With fossil fuel running out in the foreseeable future, it is essential to develop substitution strategies. The heat market in industrial countries in the Northern Hemisphere has two peaks. The dominant one occurs at∼90°C and is due to the energy demand for space heating and warm water production. A smaller peak, mainly for metallurgical processes, occurs at∼1300°C. From thermodynamics considerations, using the high flame temperature of fossil fuels–or electricity–to supply the lower temperature range is obviously wasteful. On the other hand, contemporary light water reactor (LWR) technology makes it feasible to provide the space heating sector with hot water in a district heating network. Basically, existing reactor systems are adequate for this. Some 40 to 50% of the heat demand arises in the range below 120°C, causing a corresponding fraction of air pollution by SO2and to a lesser extent NOx, if fossil fuels are used. When analyzing an adequate district heating system, units in the 10- to 50-MW power range are found to be most suitable for Switzerland, both with respect to network size and the democratic decision-making structure. They would have the best chance of penetrating and covering the heat market. In a cooperative effort among some members of Swiss industry and the Swiss Federal Institute for Reactor Research, a small LWR for heating purposes only is being developed. The Swiss Heating Reactor (SHR) is a small, 15-bar boiling water reactor. Its core, together with its primary heat exchanger, is located in a reactor pressure vessel and a shroud within an underground water pool. This pool acts both as an emergency heat sink and as a biological shield and has a steel-lined concrete containment. The pool is dimensioned to leave the concrete ultimately inactive. The built-in safety and reliability of the SHR are better than for conventional nuclear power reactors, and the admissible risk curve to an individual is set correspondingly low. The economic target of 100 to 120 Swiss franc/MW·h heat for consumers seems achievable.