Heat Network Regulation

The introduction of heat network regulation marks a significant change for the sector, and all building owners, developers, landlords, operators, and suppliers will need to get up to speed with new regulatory responsibilities.

From 27 January 2026, heat network operators and suppliers need to be authorised by Ofgem and comply with minimum consumer protections. Further regulation will introduce technical standards for new and existing heat networks and a zoning framework that will require new and certain existing buildings within designated zones to connect to a heat network.

If you own, operate, or are connected to a heat network, or are responsible for supplying heat or cooling to tenants, it is essential to review how regulation will impact you and whether you will be considered a heat network "operator" or "supplier".

Our Heat Network Regulation page brings together insights on the regulatory position and latest consultation proposals, with practical advice on how to prepare. If you are concerned about how regulation may impact you or your organisation, please get in touch with our Energy and Sustainability team.

What is a heat network?

Heat networks supply heat (or cooling) to customers through a network of insulated pipes. This could be from a centralised energy source (e.g. a gas boiler or heat pump) or from shared ground loop systems in combination with individual consumer heat pumps.

Networks can vary widely in scale – from city-wide district heat networks serving thousands of customers to a single building with centralised plant.

Decarbonising the energy source of the heat network can deliver significant carbon savings - from deep and shallow geothermal, water and biomass, to using waste heat generated from data centres, energy from waste plants or industrial processes. With UK Government ambition to grow the sector to meet 20% of all national heat demand, low-carbon heat networks will play a vital role in the transition to Net Zero by 2050.

Regulated Activities

From 1 April 2025, "operation" and "supply" became regulated activities. Any person undertaking a regulated activity on a communal or district heat network needs to be authorised by Ofgem.

The "operator" is the entity that controls the transfer of thermal energy on that network. This will be the asset owner or an entity that has significant control over the network infrastructure and ability to make decisions around investment and upgrades to the network.
The "supplier" is the entity that holds a heat supply contract (or equivalent) with customers, with control over the terms of that contract.

In most cases, the building or asset owner will be both the "operator" and "supplier", unless substantial control over operation and/or supply has been given to another party.

How to comply

Now is the time to consider whether regulation impacts your organisation – particularly where you may be carrying out a "regulated activity". Existing contractual arrangements need to be reviewed and updated to reflect the new regulatory requirements – including terms of supply and associated policies and procedures.

For new developments, new technical standards are likely to have an impact on specifications and programme – and so early consideration is key.

Timeline

All existing heat network operators and suppliers must register with Ofgem by 26 January 2027.

" " From January 2027, heat network operators and suppliers will need to apply to Ofgem for authorisation before carrying out a regulated activity.

Chris Paul

Partner, Head of Energy and Sustainability

London

+44 (0)20 7423 8349 Email me

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Stay informed in an evolving regulatory landscape

Consumer protection

Any person that operates a heat network or supplies heat or cooling to consumers will need to comply with authorisation conditions set by Ofgem. covering areas such as billing and transparency, protections for vulnerable consumers, security of supply, and quality of service.

Through ensuring transparency of information, fair pricing and improvements in reliability and service, the aim is to provide an equivalent level of protection as afforded to gas and electricity customers.

Ofgem has published a series of guidance documents to assist heat network operators and suppliers to understand their obligations which can be accessed here.

Technical standards

The Heat Network Technical Assurance Scheme (HNTAS) is the new compliance framework for technical standards and will mandate minimum technical requirements and metering requirements for new and existing heat networks.

For new developments, heat networks will be required to demonstrate these minimum technical standards have been met before entering each phase of design, construction and operation.
Existing heat networks will be assessed after a set period of time to ensure minimum requirements are met, with a transition period to submit improvements plans and install minimum levels of metering.

The aim is to ensure a minimum level of performance and reliability for heat networks in the UK, alongside reducing carbon emissions, improving affordability and consumer experience, and building evidence through better data collection and reporting.

Heat network zoning

Zoning is intended to significantly accelerate the roll-out of district heat networks. By providing heat network operators with a guaranteed customer base, zoning is intended to give greater confidence to heat network investors, operators and suppliers, and unlock private investment in the sector.

New and existing buildings within designated heat zones may be required to connect to a heat network (unless they qualify for an exemption).

All investors, developers, landlords and other relevant stakeholders will need to be aware of zoning policy when planning new developments or retrofitting existing buildings.

Consultation series

Ofgem and the Department of Energy Security and Net Zero (DESNZ) have run a number of consultations on the regulatory proposals, starting with building a market framework in 2020.

Our Consultation Series took a deep dive into the key provisions of the consultations launched on 7 November 2024, that focus on implementing consumer protections and the authorisation regime and regulatory proposals.

How we can help you

Our Energy and Sustainability team advise a wide range of clients on district and communal heating and cooling projects, including property developers, landlords, local authorities and commercial and industrial off-takers.

We advise on the full suite of contractual documents and provide early advice on phasing and procurement, risk management exercises and management of negotiations through to finalisation of contracts.

If you are concerned about any of the issues raised under the consultations or how regulation may impact you, please get in touch with a member of our Energy and Sustainability team.

Countdown to regulation series

In 2025, our monthly Countdown to Regulation newsletter covered updates on policy, guidance and consultations, and how to prepare for the introduction of regulation in January 2026:

July edition – Our first newsletter looks at the Ofgem and DESNZ proposals for consumer protections and heat network regulation.
August edition – This month's update examines the Government response to consultations on implementing consumer protections and authorisation and regulatory oversight, published on 8 August 2025.
September edition – In this edition, we look at the latest consultations and guidance published, alongside the HNTAS regime and available grant funding opportunities.
October edition – This month's update looks at fair pricing proposals, due diligence for existing heat networks and how to future-proof your organisation for regulation.
November edition – In November, Ofgem published a series of further consultations, including a consolidated set of authorisation conditions, guidance on registration and reporting. This edition also includes an update on the publication of TS1 – The Heat Network Technical Standard.
December edition – Our final newsletter in this series looked at the latest updates from DESNZ and Ofgem and how to prepare ahead of the January 2026 launch date.