Unlocking heat network funding: A guide for commercial developers
1st October 2025
“As the UK accelerates its transition to net zero, heat networks are playing an increasingly important role in decarbonising heating across both commercial and residential buildings. For developers, this presents both opportunity and complexity – particularly when it comes to funding. Fortunately, several government-backed funding schemes are available to support the development, connection, and optimisation of heat networks. This article outlines the key funding mechanisms and how you can benefit.”
Green Heat Network Fund (GHNF)
The Green Heat Network Fund (GHNF) is the UK Government’s flagship capital grant programme supporting the commercialisation and construction of new low and zero carbon heat networks, as well as the retrofitting and expansion of existing ones.
What you need to know:
- Grants cover up to (but not including) 50% of eligible commercialisation and construction costs
- Maximum grant value of £1 million
- Capital grants available until 2028
- Open to private sector developers, including registered companies
- Supports both new build schemes and major retrofits
- Projects must meet specific carbon and economic metrics
Why it matters: If you’re planning a large-scale mixed-use or residential scheme, GHNF can help you integrate heat networks from the outset. This funding can reduce your early-stage commercialisation and construction costs, de-risk your investment and accelerate your delivery timeline.
Heat Network Efficiency Scheme (HNES)
The Heat Network Efficiency Scheme (HNES) targets existing heat networks that are underperforming, offering both revenue and capital grants to improve efficiency.
What you need to know:
- Revenue grants for optimisation studies (up to 100% of costs)
- Capital grants for upgrades up to (but not including) 50% of costs (£15,000 – £24,000 per project)
- Open to commercial operators of existing networks
- Covers upgrades such as controls, insulation, and sub-metering
Why it matters: If you own or manage existing heat networks—particularly in multi-unit commercial buildings—HNES offers a route to improve performance, reduce operating costs and enhance customer satisfaction.
Regulatory and strategic considerations
Heat network zoning (2025 Onwards)
From 2025, local authorities will begin designating heat network zones, within which certain buildings may be required to connect. If you’re operating in these zones, you should anticipate potential connection obligations and strategic opportunities.
Ofgem regulation
Heat networks will become a regulated utility under Ofgem, introducing:
- Minimum technical standards
- Consumer protection requirements
- Authorisation and registration obligations
Why it matters: You should factor these regulatory changes into project planning and ensure compliance readiness.
Scotland’s Heat Network Fund (SHNF)
For projects in Scotland, the SHNF offers similar capital support to GHNF, covering up to 50% of eligible costs.
How we can help
Our Infrastructure & Energy grant funding specialists are here to support your projects — whether you’re operating a heat network or planning to connect to one.
We can help you to:
- Understand and negotiate the contractual arrangements needed to connect.
- Navigate eligibility criteria and the application process.
- Review and negotiate funding agreements.
- Stay compliant with subsidy control and reporting obligations.
If you have any questions or need support with your project, contact Adam Bertram.
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