Kozani’s Green Heat Transition: Phasing out Lignite and Natural Gas towards Net Zero

For decades, Western Macedonia was Greece’s energy hub, supplying over 70% of the country’s electricity through lignite-fired power plants. The coldest region in Greece, Kozani and its surrounding municipalities rely heavily on district heating (DH), which has provided affordable and efficient heating to thousands of households for over 20 years. However, the phasing out of lignite—accelerated by rising carbon costs, EU climate policies, and national energy reforms—has created an urgent need to transition away from fossil fuels.

Phasing out Lignite and Natural Gas

As the last of the lignite-fired power plants is scheduled to shut down in 2027, Kozani’s DH system faces supply disruptions and financial instability, making it imperative to shift to renewable heat sources. Without a sustainable alternative, heating costs will rise, impacting residents, businesses, and municipal services. The city’s Green Heat Transition Plan aims to reduce emissions, enhance energy security, and maintain affordable heating by integrating solar thermal, heat pumps, and energy efficiency measures. 

This transition is critical not only for decarbonisation but also for ensuring Kozani’s long-term economic resilience.

Kozani's Heat Plan

Kozani’s Climate Neutrality Action Plan outlines a phased transition from lignite-based heating to a diverse mix of cleaner energy sources. The initial strategy (2025-2026) maintains partial reliance on existing infrastructure, introducing electric boilers powered by green electricity. By 2027-2028, the system will shift toward a combination of cogeneration (CHP), solar thermal, and heat pumps, reducing emissions significantly. A further expansion of renewables by 2029-2030 will bring Kozani’s DH system close to climate neutrality, with a CO₂ emissions reduction of over 90%.

Through this process, Kozani has gained key insights:

• Policy & Governance: Strong municipal leadership is essential to navigating national policies that still prioritize natural gas over renewables.
• Financial Planning: Sustainable heating transitions require diverse funding sources, including EU grants, national funds, and municipal investments.
• Technology & Infrastructure: Combining different heat sources—rather than a single replacement—ensures flexibility, cost-efficiency, and long-term sustainability.

Currently, a new investment in natural gas is supported by the government as the central mid-term solution to phasing out lignite while also investing in a mix of greener solutions. Kozani, as a climate-neutral city, is also exploring the possibility of investing in alternatives acknowledging the short-term deadline of 2027. It thus constitutes a seminal case of the constraints that the representatives of a mid-size city in transition are dealing with in the context of a rapid energy transition process, while also adhering to the net-zero goal it has committed to. 

The role of district heating in Kozani’s heating strategy

Kozani’s district heating system is a vital asset, covering 99% of heating needs in the city and nearby areas. It remains the most efficient way to provide large-scale heating while reducing emissions, improving air quality, and stabilising costs for residents and businesses.

Rather than abandoning DH, Kozani is committed to upgrading it with cleaner energy sources, ensuring a just transition for the region’s economy, workforce, and energy consumers. The transition strategy prioritises:

• Expanding renewable heat integration (solar thermal, heat pumps, and biomass).
• Modernising the DH network to enhance efficiency and minimise losses.
• Ensuring affordability by securing financing and keeping tariffs competitive. 

With a clear roadmap, stakeholder engagement, and strategic investments, Kozani aims to become a model for fossil-free district heating in Greece.

The main challenges Kozani is facing in detoxifying its heat: 

• Dependence on Fossil Fuels (Lignite and Natural Gas): Phasing out lignite involves significant infrastructure transformations and financial costs. Despite governmental support for natural gas as an intermediate solution, Kozani seeks viable alternatives aligned with its ambitious climate-neutral commitments.
• Financial Constraints and Investment Needs: A substantial upfront investment of approximately €124 million is required, making it essential to secure additional funding from EU and national sources. Diversifying funding streams and attracting private investment is critical to moving forward.
• Identifying the Optimal Renewable Energy Solution: Selecting the most effective, scalable, and implementable renewable energy technologies—such as solar thermal, heat pumps, or biomass—to replace lignite and gas is crucial. The city must balance technical feasibility, cost-effectiveness, reliability, and long-term sustainability.
• Achieving Political Consensus and Stakeholder Alignment: Reaching political agreement across municipal, regional, and national authorities to adopt and implement renewable district heating solutions remains challenging. Building consensus and aligning strategic interests at all governance levels is essential.
• Addressing Increased Energy Costs for Citizens: The transition to renewable energy sources is expected to raise heating costs initially. Effectively managing and communicating these increases to ensure public acceptance, while exploring subsidies or alternative financing mechanisms to minimize the financial burden on residents, is a key priority.
• Timely Project Implementation Amid Delays: Kozani is already facing implementation delays, notably with the Combined Heat and Power (CHP) unit and uncertainties around renewable energy selection. Ensuring timely project completion to meet the ambitious 2027-2030 transition timeline is critical to maintaining public trust and achieving climate targets.

Next steps:

1. Confirm the Optimal Renewable Energy Solution: Kozani will finalise the selection of the most suitable renewable energy solutions through a high-level participatory workshop with the participation of Mayors and EU institutions. The workshop aims to build political consensus and stakeholder alignment on the renewable energy mix to be adopted in Phase III of the district heating transition.
2. Implement Phase II Investments: Proceed promptly with the implementation of the intermediate solutions, including the cogeneration of heat and power (CHP) unit powered by natural gas, the thermal solar installation, and the electric boiler. These interventions will secure stable and affordable heating in the short term, reducing immediate dependency on lignite.
3. Secure Funding for Phase III Investments: Identify and secure diversified funding streams—including EU grants, national funds, and potential private investments—for the comprehensive transition to renewable energy solutions as outlined in Phase III.
4. Implement Phase III (Renewable Energy Integration): Execute the integration of renewable energy technologies selected through stakeholder engagement, ensuring the timely and effective decarbonisation of Kozani’s district heating system. This phase will position Kozani as a leading example of sustainable urban energy transition in Europe.

Where the city is in its heat strategy

Kozani's Heat Detox

Key Heat Figures

• Emissions related to heating: 91,813 tn CO2 (2018-2020 baseline)
• Percentage of renewables in heating system: Currently low, aiming for at least 40% by 2030
• Planned investment of €223.2 million to transition to greener heating sources by 2030
• Lignite dependency to be phased out by 2030
• Integration of solar thermal, heat pumps, and electric boilers 

Covenant Figures 

• Signatory to the Covenant of Mayors since: 2011 

Overall CO2 emission reduction target: 80%

• % GHG emissions reductions by 2030: 40%

City Awards

• Mission Cities

Related links 

• Kozani Climate Action Plan
• Kozani's Pilot City Activity: NEUTRON
• STARDUST HORIZON Project