Following recommendations from the Competition and Markets Authority (CMA) in 2018, the Government has now published its long-awaited response[1] to the consultation on implementing consumer protections for the heat networks sector. Over 100 responses were received from a diverse range of stakeholders including operators, local authorities, housing associations and consumer groups. The feedback from respondents has shaped the final proposals and will inform secondary legislation.

For those working in infrastructure and energy, this marks a significant step toward formal regulation of a market that’s been largely unregulated until now. The Energy Act 2023[2] laid the groundwork, now we’re seeing the detail emerge through the Heat Networks (Market Framework) (Great Britain) Regulations 2025[3] and Ofgem’s new role as sector regulator.

Why heat networks? Why now?

The Government has acknowledged that the heat network sector is fragmented. Heat networks in the UK are operated by a large number of individual entities that are a mix of public, private and third-sector organisations, depending on the scale and ownership of the network. Poor technical design and a disparity of customer service has meant consumers aren’t always getting a good deal in terms of price and reliability.

But heat networks are central to the UK’s decarbonisation strategy. They currently supply around 3% of the UK’s heat, and the Government wants that figure to hit 20% by 2050. To facilitate such rapid expansion, the Government has set up two major grant funding schemes (the Green Heat Network Fund and Heat Network Efficiency Scheme) and intends to unlock further private investment by introducing heat network zoning and giving developers enhanced powers to build. With that growth, however, comes the need for robust consumer protections, investor confidence, and a regulatory framework that can support both.

Putting consumers first: The core aim of heat network regulation

At the heart of the Government’s approach to heat network regulation is a simple but vital goal: protecting consumers. That means ensuring fair pricing, reliable heat supply, and clear, transparent information—outcomes that mirror those in the gas and electricity markets, but adapted to the unique nature of heat networks.

The framework won’t be a copy-paste job from other sectors. Instead, it’s outcomes-focused, pragmatic, and designed to reduce unnecessary admin while still delivering strong protections—especially for vulnerable consumers and those with protected characteristics under the Equality Act 2010.

Some protections, like priority service registers and bill transparency, will be non-negotiable. Others will be phased in over time, recognising the sector’s current lack of regulation and the need to build capability gradually. There will be differences in how protections apply at first, particularly where housing legislation intersects with energy regulation.

Ultimately, the Government is clear: heat is an essential service, and regulation must reflect that. With over 1.1 million people already connected to heat networks[4], the regulations are about ensuring fairness, reliability, and confidence for both investors and consumers as the sector grows.

What’s in scope for the regulatory regime?

Following the consultation, the Government’s response has outlined a framework that intends to introduce a suite of protections. These include:

• Fair pricing: Ofgem proposes to benchmark heat network prices against gas and heat pump alternatives and will be granted powers to investigate pricing
• Registration and authorisation: a requirement for regulated entities (i.e. operators and suppliers) to provide certain information to Ofgem and to register existing networks or seek authorisation for new networks
• Billing transparency: clear, accurate bills with environmental impact data
• Vulnerability protections: adoption of Ofgem’s definition of vulnerability[5] and a requirement for suppliers to operate a Priority Services Register with tailored support for such consumers
• Disconnection rules: establishing strong safeguards around disconnection for non-payment, especially for vulnerable consumers
• Complaints handling: standardised processes and clear routes for access to the Energy Ombudsman
• Guaranteed standards and compensation: Ofgem will introduce guaranteed standards of performance (GSOPs) as a pre-requisite to authorisation, with compensation payable by regulated entities should they fall below these standards
• Step-In and continuity planning: the introduction of a Special Administration Regime, Transfer Scheme and Last Resort Directions to ensure continuity of supply if a heat network, supplier or operator fails
• Enforcement: Ofgem will be empowered to take action to ensure compliance with the regulatory framework, including powers to investigate non-compliance and impose financial penalties (of up to £1 million or 10% of turnover, whichever is higher)

Notably, protections will be phased in but, when introduced, the regulations will apply to domestic, microbusiness, and small business consumers with exemptions available to small networks (fewer than 11 premises) and those covered by housing legislation. Industrial and self-supply networks are largely exempt from consumer protections but will still need to meet technical and decarbonisation standards.

Key timelines to watch

The phased approach gives the sector time to prepare while ensuring protections are introduced as quickly as possible. For those operating in the sector, here are some key dates to be aware of:

• April 2025:
  • Consumer advocacy and redress schemes launched with the Energy Ombudsman and Citizens Advice
  • Ofgem’s authorisation of heat networks begins
• January 2026:
  • Secondary legislation expected
  • Ofgem starts regulating the sector
• Early 2027:
  • Deadline for heat networks to register with Ofgem and provide data.

Prepare for regulation: What you can do to stay ahead

With regulation fast approaching, here’s a practical checklist to help you get ahead and stay compliant:

• Identify your existing heat networks: Map out where you supply heat, hot water, or cooling—whether it’s a large estate or a few connected properties.
• Know your role: Determine whether you’re an “operator” or “supplier” under the new rules. If you’ve outsourced services, review contracts to see who holds operational control.
• Register with the Energy Ombudsman: From 1 April 2025, customers have been able to escalate complaints to the Ombudsman. Registering early will demonstrate readiness to Ofgem.
• Follow the Heat Trust’s best practices[6]: Align with existing standards where possible—this will help smooth the transition into formal regulation.
• Get familiar with authorisation conditions: Keep an eye on Ofgem’s authorisation requirements. These could cover everything from connection terms and billing to technical standards and continuity of supply.
• Carry out technical due diligence: Assess the age and efficiency of your heat network equipment and start identifying any defects or inefficiencies now. The Heat Network Technical Assurance Scheme (HNTAS) launches in 2026 so get ahead of any required upgrades or works.
• Review billing and supply contracts: Understand how heat costs are recovered—especially if bundled into rent or service charges. Review leases and contracts to ensure they meet new transparency requirements.
• Review change in law clauses: Long-term contracts should be reviewed to understand how they handle regulatory changes like these. For new contracts, include clear obligations around regulatory compliance.
• Prepare for data reporting: Start collecting your data now and check your contracts for data-sharing provisions. Ofgem will require regular reporting from April 2026.
• Reassess heat charges: Review how tariffs are calculated and when fuel supply contracts are up for renewal.
• Protect vulnerable customers: Make sure you have records of vulnerable customers and review safeguarding policies.

Heat network regulation: How we can help

This is a landmark moment for heat networks in the UK. The regulatory framework is ambitious, but it’s also pragmatic—designed to protect consumers, support growth, and unlock investment. For legal advisors, operators, and developers alike, now’s the time to get ahead of the curve.

Our Infrastructure and Energy specialists can provide advice and support to clients looking to connect to a heat network or better understand the new regulatory framework. Specifically, we can:

• Advise on the contractual arrangements required to connect to a heat network
• Help you understand, apply and stay up-to-date with, legal and regulatory developments
• Provide training on heat networks and related sector horizon-scanning
• Provide legal and practical advice and support in relation to heat networks, as well as related statutory consent and planning applications
• Provide commercially-focused, cross-disciplinary advice and transactional assistance in connection with infrastructure and energy developments and financings
• Help secure grant funding, including ‘green finance’, or other responsible investments to fund infrastructure and energy developments
• Provide risk management and effective dispute resolution strategies if/when any heat network or related issues do arise.

If you’d like to discuss how these changes might affect your organisation or project, contact Ben, James, Adam or any member of our team.

[1] Heat networks regulation: government response

[2] https://www.legislation.gov.uk/ukpga/2023/52

[3] https://www.legislation.gov.uk/uksi/2025/269/introduction/made

[4] https://www.gov.uk/government/statistics/heat-networks-registered-under-the-heat-network-metering-and-billing-regulations-statistics-december-2022)

[5] https://www.ofgem.gov.uk/sites/default/files/2025-04/Final%20CVS%2015042025-20250414111309.pdf

[6] Our Best Practice Guidance