Housing associations and heat network regulation

25 July 2024

Heat networks supply thousands of homes and non-residential buildings across the UK with heat and hot water. Two-thirds of all existing heat networks are owned and managed by social landlords, mostly in the form of communal boilers. As heat networks will be critical to our mission to decarbonise home heating by 2050, a new regulatory regime which will cover social landlords is being developed to improve and expand their use. 

We will update this page to keep you abreast of the changing landscape of heat network regulation. We also work closely with sector supplier Chirpy Heat on this topic.

About heat networks

What is a heat network?

A heat network is a mechanism for supplying heat and hot water to a home or non-residential premises. Heat networks can be either communal, or district systems. Communal systems consist of a centralised large heating appliance (in more than 90% of current cases a gas boiler) located in the building (e.g. plant room in flats). District heat networks supply heat and hot water to a network of buildings and can have more varied heat sources (e.g. geothermal or waste heat). The majority of heat networks (85%) are communal, and despite district heat networks being larger – most domestic consumers are on communal schemes. Around 90% of heat networks supply residential buildings.

How many people use heat networks in the UK?

Official government data shows that there are over 14,000 heat networks in the UK (90% in England), serving around 500,000 households. Heat networks provide about 3% of nationwide heat consumption.  

Heat networks and social housing 

Ofgem estimates 66% of all existing heat networks are owned and managed by social landlords. In fact, around 150,000 housing association households in England are connected to a heat network. There is also a relatively higher presence of heat networks in the supported and older peoples’ social housing sector.

However, the data on heat networks is not robust and in 2023, the Social Market Foundation used experimental EPC data to estimate that up to 900,000 UK households (or one in 25) are on heat networks, including one in 12 in social housing. The Heat Trust (the voluntary code of standards body for heat networks) has supported this as a more accurate picture of the scale of the sector. 

Heat networks and the net zero target

Heat networks are ‘heat source agnostic’ and therefore are relatively easy to decarbonise by changing the heating source (e.g. changing from gas to a heat pump). They also benefit from economies of scale and a greater variety of heat sources than traditional domestic heating, e.g. using waste heat or geothermal sources. The government hopes that heat networks will provide at least 20% of heat demand by 2050, and that this will be from decarbonised heat sources. To make this a reality, a new regulatory regime is being rolled out. 

The new regulatory regime 

In 2017, the Competition and Markets Authority recommended the government introduce a regulatory regime for heat networks to ensure heat network consumers have equivalent protections to other household energy consumers. 

The government has been developing the regulatory regime and legislated through the Energy Act 2023 to bring it forward. 

The regulatory regime will cover three broad areas (which we detail below): 

  • Consumer protections and the regulatory framework. 
  • Improving the operating standards of existing and future heat networks by mandating standards through a Heat Network Technical Assurance Scheme. 
  • Expanding the number of homes connected to district heat networks through zoning.  

The energy regulator Ofgem will be the regulatory body for heat networks. DESNZ will oversee the Heat Network Technical Assurance Scheme working with a Code Manager. The Energy Ombudsman will act as the redress body. Citizens Advice will act as the statutory consumer advocate, mimicking their existing role in the wider consumer energy market.  

The regulatory timeline 

Throughout 2025/26 we are expecting several consultations from DESNZ and Ofgem as they continue to design the regulatory regime. 

  • From April 2025, the Energy Ombudsman and Citizens Advice will assume their statutory powers. 
  • January 2026, Ofgem will assume its role as the heat network regulator and all existing heat networks will be deemed temporarily authorised. 
  • By January 2027, all heat networks will need to have registered with Ofgem for regulation

The NHF liaises regularly with the government and Ofgem on all of these topics, and we sit on Ofgem’s Heat Network Stakeholder Advisory Group. We are expecting further consultations in 2025 and will ensure housing associations are heard. 

Keep up to date on heat network regulation

There are several ways to keep up to date on heat network regulation:

Consumer protection and the regulatory framework

Housing associations with heat networks will need to register with Ofgem for regulation. The regulatory regime will cover a wide range of topics, including: 

  • Reporting to Ofgem, monitoring and enforcement. 
  • Pricing regulation. 
  • Complaints and redress. 
  • Metering, billing and service charge reform. 
  • Debt management and protections for vulnerable consumers. 
  • Provision of information to residents. 
  • Compensation. 

Find out more

The government consulted on implementing consumer protections and we responded to consultations on these topics in January 2025, and recorded a webinar to brief members. 

Members should also consider the work of the voluntary standards body, The Heat Trust. Much of the forthcoming consumer regulation is based on the Heat Trust’s current voluntary standards.

Technical standards and improving existing heat networks

Heat networks have generally provided more affordable heating and hot water for residents than other domestic heating systems. However, to prepare heat networks for the challenge of decarbonisation, improve service standards and lower costs, the government is planning to mandate a set of technical standards that heat networks (both new and existing) will have to meet through an accreditation scheme. Owners of heat networks will need to:

  • Roll out more metering.
  • Analyse current performance.
  • Bring existing heat networks up to higher standards.

The government is planning to consult on these technical standards and metering obligations in early 2025. The Chartered Institution of Building Services Engineers (CIBSE) has developed a voluntary Code of Practice (CP1) that sets out minimum technical standards for heat networks. DESNZ is also working with CIBSE to update this throughout 2024, to ensure alignment with the new technical standards. The aim is to make the next version of CP1 freely available in 2025. CP1 (2020) is therefore not an exact representation of the standards heat networks will be required to follow within regulation but it is a very good starting point because CP1 (2020) compliant networks will be well prepared for forthcoming regulatory technical standards. 

The government is also planning to pilot their technical standards throughout 2024. Housing associations can get involved by contacting heatnetworks@energysecurity.gov.ukMore information is available here.

Another standard for housing associations to be aware of in preparation for regulation is developed by the Building Engineering Services Association (BESA). It is a voluntary test standard and testing regime for the Heat Interface Units (HIUs) that transfer heat from the heat network into the homes of consumers. It aims to ensure that the HIU market meets the needs of those developing and designing heat networks, which ultimately benefits consumers.

Find out more

DESNZ has published short guidance notes and videos setting out practical steps to help operators improve the performance of existing heat networks.

There is also a range of government funding support available for new and existing heat networks from the Heat Network Efficiency Scheme(HNES), the Green Heat Network Fund and the Warm Homes: Social Housing Fund (formerly the SHDF)

Zoning and heat network expansion

To grow the heat network sector, the government is regulating it, providing funding to expand it and using ‘zoning’ to drive up scale. In short, zoning will mandate new homes and many existing communal heat networks to connect to larger heat network schemes in certain areas.

Who to speak to

Rory Hughes, Policy Officer