New funding model proposed to expand heat networks
25 August 2026
Heat networks could attract £17bn of investment by 2035 if the government provides £1bn of funding now and introduces a new financing model, according to an industry report.
Heat networks currently provide about 3% of the UK’s heating, but government plans aim to increase this to 20% over the next 25 years, with the potential for a much higher share in some towns and cities.
The report, published by Energy UK and the Heat Networks Industry Council, says £1bn of public investment could support a further £4bn from private investors by the end of the decade.
It proposes introducing a Regulated Asset Base (RAB) model from 2030. The approach, which is used to finance major infrastructure projects, would provide investors with greater certainty over future revenues.
The organisations behind the report say this could help heat networks compete more closely with gas heating by reducing the cost of projects and, potentially, prices for customers. They estimate investment in the sector could reach £17bn by 2035 and £100bn by 2050 if the proposed approach is adopted.
Adam Berman, director of policy and advocacy at Energy UK, says:
“Heat networks are an essential piece of the puzzle in a cleaner, more secure energy system. By supporting this sector to crowd in private investment in the coming years, and providing confidence and financial certainty beyond 2030, they can drive economic growth, support tens of thousands of skilled jobs across the UK and strengthen our energy security.”
Andrew Wettern, chair of the Heat Networks Industry Council:
“Heat networks are the missing key ingredient of a resilient energy system which brings down users bills by using more homegrown energy to heat and cool our homes and businesses. Heat networks drive local economic growth across the UK, the creation of local jobs, and deliver huge improvements in air quality and health.”
The report comes as the government considers how heat networks could contribute to reducing emissions from heating buildings. Unlike individual heating systems, heat networks supply multiple properties from a shared source, which can include recovered heat and other low-carbon sources.
