The UK is entering a new phase in its energy landscape as Ofgem, the Office of Gas and Electricity Markets, prepares to take on the role of regulator for heat networks across the UK.   This change will bring heat network operators into line with gas and electricity suppliers by ensuring customers are treated in a fair and transparent manner.

What Are Heat Networks?

Heat networks are systems that distribute heating or cooling or hot water from a central source to multiple buildings or units. They come in two main forms:

• Communal heating systems: Serve multiple dwellings within a single building, such as blocks of flats.
• District heating networks: Extend across multiple buildings, such as housing estates or commercial developments.

Both of these forms of heat network are covered under the new framework.

Legislative Framework

Ofgem’s new regulatory powers stem from two key pieces of legislation:

1. Energy Act 2023: This Act laid the groundwork for Ofgem’s role in regulating heat networks, establishing the legal basis for oversight and consumer protection
2. The Heat Networks (Market Framework) (Great Britain) Regulations 2025: This statutory instrument formally designates Ofgem as the regulator and outlines the structure of the regulatory framework

Under these regulations, Ofgem—acting through the Gas and Electricity Markets Authority (GEMA)—is empowered to:

• Authorise heat network operators.
• Enforce compliance with regulatory standards.
• Oversee consumer protection measures.
• Coordinate with other bodies such as the Energy Ombudsman and Citizens Advice.

Regulatory Timeline and Implementation

The regulation of heat networks will be phased in over several years:

• April 2025: Launch of consumer advocacy services. Customers can seek help from Citizens Advice (England and Wales), Advice Direct Scotland, and the Energy Ombudsman.
• April 2025 – January 2027: Existing heat networks will receive “deemed authorisation.” New networks must apply for authorisation from Ofgem.
• January 2026: Full regulatory framework comes into effect. Operators must comply with new rules on billing transparency, service reliability, and fair pricing

The Heat Network (Metering and Billing) Regulations

In addition to the new market framework, the Heat Network (Metering and Billing) Regulations 2014, amended in 2015 and 2020, remain in force.  These regulations require heat suppliers to:

• Install metering devices.
• Bill customers based on actual consumption.
• Submit notifications about their networks to the Government

These rules aim to improve energy efficiency and ensure fair billing practices, complementing Ofgem’s broader regulatory oversight.

Why Regulation Matters

Historically, heat network customers have lacked the protections afforded to gas and electricity users. With Ofgem’s involvement, the sector will benefit from:

• Improved customer service.
• Greater transparency in billing.
• Fairer pricing structures.
• Robust dispute resolution mechanisms.

This regulatory shift is expected to boost consumer confidence and support the growth of heat networks as a sustainable heating solution.