There are three main parts to the planned regulations, which collectively make up the government’s heat network market framework.

Authorisation and consumer protection

 

All heat suppliers / heat network operators will need to be authorised by Ofgem. Conditions of these authorisations will include compliance with consumer protection standards of conduct. Ofgem will have powers to monitor compliance and take enforcement action for any breaches of the conditions.

Ofgem and the Department for Energy Security and Net Zero (DESNZ) consulted in Summer-Autumn 2023 on their planned consumer protections as well as the scope, phasing in and monitoring/enforcement of regulation. You can find the consultation here and Heat Trust's response here.

The timing of Ofgem’s and Scottish Government’s consultation on Ofgem’s administration of an additional Scottish licensing regime is still to be confirmed. You can find out more about the progress of Scottish heat networks regulations here.

Heat network zoning

Government will have powers to designate areas as ‘heat network zones’ where heat networks are expected to be the lowest cost solution for decarbonising heat. Certain buildings within zones may be required to connect to heat networks within a specified timeframe. This supports government’s target of supplying 20% of homes through heat networks by 2050.

The specific regulations around zoning will be different in Wales and Scotland to those in England.

DESNZ's consultation on zoning proposals for England closed on 26 February 2024. You can find the consultation here and Heat Trust's response here. DESNZ also has a collection of information about zoning here. Scottish regulations on zoning are already being brought in, and you can find details here. The Welsh government has also already consulted on its Heat Strategy for Wales, which includes zoning – its consultation closed on 8 November 2023 and you can find it here.

Technical standards, carbon emissions limits and step-in arrangements

Heat suppliers and heat network operators will be required by their Ofgem authorisation conditions to comply with a GB-wide code that sets out minimum technical standards. Under the code, heat networks will need to achieve certification against these standards - which are designed to ensure network performance and efficiency.

The standards will replace the existing Heat Network (Metering and Billing) Regulations, as well as build on current voluntary engineering standards such as the Chartered Institution of Building Services Engineers' (CIBSE's) Code of Practice 1 (CP1). They are being designed by the Heat Networks Technical Assurance Scheme (HNTAS) Programme, which you can find information about here. The scheme aims to carry out pilots in 2024, before launching fully in 2025 as part of the overall regulatory framework.

Heat networks are fuel-agnostic in that they can be connected to any fuel source. They’re therefore set to play a key role in government’s net zero objectives. Regulation will include decarbonisation targets for heat networks.

Ofgem will also put in place ‘step-in’ arrangements to protect consumers if their heat supplier goes out of business or performs consistently poorly.

Ofgem and DESNZ plan to consult on these areas during 2024. 

Heat Trust has long advocated for statutory regulation of the heat networks sector. We're firmly behind the intent of the planned statutory protections for heat network consumers and believe that they can’t come quickly enough.

Our Heat Trust Scheme rules are the foundations on which the formal regulations will build and we’re working closely with Ofgem and government. Registering with Heat Trust now gives consumers confidence and helps heat suppliers get regulation ready.

Ofgem and DESNZ say: ‘The Heat Trust's established role in setting industry standards provides a strong foundation upon which the new regulation will build and their continued involvement will aid transition, ensuring continuity, and reducing risk of disruption for the sector and its consumers … [We] encourage parties to follow existing good practice, such as that set out by the Heat Trust.’

Between now and introduction of full regulation in 2026, our continued involvement will help ensure that:

• Consumers remain front and foremost in regulatory design and decision making (by engaging in consultations and regulatory forums, sharing our insight and expertise)

• Heat suppliers are ready for regulation (by registering and auditing as many as possible under our Scheme)

• There is no gap in consumer protections (by continuing our Scheme for as long as needed, until formal regulation is fully operational)

As the independent consumer champion for heat networks in Great Britain, Heat Trust’s input to regulation won’t be limited purely to matters covered by our Scheme. We’re not a trade association and we don’t lobby on behalf of either our Scheme participants or heat suppliers generally.

While we’ll publicise key regulatory developments through our website, newsletters and LinkedIn, we can’t urge heat suppliers strongly enough to engage directly in the regulatory consultation process.

We’ll publish all of Heat Trust’s responses to government consultations here. 

You can find out more at the links below:

https://www.ofgem.gov.uk/energy-policy-and-regulation/policy-and-regulatory-programmes/heat-networks
https://www.gov.uk/government/collections/heat-networks
https://www.gov.scot/policies/renewable-and-low-carbon-energy/heat-networks
https://www.gov.wales/heat-strategy-wales-html 

You can also sign up to receive updates from Ofgem and DESNZ here:

https://www.ofgem.gov.uk/energy-policy-and-regulation/policy-and-regulatory-programmes/heat-networks
https://public.govdelivery.com/accounts/UKBEIS_HN/subscriber/new?preferences=true#tab1