Housing associations and heat network regulation

Heat networks supply thousands of homes across the UK with heat and hot water. They are more common in social housing than other tenures and, as they will be critical to our mission to decarbonise home heating, new regulations are 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. 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 scheme (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. They are often found in the social housing sector – in fact around 150,000 housing association households in England use heat networks. Around 30% of heat networks and 50% of consumers are in London. 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 1 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 necessary.

During the energy crisis of 2022-24, many social landlords and residents on heat networks were facing higher energy bills than other consumers. This was because the energy (mostly gas) was not subject to the price cap and other government support. We successfully worked with the government and stakeholders to increase the support available to heat network residents in the form of the temporary Energy Bills Support Scheme Alternative Funding (EBSS AF), Energy Bill Relief Scheme (EBRS) and Energy Bill Discount Scheme (EBDS).

How can I shape regulation?

The NHF liaises regularly with the government and OFGEM on all of these topics, and sits on OFGEM’s Heat Network Stakeholder Advisory Group.

We are expecting several consultations throughout 2024 and 2025, and we will seek feedback from members and support you to engage directly. In the meantime, please get in touch with any queries or to share feedback on the proposals. We are particularly keen to hear from members about the scale of investment needed to ensure heat networks meet the proposed technical standards.

The NHF will also continue to deliver a range of webinars, briefings and conference sessions to support members to prepare for heat network regulation.

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

Join the National Asset Management Network.
Sign up for updates from DESNZ.
Email Ofgem to sign up to updates.
Engage with The Heat Network, a voluntary group of social landlords managing heat networks who meet regularly to discuss these topics and share best practice.
Join us at the Quality Homes Conference and Exhibition 2024.
Join us at The Housing Community Summit 2024.

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.

Find out more

You can find the government’s most recent consultation on zoning from December 2023 here.

We also hosted a member webinar with DESNZ and The Heat Network in January 2024 on the topic.

There is some more detail on the funding available to create new and expand existing heat networks available here.

Technical standards and improving existing heat networks

While heat networks have generally been more affordable for residents than domestic heating systems, the best performing networks are estimated to run at just 65-70% efficiency and the majority estimated at just 35-45% efficiency. This means 55-65% of their heat could be lost before reaching consumers. For comparison, the average efficiency of a domestic gas boiler is around 85%.

More heat loss means higher costs for landlords and residents, as more heat has to be used to compensate for what’s lost. This lost heat can also cause overheating in various areas of a building. To lower costs, improve service and prepare heat networks for decarbonisation, 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 2024. 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.uk. More 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 government grant to upskill staff on heat network operation and maintenance.

Finally, the government’s Heat Network Efficiency Scheme(HNES) and Green Heat Network Fund provides grant funding for heat network efficiency improvements in England and Wales, which housing associations qualify for. You can find more HNES information and case studies here.

Consumer protection

All heat networks will be required to register with OFGEM as the new regulator and to provide OFGEM with a range of information. Citizens Advice will become the statutory consumer protection representative. Both the Energy Ombudsman and the Housing Ombudsman will have a role in providing redress to consumers (depending on the type of heat network scheme). OFGEM will be consulting on a range of areas regarding heat network consumer protection throughout 2024 including:

Consumer vulnerability
Complaints
Guaranteed standards of performance
Billing
Pricing protection

Find out more

The government consulted on the broad brushstrokes of this forthcoming regulation in August 2023, which we briefed members on and responded to.

We also delivered a member webinar on this topic in October 2023.

Members should also consider looking over 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.

Who to speak to

Rory Hughes, Policy Officer

Rory.Hughes@housing.org.uk

Housing associations and heat network regulation

About heat networks

What is a heat network?

How many people use heat networks in the UK?

Heat networks and the net zero target

How can I shape regulation?

Zoning and heat network expansion

Find out more

Technical standards and improving existing heat networks

Find out more

Consumer protection

Find out more

Who to speak to

Rory Hughes, Policy Officer

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