This page explains what a heat network is, who heat network consumers and suppliers are, why the heat networks sector is expanding to help deliver Net Zero, and why heat network efficiency is important.

What is a heat network?

A heat network is a shared system for providing multiple properties with hot water and/or space heating (and sometimes, but much more rarely, cooling). It uses a heat source, or sources, to power an energy centre. That energy centre then transfers heat to connected properties in the form of hot water, through a network of insulated pipes. Another set of pipes returns cooler water from the properties to the energy centre.

Sometimes a heat network just provides hot water for space heating (e.g. by heating radiators), with the hot water from taps provided separately by an in-property electric immersion heater and water tank. But the key feature of heat networks is that there is no need to have a traditional boiler in each individual property, such as a domestic gas boiler, because the heat is generated outside of the property. 

Modern heat networks are fitted with in-property Heat Interface Units (HIUs) and heating controls, so that each consumer has as much control as they would with a more conventional system. An HIU contains a heat exchanger that transfers heat from the heat network to the pipes within an individual property.

Heat networks can serve both homes and businesses. Heat Trust’s voluntary Scheme covers both domestic and micro-business heat network consumers in Great Britain (England, Wales and Scotland). 

There are two types of heat network: communal and district. Heat Trust’s Scheme doesn’t distinguish between these. But the government uses these definitions, so it can be helpful to know them - particularly when looking to understand the planned expansion of the heat networks sector.

Communal heating is the supply of heat and hot water to multiple consumers within one building only. The energy centre often consists of a large boiler in the building’s basement, but does not have to be inside the building. The minimum criteria for an installation to be considered communal heating is two final customers within that building. 

District heating involves a local energy centre that supplies heat and hot water to consumers in more than one building. District heat networks can vary significantly in size. The minimum criteria for an installation to be considered a district heat network are two buildings being supplied with heat and at least one final customer.

Some new heat networks are built for large property developments that are completed in stages. This might mean that some properties are connected before others are built, which will then be joined to the heat network later. Unrelated communal heat networks may, over time, join a wider district heat network.

Public awareness of heat networks is low, with approximately half of the 3,700 UK adults surveyed by government in Winter 2023 having never heard of them. This level of awareness has also remained static over the last few years:

(Data source: Government public attitudes tracker on heat and energy in the home, Summer 2023.)

HIUs can look very similar to gas boilers. It can be difficult for domestic consumers to know that they’re on a heat network just by looking at the utility appliances within their home: 

The product on the left is an HIU, while the one on the right is a gas combi boiler by the same manufacturer (photo credits: Worcester Bosch).

How many heat networks and consumers are there?

The Heat Network (Metering and Billing) Regulations came into force in 2014. These require heat suppliers to notify the Office for Product Safety and Standards (OPSS) of all their operational heat networks every four years (and when any new heat network first becomes operational, if between these points). The four-yearly notifications were due in 2015, 2019 and 2023. 

The government's 2015 notification data, published in 2018, recorded 475,000 GB consumers on heat networks (of which over 90% were domestic consumers). These covered 14,000 heat networks, of which 85% were communal. We've excluded Northern Ireland from these rounded figures, as it won't be covered by planned GB regulation for heat networks.

The government's 2019-2022 notification data, published in 2023, recorded 505,000 GB consumers on heat networks (of which over 90% were domestic consumers). These covered 12,000 heat networks, of which 78% were communal. Over 1,500 heat networks that notified were not included in these statistics, due to the poor quality of their data submissions. As above, we've excluded Northern Ireland from these rounded figures.

In its commentary on the 2019-2022 data, the government says that:

• As the statistics only cover registered heat networks, they may not be representative of the heat network market as a whole and can't be used to estimate the size of the market.

• The 2019-2022 statistics aren't directly comparable with the 2015 data, due to differences in data methodology and collection, and so can't be used to identify changes or trends in the market.

• There's still a limited understanding of the coverage of these statistics, with government planning further research in this area.

• As Ofgem regulation of GB heat networks is planned to start in 2025, the government doesn't plan to publish further figures for the 2023-26 notification period.

Heat Trust is concerned that the number of heat networks recorded by government in 2019-2022 is lower than for 2015. While allowing for differences in methodology and collection, and for removal of poor-quality submissions, this doesn't appear reflective of growth in the heat networks sector and suggests non-compliance with OPSS notification requirements. OPSS has only taken enforcement action once against a single heat supplier, in June 2021 (for a failure to re-notify in 2019).

In 2023, the Social Market Foundation estimated that up to 900,000 UK households (or 1 in 25) are on heat networks, including 1 in 12 in social housing. This was based on Energy Performance Certificate data and other publicly available data. This figure seems to be supported by BSRIA’s UK sales data for HIUs, which (when added to the government’s 2015 numbers) suggests a total number of heat network consumers by 2023 that approaches 1 million.

Heat Trust believes that the 900,000 figure is more likely. This would mean that our voluntary Scheme covers roughly 1 in 10 heat network consumers.

Where are heat networks?

Heat networks require density of heat demand to be economical and so are usually installed in population-dense areas. Within Great Britain most heat networks have historically been communal, served blocks of flats and been concentrated in cities within England. However, this profile is expected to change as the sector expands and develops.

In both the 2015 and 2019-2022 government notification data, over 90% of GB heat networks were in England and 30% of networks were in London.

In the 2019-2022 data, 50% of GB domestic heat network consumers (or over 240,000 consumers) were in London. The first graph below shows the breakdown by region, with London excluded. The second graph shows the breakdown within London by Borough. As outlined above, Heat Trust has concerns that not all heat networks and their consumers are captured in this data.

(Data source: 2019-2022 data from DESNZ, published 2023.)

The London Heat Map includes information on existing and planned district heat networks in the Greater London region, and is updated regularly. It was created by the Centre for Sustainable Energy for the Greater London Authority. You can find the map here and its underlying datasets here. 

There are various government funding schemes for new heat networks that publish information about the projects they fund (or funded, in the case of closed schemes). For example:

• The Heat Networks Delivery Unit (HNDU)
• The Green Heat Network Fund (GHNF) - see also the related press releases here
• The Heat Networks Investment Project (HNIP) - see also the related case studies brochure here
• The Local Energy Accelerator (LEA) for London
• The Green Finance Fund for London
• Scotland's Heat Network Fund (SHNF) and Heat Network Support Unit (HNSU) - see also the related case studies here
• The District Heating Loan Fund (DHLF) for Scotland

The Heat Networks Planning Database (HNPD) is updated monthly and gives a picture of both district and communal heat network deployment across GB. It provides information in various formats including raw datasets and an interactive map. The CIBSE Journal also reguarly publishes articles about new heat networks.

Who are heat network consumers?

There's limited public data about the types of domestic consumers on heat networks. The figures in the table below are from a 2022 government survey of around 2,000 heat network consumers in Great Britain.

Who are heat suppliers?

Heat Trust considers the heat supplier to be the entity that has the supply contract with consumers, either as a separate contract or as part of a lease or tenancy agreement.

There's limited public data about who heat suppliers are. The figures in the table below are from a 2022 government survey of 130 heat network operators in Great Britain. Note that these were not necessarily the actual heat suppliers and could include subcontractors.

 The heat networks sector has some key differences from the regulated gas and electricity markets:

• There are far more heat suppliers, with much smaller customer bases.

• Heat networks are natural monopolies. One entity is the supplier for all homes and businesses on the network, with the supply contract covering the period in which the consumer owns or occupies the property. The individual consumers on the heat network can’t change their heat supplier and can’t easily leave the network once they’ve moved in.

• The heat supplier (or their subcontractor) is also usually the operator and maintainer of the heat network infrastructure. This includes the energy centre, communal pipework, HIUs and any metering. This means that their business model also has similarities with gas and electricity distribution and with boiler maintenance. Unlike gas and electricity, repair and maintenance charges are often included directly within consumers’ heat bills.

• The vast majority of new heat networks are metered. But many older ones are not. Only 30% of consumers on heat networks recorded in the 2015 government figures had individual consumption meters. And only 40% of operators in the 2022 government survey used these to calculate heat bills. 

Heat Trust estimates that 10% of heat suppliers are dedicated Energy Service Companies (ESCOs). These ESCOs are appointed by the building owners through long-term contracts that can span decades. The heat suppliers registered with Heat Trust are predominantly, though not all, ESCOs.

Most often the heat supplier is the building owner in their capacity as landlord. This might be a private developer or freeholder, or a housing association or local authority. In practice many landlord heat suppliers subcontract their network operation and maintenance, and/or heat metering and billing activities, to other entities. So it can be difficult for consumers to know who their actual heat supplier is. Under housing legislation, landlords have to run heat networks on a cost-recovery (not profit-making) model. Consumers may be billed separately to, or as part of, their rent or service charges.

Among the heat network operators surveyed by government in 2022, awareness of planned regulation was low (although we'd expect this to increase as the government publishes and engages more about it):

Where do heat networks get their heat?

Historically, most heat networks have been powered by commercial gas boilers or gas Combined Heat and Power (CHP).

In the government's 2015 notification data, 90% of heat networks used natural gas as their main heat source:

(Data source: 2015 data from DESNZ, published 2018. Note that six Welsh heat networks were excluded from these figures due to their small numbers / risk of disclosure.)

This proportion was unchanged in the government's 2019-2022 notification data (although, as explained above, the 2019-2022 and 2015 data isn't directly comparable):

(Data source: 2019-2022 data from DESNZ, published 2023.)

In 2022, 74% of 130 GB heat network operators surveyed by government used gas or gas CHP as their main heat source:

(Data source: 2022 DESNZ survey.)

Why is the number of heat networks increasing?

Heat networks are ‘fuel agnostic’ in that they can be connected to any type of heat source. Heat networks of any heat source can register with Heat Trust’s Scheme. 

Heat networks are therefore a natural candidate to help meet Net Zero targets by decarbonising heat emissions from buildings. The government has a target to supply 20% of homes through heat networks by 2050, a big increase from the current estimated 3%. This will mean using dedicated investment and planning to rapidly expand the number and size of district heat networks, in order to benefit from economies of scale.

At the end of Q4 2023, over £3.1 billion total active capital expenditure (capex) was supported by different government funding schemes:

(Data source: DESNZ heat networks newsletter, 15 April 2024.)

Many new heat networks are being built to run on low-carbon heat sources such as heat pumps (water, ground or air), renewable heat (e.g. biomass) or waste heat (e.g. from waste incineration or data centres):

(Data sources: 2015 data from DESNZ, published 2018. 2023 data from the Heat Networks Planning database, as summarised in the UK Investment Bank's September 2023 Heat Networks Strategy Update.)

A move away from gas will mean not just building more low-emission heat networks but also decarbonising existing ones – and the government is planning targets to achieve this. 48% of the 130 heat network operators surveyed by government in 2022 said they were likely to switch to a low-carbon heat source at the end of their generation asset lifetime (19% said they were unlikely to do so).

Other countries such as Denmark offer a potential model as to how heat networks can form a significant part of a sustainable energy system.  

Why is heat network efficiency important?

Heat is lost from pipework during its journey between the energy centre and end consumers. The level of heat losses increases:

• The longer the heat network is (i.e. the bigger the distance that the heat has to travel)
• The higher the number of properties connected to the network
• The higher the temperature of the network
• The lower the amount of installed pipework insulation.

The majority of existing heat networks are estimated to operate at 35-45% efficiency (i.e. with 55-65% of their heat lost before reaching consumers), with the best performing ones running at 65-70% efficiency. For comparison, the average efficiency of a domestic gas boiler is around 84% (figure taken from a 2009 government report).

While these figures are widely cited in the sector, there’s currently no public government data on heat network efficiency. Some information is available as part of papers presented to the annual CIBSE Technical Synposiums here, and in CIBSE Journal articles like the one here. You can also find some public case studies from FairHeat here and from Guru Systems here.

Higher heat losses mean higher bills for consumers, as more heat has to be used to compensate for what’s lost. Because most existing heat networks still use gas as their heat source, heat suppliers buy this gas at (uncapped) commercial prices that were subject to extreme rises and volatility during the energy crisis. Heat network consumers are considered to be commercial energy customers and don't benefit from domestic price-support mechanisms, such as the price cap.

The government has published guidance to help operators improve the efficiency of existing heat networks. You can find a link to this under ‘Technical guidance and standards’ here. The government’s Heat Network Efficiency Scheme provides grant funding for heat network efficiency improvements in England and Wales (there's currently no equivalent Scottish funding scheme).