BERLIN (Reuters) - Swedish utility Vattenfall [VATN.UL] expects strong growth in its environmentally-friendly communal heating network in Berlin and Hamburg as urban areas grow, a top executive said, helping Germany's efforts to cut emissions from power generation.

With one third of all electricity produced in Germany already coming from renewables, the country is next looking to reform residential heating, which accounts for 40 percent of energy-derived carbon dioxide emissions.

Communal, or district, heating networks - which generate heat in central plants and pump hot water into homes via underground networks - will play a central role in that switch and are part of a long tradition in Germany and Nordic countries.

Vattenfall's Germany chief Tuomo Hatakka said strong urban growth would raise its district heating customer numbers in Berlin and Hamburg by 25 percent up to 2025 from 1.7 million now.

Vattenfall's Berlin and Hamburg district heating systems account for 20 and 30 percent of district heating in the two cities respectively and are among the biggest in Europe.

ADVERTISEMENT

Berlin has added around 15,000 apartments and attracted 40,000 new residents annually in recent years amid a boom in the technology and healthcare industries.

"In Berlin, we could reach 50 percent district heat," Vattenfall's Germany chief Tuomo Hatakka told Reuters.

District heating accounts for just 9 percent of space and hot water heating in the European Union. Last year the European Commission published a strategy paper for heating and cooling - which account for around 40 percent of EU energy consumption - that aims to boost district heating and renewable energy use.

Over the next five years Vattenfall, one of Europe's largest heat providers, plans to invest two billion euros ($2.35 billion) in Berlin, half of that in district heating systems.

District heating systems typically are fired by so-called Combined Heat and Power (CHP) plants which generate electricity as well as heat, in a process that is much more efficient than pure power generation plants, which typically lose up to two thirds of the energy they use as waste heat.

Away from cities, the bulk of German households use individual gas- and oil-fired boilers for heating and most are old and inefficient.

"There is a lot to do to modernize this sector," Hatakka said.

Vattenfall's CHP plants in Berlin will gradually switch from coal to gas, and eventually they will use surplus electricity from wind turbines.

In February, Vattenfall decided to invest in a new gas-fired plant in the Marzahn district, it stopped burning coal in its Klingenberg plant in May and changed to gas, and in June it said its Spandau plant will switch from coal to gas and wind from 2020.

ADVERTISEMENT

Vattenfall sold its brown-coal burning German power plants last year and aims to become coal-free in Germany by 2030.

The company also plans to channel more waste heat from industry to its district heating plants.

($1 = 0.8524 euros)

(Editing by Geert De Clercq and Susan Thomas)