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The energy giant, the historic operator, has been ousted by the City of Paris in favor of a consortium led by Dalkia, Eiffage and RATP for the next 25 years.

A major twist. Late Tuesday afternoon, the City of Paris revealed the winner of the tender for the capital’s urban heating network. The Dalkia, Eiffage and RATP Solutions Ville consortium was selected after five years of work and 27 months of consultation. It marks a setback for Engie, the historic operator of the Paris heat network, which was competing against the consortium. It is a huge disappointment for the loser, which had hoped to validate its strategy with this contract. Both groups are refusing to comment on the decision, which must still be put to a vote by the Paris Council on December 16 before being formally approved.

The choice of the winning bidder is highly symbolic and goes beyond Paris. It is not just a 25-year contract worth around €15 billion in revenue. The Compagnie parisienne de chauffage urbain (CPCU) serves as a showcase for its concession holder, in France and worldwide. The Paris heating network is the largest in Europe after Moscow’s. Its 530 km of underground pipes provide heating and hot water to 6,000 buildings in the capital, serving more than 450,000 housing units—nearly 1 million Parisians. It also supplies energy to sixteen heat networks across the metropolitan area, including those in Clichy, Issy-les-Moulineaux and Levallois-Perret.

Since the 2022–2023 energy crisis, the French government has made heat networks a key driver of the energy transition, as heating accounts for 66% of national energy consumption. France currently has just over 1,000 heat networks, with a target to triple that number by 2035. Interest in this solution extends well beyond France. Whether renewing contracts or accessing new opportunities, competition among operators is fierce. Winning Paris is a prestigious asset to leverage in other markets.

The enthusiasm for heat networks stems from their advantages. They accelerate the decarbonization of cities—and industries—by relying on renewable energy sources: waste-to-energy, and increasingly biomass, geothermal energy and waste heat (heat generated during industrial processes). Above all, they provide stability for heating and hot-water bills for households, businesses and public services. Urban heat networks are less exposed to fluctuations in gas and electricity prices, as heat production increasingly depends on local, renewable resources. These networks are also increasingly designed to provide cooling in summer, in addition to heating in winter. They consume far less energy than conventional air-conditioning systems.

This aligns with the goals of the City of Paris, which aims for carbon neutrality by 2050. It expects the new concession holder to green its energy networks, which must be supplied exclusively from renewable and recovered energy sources. In its original version, the tender required a phase-out of coal—a requirement now obsolete, since no coal-fired plants supply the Paris network anymore.

The schedule is already being criticized. “A contract binding Paris for several decades cannot be decided by a departing majority just months before a decisive election. The decision should be made by the future majority elected in 2026, after public debate,” argues Pierre-Yves Bournazel, Horizons and Renaissance candidate for mayor of Paris. He had been advocating for several years to postpone the review of applications until after the 2026 municipal elections. Such a delay would not have been unusual for a contract that, in nearly a century of existence, has already undergone fifteen amendments.

The Compagnie parisienne de chauffage urbain was created in 1927. The network has since been managed as a public-service delegation between the City of Paris and the Compagnie générale française de chauffage urbain (CFGCU), which later became the CPCU. In keeping with the original structure, the company is now owned 66.5% by Engie and 33.5% by the City of Paris. Fifteen amendments have extended the original contract. In February 2024, the Paris Council decided to add two more years, explaining that “the health and energy crises had affected preparation of the new concession agreement.” A fourteenth amendment postponed the deadline from 31 December 2024 to 31 December 2026. A fifteenth added one extra day to allow for accounting alignment on 1 January 2027.

Another concern: Dalkia has been the subject of recurring rumors. The group could reportedly be sold by its parent company, EDF. “This creates major uncertainty regarding this bidder’s ability to commit,” adds Pierre-Yves Bournazel, who believes that “continuing the process under these conditions could weaken competition.” However, industry sources praised “the expertise of the City’s teams” and the “quality of the discussions.”