Heat networks supply heat (or cooling) to customers from a centralised energy source through a network of insulated pipes, removing the need for individual boilers in each connected building. Networks can vary widely in scale – from city-wide district heat networks serving thousands of customers to a single building with centralised heating. Low-carbon heat networks will play a vital role in the transition to Net Zero by 2050, with UK Government ambition to grow the sector to meet 20% of all national heat demand.
From the introduction of regulation later this year, heat network operators and suppliers will need to be authorised by Ofgem. This 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.
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".
Key regulatory proposals
On 7 November 2024, Ofgem and the Department for Energy Security and Net Zero launched the latest round of consultations on the new heat network regulations. These follow on from the original consultation on consumer protection, published in August 2023, and focus on implementing consumer protections and the authorisation regime and regulatory proposals.
This series of articles looks at the consultation proposals in detail and how to prepare:
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Overview of the key proposals under Ofgem and the Department for Energy Security and Net Zero's latest round of consultations. |
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Will heat network regulation impact you? With multiple parties often involved in the supply of heat or cooling to customers, it is essential to determine which entity will be the authorised "operator" and "supplier" for existing and future heat networks. |
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Ofgem's Standards of Conduct, a set of outcome-focused principles, are intended to underpin relationships with consumers and will form a key part of the authorisation regime for heat network operators and suppliers. |
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Ensuring that heat is supplied at a fair and transparent price is a key objective of the regulator. This article examines Ofgem's proposals around pricing and how this may impact heat network operators and suppliers. |
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Protecting and supporting vulnerable consumers is a primary objective for Ofgem – but with a much smaller customer bases than gas and electricity markets, how will this impact heat suppliers? |
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Heat contracts, billing, and landlord and tenant legislation |
With new proposals to "unbundle" heat from service charge, what does this mean for landlords? This article looks at the interface between heat network regulation and existing Landlord and Tenant legislation. |
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Proposed step-in arrangements intend to protect customers where heat networks become insolvent or lose their authorisation – but how will this work in practice? |
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Operators and suppliers need to get to grips with the new regulatory regime. This article examines how the authorisation process will work, ongoing reporting obligations, and Ofgem's powers to monitor and oversee heat networks. |
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With heat regulation on the horizon – act now to ensure you are prepared. This article looks at the transition to a regulated market, practical steps for existing heat networks and how to future-proof for regulation. |
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.
