How best to navigate regulatory changes
23 July 2026
With new targets, regulations and funding opportunities, 2026 marks a year of change for UK heat networks. Jeff House, director of external affairs & policy for Baxi, explores the regulatory shifts reshaping the sector, and the challenges and opportunities for operators.
Heat networks, which provide heating, cooling and hot water to multiple properties in a building or to multiple buildings from a single source, are a critical pillar in the UK government’s roadmap to achieve net zero emissions. In dense urban environments where retrofitting individual solutions may be costly, challenging or less efficient, heat networks are regarded as a practical, scalable solution to decarbonising heat locally. Now, the UK government has launched a new regulatory regime to accelerate heat network deployment, provide new mandatory consumer protection standards and ensure consistent performance and reliability. Here’s what heat network operators need to know about the new regulation.
Consumer protection
There are over 14,000 heat networks in Great Britain, according to government data, serving around 500,000 households, 90% of which are in England. This equates to just 3% of the UK’s heat today. In its recently published Warm Homes Plan, the UK government has set a target to double the share of heat demand met by heat networks to 7% by 2035. This figure is an interim goal to achieve a longer-term target of 20% by 2050.
Heat networks have historically been subject to relatively limited and indirect regulation which did not fully consider consumer protections. This has led to reports of some legacy communal heat networks operating at just 35 to 45% efficiency, resulting in alleged unfair pricing and poor reliability for consumers. To achieve the ambitious deployment growth from heat networks while protecting consumers and supporting investor confidence, the government has launched a new regulatory regime. On 27 January 2026, Ofgem was appointed as the statutory regulator for heat networks in Great Britain, a role established under the Energy Act 2023 and implemented through secondary legislation in the Heat Networks (Market Framework) (Great Britain) Regulations.
Operators and suppliers of heat networks will now be treated as regulated suppliers, with consumers having access to the Energy Ombudsman to resolve any disputes. Full regulatory requirements will be phased in from next year with operators obliged to register all relevant heat networks with Ofgem via a new digital portal by 26 January 2027.
More information on which heat networks are in scope of the new legislation and detailed guidance on consumer protection can be found on the Ofgem website (www.ofgem.gov.uk)
Technical standards
The second regulatory area that heat network operators should be aware of is the introduction of new mandatory technical standards (Heat Network Technical Assurance Scheme or HNTAS) that heat networks must meet.
With the consultation on the new standards now closed, HNTAS is expected to be introduced for new heat networks from next year. The focus is on building the heat network framework correctly from the start for future flexibility. HNTAS aligns with the CIBSE Code of Practice CPI with auditing to assess all requirements.
Existing networks are expected to have longer to comply with the higher standards. To support performance improvements to these existing district heating or communal heat networks in England and Wales, funding is available under the Heat Network Efficiency Scheme (HNES). Guidance on eligibility criteria and the application process can be found on the government website.
Network zoning
The third key regulatory area to note is zoning. Heat network zoning is a framework that will mandate new and existing buildings in identified areas to connect to district heat networks where this is the lowest cost solution for low-carbon heating. The government believes that by designating zones where district heat networks are expected to offer the lowest-cost solution for decarbonising heat, local communities will have the tools to accelerate the development of heat networks. This in turn will ensure that more homes and businesses can access lower-carbon, cheaper heat.
Heat networks can use a range of low-carbon and waste heat sources, including from the air, rivers and ground as well as excess heat from buildings such as data centres. Heated water is circulated through underground insulated pipes for a more efficient solution to heat provision. The government is working with cities to identify these zones, focusing on London, Leeds, Plymouth, Bristol, Stockport, and Sheffield to pilot the ground-breaking heat network schemes.
In the designated heat network zones, which will primarily be based in England, new homes and existing communally heated high rise residential buildings as well as new commercial buildings and large non-domestic buildings (for example pre-existing medium-sized office blocks with an average annual heat demand of over 100MWh) may be required to connect.
Heat network zoning regulations are expected to be implemented before the end of the year, with key consultations and responses already available.
Prepare for change
From data centres to universities and hospitals to communally heated social housing developments, potentially big changes lie ahead for developers and operators of heat networks in 2026. All the more reason, then, for early action to ensure compliance and avoid financial penalties.
A good starting point for providers is to identify now how many heat networks they operate and register with the Energy Ombudsman.
The next step is to review contracts and ensure that the operator and suppliers comply with the new regulations relating to strict billing transparency, full heat metering and service quality for consumer protection.
Collecting detailed data on the network, its size and performance, and registering with the Ofgem digital platform ahead of the deadline should be prioritised.
Finally, providers should assess the existing networks alongside the proposed HNTAS standards, understand any required updates and identify funding opportunities. With funding available through HNES, now is the time to act. Early engagement with end-to-end solutions providers like Baxi when looking to improve existing heat networks will make it easier to identify the solutions required to navigate the regulatory changes and support the move to cleaner heat.
