Both UK and Scottish Governments have published proposals to regulate the heat networks market.

UK

Heat Trust welcomes and supports government’s confirmation that it will introduce regulation for heat networks, with a sector regulator to provide oversight and enforcement.

Statutory regulation is vital to building customer trust in heat networks, allowing the market to continue to grow and deliver the benefits of sustainable heat more widely. This is particularly important in a market of natural monopolies where customers cannot switch their supplier.

We at Heat Trust have unsurpassed collective knowledge of this complex, fledgling industry and have been putting in place the foundations of the bespoke, robust regulations that protect customers while allowing the heat networks market to flourish in the future. This is an essential part of the sector’s development – but just the first step. Customer protection need not and should not wait whilst a new regulatory framework is developed. We believe all heat networks should be required to meet our standards before regulation is in place. The recent BEIS consultation stated that “By joining Heat Trust now, organisations will not only be able to demonstrate the quality of their service to consumers right now, but they will also be better prepared for the transition to regulation.” We support the move to statutory regulation and are committed to supporting the sector with the transition.

The proposals would create a statutory regulator for the heat network sector, proposed to be Ofgem, and focus on three core areas:

  • Transparency of the heat network service, including before first joining the network;
  • Fair and accurate pricing; and
  • Quality of service - for example expectations on outage management and customer complaints handling.

Scotland

The Scottish Government introduced the Heat Networks (Scotland) Bill to Parliament on 2nd March 2020. The Bill proposes heat network suppliers apply for a licence to supply heat via a heat network, similar to how gas or electricity suppliers operate, and a consenting process for constructing or operating heat networks in Scotland, similar to planning permission. The Bill also contains proposals to give local authorities the power to designate heat network zones, and to introduce a transfer scheme should a supplier cease to operate (similar to the Supplier of Last Resort scheme for gas or electricity customers).