 50001 requirements. 

The timing of the Act and the release of ChatGPT and other AI tools make compliance more challenging. The Act was drafted based on the performance of data centres before the current shift towards AI-ready facilities had taken place. In 2020, when the Act was being conceived, the average rack power was 6-10kW per rack, and air cooling was standard. Today, within dedicated AI facilities, the average rack power density has increased to 60kW, with a typical range of 30 to 100kW, depending on the workload type. Some high-end deployments are already pushing beyond 100kW, with the latest generation of Nvidia GB300 processors approaching 120kW per rack. The size and scale of data centre facilities are also expanding. 

Data centre cooling strategies have had to adapt to keep pace with these demands, with liquid cooling now being the norm. However, whilst this delivers the additional cooling capacity necessary to support higher-density racks, it also changes the heat profile of the cooling system. This creates challenges when it comes to complying with the ERF rules, as operators are left trying to recover heat that may be significantly more than any local heat network can utilise, especially during the summer months.

Understanding residual heat recovery

Residual heat recovery refers to the process of capturing heat generated by IT operations and redirecting it for external use. The potential applications for this are most often to supply district heating systems, although it may be applied to industrial processes, swimming pools and even indoor farming. This offers both environmental and economic benefits to the operators. The effect can be significant too, with 3MW of heat potentially sufficient to meet the heating demand of 2,500 homes.

Telehouse Germany GmbH implements a heat recovery project in Frankfurt, where residual heat from its data centres is supplied to the neighbouring FRANKY residential quarter. This initiative supplies over 60% of the district's heating and hot water needs. The FRANKY site had the benefit of an existing pipework system, which had been installed in the 1990s.

This sounds great, but there are technical challenges that must be overcome to make it a reality. The data centre’s residual heat is often at a temperature of around 30-35°C. This means that heat pumps are needed to boost the supply temperature to a usable level for residential systems, typically around 70°C. Seasonal demand variations also create load profile mismatches, meaning that for much of the year, heat may go unused – for example, during the summer months when residential heating systems are not needed. Lastly, extensive infrastructure needs to be put in place so that the data centre can connect to the local heat network. This entails substantial investment in buried pipework, heat pumps, and the electrical infrastructure required to support them. Coordination with local municipalities and energy companies is often necessary, which can result in delays. And after all that, residual heat utilisation must still fall within the percentages dictated by the Act. 

The success of Telehouse’s FRANKY project is an illustration of what can be successfully delivered, where Telehouse was able to provide its residual heat. In the words of Dr Béla Waldhauser, CEO of Telehouse Deutschland GmbH: we had the waste heat, alongside a committed district heating utility provider, Mainova and real estate developer Instone, who all wanted to do the right thing for FRANKY. Without all such interested parties, it would not have been possible to make this a reality.

How do the Act and residual heat recovery intersect

The EnEfG’s ERF targets aim to shape the industry's perspective on residual heat reuse. Compliance with these targets is not just about capturing energy; it requires integration of heat reuse into the design of the data centre. It will impact each part of the project cycle, including site selection, which will need to consider whether the necessary infrastructure is in place and whether there is a demand for such heat. The availability of power and land for heat pump infrastructure will also need to be assessed.

Many projects will lack sufficient electrical capacity or available land to accommodate heat pumps. There may be no district heating network to which the proposed facility could be connected. Even if all these components could be put in place, unless there is sufficient demand, it may not be possible to utilise them all year-round.

The greatest challenge, however, is the gap between the ambitious aspirations of the EnEfG regulations and the reality on the ground. Whilst heat pumps and low-temperature distribution networks are available, to scale up their utilisation in the manner envisaged by the Act does not appear to be feasible, at least not within the timeline set by the ERF targets. A primary objective of the Act is to encourage data centre operators to facilitate residual heat recovery. Still, the truth is that the constraints on utilising this heat lie elsewhere and are beyond the control of data centre operators.

How can we solve this?

To deliver waste heat recovery effectively, we need changes across several areas:

1. Early integration: Waste heat recovery should be considered a priority for operators in the region from the outset. Its viability will inform site selection, data hall design, and the cooling strategy from the earliest parts of the project.
2. Collaboration between stakeholders: The viability of residual heat recovery is not just in the hands of data centre operators and designers. It requires a holistic approach involving utility companies, local authorities, and the government to provide strategic planning and support, ensuring that heat generation aligns with the local area's needs and can be distributed and utilised effectively.
3. Temperature thresholds: Historically, district heating networks have typically operated in the medium temperature range of 90-120°C. This was to reduce flow rates and thereby minimise pumping energy consumption. However, this approach is fundamentally incompatible with data centre residual heat reuse, as the supply temperature falls outside the range achievable with heat pumps and can only realistically be attained by burning fossil-based fuels in a boiler plant. It is also wasteful in terms of heat losses from pipework. The district heat networks of the future must be designed to operate within the low temperature range of 60-80°C. These temperatures are readily achievable with multi-stage heat pumps, using the low-grade residual heat from data centres as their primary source.
4. Regulation: As we maintained in our last blog, the intent of the EnEfG is good, although in practice, it can only work where there is full alignment of all the parts: heat production and collection at the facility, infrastructure in the form of energy centres and distribution networks, and a steady demand profile that ideally matches production. Failure to put all these components into place will likely render the scheme non-viable. The current framework places too much responsibility on data centre operators, who are just one part of a much wider and more complex ecosystem. Policymakers need to confront this fact and consider incentives and planning initiatives that encompass not just data centres but also extend to include energy supply companies, utility providers, local communities, building owners, and the Municipality.

Residual heat recovery is an exciting, environmentally friendly, and cost-effective solution for all stakeholders. It offers huge potential for decarbonising residential buildings, which are a major contributor to carbon emissions. Many would like to see it implemented more widely. However, the current regulations dictating it don’t take into account several fundamental factors governing its viability and are hence limiting its progress. If the widespread and effective reuse of data centre residual heat is to become a reality, then greater collaboration and a more holistic approach involving multiple stakeholders will be required.

Delivering effective waste heat recovery requires collaboration between engineering disciplines. We work with operators, developers, and utility companies to develop sustainable data centre design. To learn how we can support your next project in Germany, reach out to our data centre team.