District heating can use cogeneration in nearby power plant, so it essentially reuses waste heat from electricity production. There are even district heatings that use heat from nearby nuclear power plant.

Also note that modern systems does not use steam distribution, but high-pressure hot water distribution.

If you burn the gas in a power plant you turn something like 40% into electricity. You can deliver something like half of the remaining Joules as heat to homes, raising the overall efficiency to 60% or so. You can then use the 40% you have as electricity to run heat pumps, which put out something like 2-5 Joules of heat per Joule of electricity. In total this gives you a lot more Joules of heat per unit of gas than just burning the gas in the homes directly.

That assumes the power plant is near the people. In many places the power plants are in another state.

District heating of course only works when the power plant is near some district where people live.

Here in Netherlands, districted heating is considered green because the centralized heat is not generated using coal or gas. Instead the heat comes from burning trash or other industrial waste heat.

Geothermal makes so much sense conceptually. It seems ridiculous to run natural gas pipelines everywhere when there is a limitless supply of heat under every house provided one drills down far enough. Hopefully the process can be simplified and costs can be reduced significantly.

> Today, why burn natural gas at a central plant and then have to manage a complex steam distribution network with associated losses when you can simply distribute natural gas instead and get 98% AFUE at the point of use?

- efficiency of gas heaters, both with tanks and without, is definitely not 98%. Only the most modern condensing boilers can achieve over 90% efficiency, and the utter majority of heating systems are old clunkers [2].

- a central plant can/has to install exhaust and condensate filtering systems, whereas decentral heaters just pipe their exhaust into the environment

- gas lines are a massive fire and explosion risk

- decentralized heaters that are based on burning anything are carbon monoxide risks - in Germany alone, it's usual to have a dozen people or more die due to CM poisoning by a defective heater [3] each year.

- a district heating system can be adapted to different fuels (anything from trash over oil to gas or geothermal energy can be used), whereas a switch of the heat source is completely out of the question in a decentralized system (which is a real big issue here in Europe at the moment, as alone in Germany half the heat is generated by gas burners [4])

- a central plant can also use energy to power electricity generators, thereby improving total efficiency

> You dont really insulate the steam distribution pipes

Of course we do. Right around the corner where I live there is a centralized heating in construction, and these pipes are heavily insulated.

[1] https://en.wikipedia.org/wiki/Condensing_boiler

[2] https://www.effizienzhaus-online.de/zwei-drittel-aller-heizu...

[3] https://www.focus.de/immobilien/wohnen/wohnen-13-tote-durch-...

[4] https://www.bmwi-energiewende.de/EWD/Redaktion/Newsletter/20...