25/09/2025
With applications for Round 10 of the Green Heat Network Fund (GHNF) due to close at midnight on 7 November 2025, now is a good time for applicants to consider the subsidy control rules in the Subsidy Control Act 2022 (the Act).
GHNF is a capital grant programme to support organisations in the public, private, and third sectors to deliver heat network projects in England across the financial years 2022/23 to 2027/28. The programme aims to incentivise the heat network market to transition to low carbon heat sources. GHNF funding may be awarded both for the commercialisation and construction of new low- and zero-carbon heat networks and for the retrofit and expansion of existing heat networks.
Given the commercial nature of a heat network, any developer of a new network, or operator of an existing heat network who is awarded GHNF funding almost certainly will be in receipt of a subsidy. It makes no difference if the developer or operator is a public sector body, or an organisation owned, or part-owned by a public sector body, as the subsidy control rules focus on the commercial nature of the activity being funded rather than on the identity of the recipient.
Successful applicants are advised to check that their GHNF funding award complies with the Act. If the compliance requirements are not met, an applicant could be at risk of having to repay the funding with interest if it is successfully challenged as being an unlawful subsidy.
For previous rounds of GHNF funding, BEIS published a subsidy scheme (SC10541) which provided an easy means of ensuring that the funding was compliant, although applicants still had to consider the compliance of any separate subsidies they received for their project. That scheme only ran until 31 March 2025 and so appears to have expired. There is as yet no indication that it will be extended or renewed to cover Round 10, but we anticipate that DESNZ will attend to this in due course.
The key step for an applicant will be to check, before accepting any award of GHNF funding, that the existing subsidy scheme has been extended to cover Round 10, or else that a new subsidy scheme has been published. This can be checked on the Subsidy Database. In either case, the applicant should check that its project complies with the core eligibility requirements of the scheme because, if the eligibility requirements are not met, its GHNF funding may not comply with the Act and could be susceptible to legal challenge.
If DESNZ does not extend or renew the GHNF subsidy scheme to cover Round 10, we would advise applicants to seek legal advice on how they can check that their funding complies with the Act and on how they can mitigate any subsidy control risks.
For applicants who are public authorities, as well as considering their own position as the potential recipient of a subsidy, they must also consider the possibility that they may be giving a subsidy when they spend the GHNF funding or on-fund it to a delivery partner. If this is the case, they will need to ensure that they comply with the Act, whether by complying with the terms of any new or extended GHNF subsidy scheme or, as the case may be, taking other steps to ensure compliance. When transacting with delivery partners and contractors, it will be important to flow down any relevant obligations in the GHNF grant agreement, including not only any subsidy control related requirements but also other obligations such as reporting requirements, to ensure compliance throughout the supply chain thereby minimising the risk of GHNF funding having to be repaid.
Applicants for GHNF funding who would like advice in relation to subsidy control are welcome to contact Bethan Lloyd for further information and support.
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