The Heat Networks (Market Framework) Regulations 2025 introduce the formal regulation of heat networks, with major provisions having taken effect in January 2026. These regulations include licensing, consumer protections, technical standards, and operational obligations overseen by Ofgem.
The new regulations are being introduced to help protect heat network customers from high energy bills, while ensuring heat networks operate reliably and efficiently. The changes mean that those connected to heat networks will receive similar protections to those using standalone heating systems like boilers and heat pumps.
Key Regulatory Changes
From January 2026, all heat network owners/operators must hold an Ofgem authorisation. Existing networks will initially receive temporary authorisation but must have registered with Ofgem by January 2027.
The new standards require fair, usage-based charging, minimum service levels, and mandatory participation in a consumer redress scheme. Ofgem will also require networks to maintain detailed operational records and submit data reports regularly.
The Heat Network Technical Assurance Scheme (HNTAS), which is currently being consulted on, will also mandate minimum standards on insulation, flow temperatures, reliability, and overall performance.
The phased rollout of these standards includes consumer advice services from April 2025, the launch of regulations from January 2026, and registration with Ofgem from Spring 2026 to January 2027.
Implications for HNES Applicants
The Heat Network Efficiency Scheme (HNES) provides financial support to heat network owners. Revenue funding covers the cost of Optimisation Studies that identify areas of underperformance and propose measures which can improve the efficiency of the heat network. Capital grants part-fund the installation of improvement measures, resulting in more efficient and cost-effective heat networks and helping heat networks to align with the upcoming technical regulations. An additional £30M of HNES capital funding was recently announced in the Warm Homes Plan, with the next round of funding, Round 12, due to open in March.
Where regulations have already come into force, HNES applicants must demonstrate that they comply with these or may be subject to a funding condition ahead of receiving any grant funding awarded.
For future applicants to the scheme, applications will likely require stronger evidence of compliance capability as regulations are rolled out.
Any changes to scheme requirements in future funding rounds, including eligibility criteria and scoring approaches, will be detailed in the Guidance for Applicants document that accompanies each funding round opening. Prospective applicants are advised to review this document before applying to ensure their project aligns with the current scheme objectives.
For those heat network projects that have already received HNES support, this funding will not be reviewed retrospectively in light of new regulations. Should further applications be submitted in future rounds, then any new scheme requirements will apply to these new applications.
We recommend that all current HNES applicants review and consider adapting their project designs to meet future regulatory obligations, and to respond to the HNTAS consultation to ensure your voice is heard.