Report calls for policy changes to expand UK heat recovery
23 October 2026
Nearly 4,780 potential sources of recoverable heat are located within 1km of UK heat network zones, according to a new report calling for coordinated policy changes to increase the use of the resource.
The Recoverable Heat in Heat Networks report, published by Energy Systems Nexus, identifies commercial and regulatory barriers preventing heat from sources such as data centres, nuclear power stations and energy-from-waste plants from being supplied to heat networks.
Heat networks currently meet around 3% of UK heat demand. The government expects this to rise to 7% by 2035 and 20% by 2050 as the technology plays a greater role in decarbonising heating.
The report identifies misaligned commercial incentives and a lack of guaranteed customers for recovered heat as major obstacles to investment. It also highlights the challenges of coordinating infrastructure development, heat demand and planning approvals.
The study reviewed 37 UK and international heat networks already using recovered heat, mapped 4,780 potential heat sources near heat network zones and interviewed 13 industry stakeholders.
Among its recommendations, the report calls for expanding the UK Emissions Trading Scheme to include energy-from-waste plants from 2028, with free allowances for heat recovered for heat networks. It also proposes maintaining funding for infrastructure connecting recoverable heat sources and exploring the use of National Wealth Fund guarantees and loans to reduce construction risks.
Chetan Lad, head of UK Strategy at E.ON UK:
“The technology to recover waste heat is already proven, and E.ON is delivering it at scale across Europe. The real opportunity now is to create the right commercial conditions in the UK. It’s about who pays, where the risk sits, and whether there’s a sound business case at the end of it. Continued government support will be important to build market confidence. Alongside this, better data on where recoverable heat is available would help the whole industry, and contracts need to reflect the source.”
Other proposals include requiring heat recovery assessments for certain planning applications, developing standardised contracts and establishing an open data platform to help planners and investors identify suitable heat sources.
Iain Darby, head of strategic research at United Kingdom National Nuclear Laboratory:
“Nuclear heat could play a major role in decarbonising UK heat networks, but only if it’s planned as a strategic infrastructure from the outset. The report shows that nuclear reactors can provide predictable high-grade heat at a scale few technologies can match. However, success depends on coordinating reactor development, heat network infrastructure, planning approvals and long-term heat demand together rather than trying to retrofit connections later. Nuclear heat is therefore a systems challenge as much as an energy opportunity.”
Alex Buckman, Energy Systems Nexus Lead:
“This work shows the importance of bringing diverse perspectives to a systems challenge like this. We know there is, and will be, a huge amount of recoverable heat in our energy system – wasting it would be a massive, missed opportunity. The question is how we can integrate it. We’ve found the challenges are less technical and more about coordinated actions that understand the needs and perspectives of both the offtaker and the heat supplier. Our members are the ones that can make wide-spread heat offtake a reality and look forward to working with Government to making it happen.”
The report calls for government and industry to work together to establish the commercial conditions and infrastructure needed to increase heat recovery across the UK. It was co-funded by Energy Systems Nexus members, including E.ON, the United Kingdom National Nuclear Laboratory and Amazon Web Services.
