Global Economy faces a challenge of the need for rapid decarbonisation. Households are responsible for 17,8% of CO2 emissions. As vast part of this emission is used for heating and electricity, we are in need of innovations and original solutions in this area. Hence, the paper reflects the exploratory research carried out during the innovation process co-created by the Housing Cooperative Wroclaw South and District Heating Provider. Potential innovators are going to replace the existing unsustainable district heating system with more sustainable hybrid system combining air-heat pumps, powered by the electricity produced from photovoltaics and supported by district heating. This research paper based on grounded theory and multilevel perspective is a discourse on the source of innovation, participators’ motivations, innovation functionalities, and challenges of innovation in its initial phase. The paper contribution to science concentrates on the exploration of academically underrepresented social energy transition projects from the Central and Eastern European region, where the traditional district heating system constitutes the dominant part of the market.

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