Fortum has begun construction on a heat pump plant in Finland's Kolabacken region of Kirkkonummi.
The plant is being built on Microsoft's data center site, where the tech giant is currently building its first facility in Finland. Another Microsoft data center is being built in Espoo.
The proposal is believed to be the world's largest data center heat recovery project.
The Fortum plant will be able to produce district heat independently with air-to-water heat pumps and electric boilers, which it will do when it launches in late 2025.
When the two Microsoft data centers come online, they will then provide their waste heat to the site. The facilities are expected to provide around 40 percent of the district heating needs of Espoo, Kauniainen, and Kirkkonummi.
The recycling of waste heat is expected to result in a gradual reduction of CO2 emissions of around 400,000 tonnes, Fortum said.
"Fortum is committed to phasing out the use of coal in district heat production by the end of 2025 at the latest in the district heating network of Espoo, Kauniainen, and Kirkkonummi in Finland," project manager Teemu Nieminen said.
"This is an important project, not only locally but also nationally, on the way to a carbon-neutral Finland."
The project was awarded European Union NextGenerationEU funding and investment support from the Ministry of Economic Affairs and Employment.