22/08/2025
As part of its plans to establish a new regulatory framework for the heat network sector, the Government has recently published its Response to the consultation on 'Heat networks regulation - implementing consumer protection'. Consumer protection is one of the key pillars of the Government’s drive to expand the heat network sector and this consultation response was therefore eagerly awaited by the sector and consumer groups.
In this article we have set out a high-level summary of some key aspects of the Response. If you are a heat network operator or supplier of heat through a heat network and would like to discuss the potential implications of the proposed consumer protections on your activities, please contact us.
Why Regulate?
The Government intends that heat networks play a crucial role in decarbonising heat in buildings, forming a key element of the UK's drive to net zero. While heat networks currently provide around 3% of total heat the Government aims for them to provide as much as 20% by 2050.
With heat networks therefore potentially providing a fifth of the country’s heating and hot water, and the particular nature of heat networks meaning that consumers connected to them rarely have the choice to switch to alternative suppliers, it is vital that heat network customers receive reliable service for a fair and transparent price, and that they have recourse in circumstances where service is poor and/or pricing is inequitable.
Background
The Energy Act 2023 empowered the Secretary of State to establish a regulatory framework for heat networks through secondary legislation, with Ofgem as the appointed sector regulator.
The most recent Response is the third joint DESNZ and Ofgem consultation on consumer protections for heat network consumers. The two previous consultations in 2020 and 2023 informed the provisions in the Energy Act 2023, and the Heat Networks (Market Framework) (Great Britain) Regulations 2025.
Scope
The Response splits the market into various categories with different types of protections and regulated standards expected to apply to each as the following table illustrates:
| Scope of Consumer protections | |||||||
| Protections | Network responsibility | Consumer Network / Classification | |||||
| Supplier | Operator | Domestic | Micro-business | Small Business | Self-supply | Industrial | |
| Supply to Premises | X | N/A | X | X | X | N/A | N/A |
| Standards of Conduct | X | X | X | X | X | N/A | N/A |
| Fair Pricing | X | X | X | X | X | N/A | N/A |
| Vulnerability | X | N/A | X | N/A | N/A | N/A | N/A |
| Disconnection | X | N/A | X | N/A | N/A | N/A | N/A |
| Complaints | X | X | X | X | X | N/A | N/A |
| GSOPs (Guaranteed Standards of Performance) | X* | X* | X* | Δ* | Δ* | * | * |
| Billing and transparency | X | N/A | X | Δ | Δ | N/A | N/A |
| Step-in | X* | X* | X* | X* | X* | N/A | * |
Key:
X = applies in full
△ = applies in part
* = subject to further consultation
N/A = not applicable
It is worth noting that consumer protection measures, metering and decarbonisation rules will not apply to industrial heat networks which are defined as “where all the heating, cooling or hot water which is supplied by means of that heat network is wholly or mainly supplied for an industrial process.” However, they will apply to non-domestic consumers that are not industrial heat networks.
Similarly self-supply networks, defined as “where all the heating, cooling or hot water supplied by means of that district heat network is consumed by the authorised person for that district heat network”, will not be subject to consumer protection rules but will be subject to requirements of authorisation, technical standards, decarbonisation, and associated regulatory oversight.
Timings
Government is planning to introduce consumer protections over time to allow the sector to prepare. Table 2 provides a high-level summary. Further detail on heat networks regulation timeline is provided at the end of this article.
| Date | Implementation |
| April 2025 | Consumer advocacy, advice, and redress started. Citizens Advice in England & Wales and Consumer Scotland in Scotland are providing the advice and advocacy services, and the Energy Ombudsman is running the consumer redress scheme. Heat networks have until early 2027 to complete registration through Ofgem’s digital service |
| January 2026 | Ofgem begins full market regulation (authorisation and enforcement) |
| January 2027 | Ofgem to carry out more complex regulatory activities in areas like pricing and standards of performance |
Key regulatory components
Implementing the market framework will require close collaboration across government, regulators, consumer advocacy groups, and Ombudsman Services.
Statutory Regulator – Ofgem
Ofgem is appointed as the statutory regulator for heat networks across Great Britain. Ofgem will be granted enforcement powers to:
- Authorise and license operators
- Regulate pricing structures
- Enforce consumer protection rules
- Monitor technical and environmental standards
This regulatory approach is expected to mirror the framework applied to electricity and gas markets.
Consumer advocacy & redress
Historically, heat network customers have not enjoyed the same statutory protections as gas and electricity users. The new regime intends to address this by mandating:
- Transparent pricing and fair billing
- Clear contract terms and communication
- Defined redress routes for complaints
From April 2025, Citizens Advice, Consumer Scotland, and the Energy Ombudsman have begun official advocacy and redress roles for heat network customers and there is now mandatory access for domestic and micro-business consumers to the Energy Ombudsman (ADR), for disputes that are unresolved after eight weeks.
Security of supply
The Response reiterates the Government’s position that operators in the sector are expected to ensure reliable heat supply. The intention is that Ofgem will be empowered to issue consumer redress orders for compensation in cases of system failure or unfair service. There will also be increased protections for vulnerable customers (such as the elderly, or those living with health conditions) to ensure that protections for heat network customers are aligned with those for customers of gas and electricity.
The Government intends introducing a “Security of Supply” principle for the sector in order to improve efficiency and reliability of services “ensuring that suppliers and operators recognise the supply of heat as a regulated service and implement effective processes to reduce interruptions”. The Response indicates that the Government will continue to work with relevant stakeholders to build on this requirement and provide further guidance, with the Security of Supply principle intended to operate alongside technical-based standards such as Heat Network Technical Assurance Scheme (HNTAS) and Guaranteed Standards of Performance (GSOP).
HNTAS is expected to launch during 2026 with GSOPs likely be phased in from January 2027 following separate consultations.
Billing and transparency
The Response notes that respondents to the consultation broadly supported proposals about the types of billing information consumers should receive.
The Government therefore intends issuing guidance including billing templates and setting out best practice and advice about how heat networks can use websites to provide information. Ofgem and DESNZ are also working to determine whether a central website could host key information about heat networks which could then be used by the sector to signpost to consumers.
Step-in, Special Administration Regime and Transfer Scheme
The Response concludes that the risks associated with financial failure in social housing and local authority operated heat networks could be managed within existing regulatory arrangements and therefore such networks will be carved-out from proposed step-in and financial monitoring provisions.
For other heat networks we expect to see further details about the types of authorisation conditions that will be put in place with a view to ensuing oversight of how operators / suppliers are to evidence sound financial management and the types and extent of financial data submissions that will be required of them. There are also expected to be further details to follow about requirements for Operations and/or Supply Continuity Plans.
Contrary to what many in the sector had expected the Response indicates that there is now currently an intention to introduce a universal requirement for contractual step-in. Instead the approach appears to suggest that stakeholders with an interest and/or incentive to step-in to support the continued operation of a heat networks would do so. That said, the Response found strong support for a Special Administration Regime, funded by Government where necessary, to ensure continuation of supply for heat network customers in the event of operator insolvency where market-led measures are insufficient to achieve this. Further details on this are expected to be issued in due course and are likely to be awaited with interest by the sector.
Interaction with Heat Zoning proposals
The Response notes that concerns were raised about potential regulatory conflict between the consumer protection framework to be established by Ofgem’s and the proposed role of heat network Zone Coordinators (in England). The Response acknowledges that “the approach to pricing protections within zones are still under development and further details will be provided in the government response to the 2023 Zoning Consultation. We are keen to ensure that roles and responsibilities are clear, and the frameworks work in parallel with each other.”
Next steps
Secondary legislation will be developed to form part of the heat network market framework, drawing on the Response. Ofgem will also be consulting further on several points including authorisation conditions and draft guidance on financial resilience and registration. Ofgem will also consult on draft guidance on consumer protection and fair pricing. The following table sets out the overall timetable:
| Completed Milestones | Milestones summer 2025 | Future Milestones |
| 2017: CMA report recommends market regulation to address monopolistic characteristics | August 2025: Implementing Consumer Protections government response published | Autumn 2025: HNTAS consultation and draft new build Technical Specifications published |
| March 2020: Publication of first HNMF consultation | August 2025: Ofgem response to Authorisation and Regulatory Oversight | Autumn 2025: Second Market Framework Regulations laid |
| December 2021: First consultation response published | August 2025: Ofgem consultation on authorisation conditions and guidance on measures to mitigate the risk and impact of financial failure | Autumn 2025: Ofgem Pricing Guidance Consultation & fair pricing protections response |
| November 2022: Work on designing Heat Network Technical Assurance Scheme begins: Industry working groups formed to inform decisions | Summer 2025: HNTAS Pilot Programme commences for existing heat network assurance process | Autumn 2025: Ofgem Consumer Protection Guidance Consultation |
| August 2023: Consumer Protection Consultation published | Summer 2025: HNTAS draft new build overview technical specifications and assessment procedures published | Autumn/Winter 2025: Regulatory Cost Recovery Consultation (covering recovery from heat networks sector) |
| October 2023: Energy Act 2023 completes passage through parliament | Summer 2025: Ofgem consultation on authorisation conditions for Registration and nominating a single point of contact for heat networks with multiple operators. | Winter 2025: Heat Network Technical Standard 1 (TS1), existing heat network Technical Specifications and all Assessment Procedures published |
| January 2024: Ofgem licence fee cost recovery principles consultation published | Summer 2025: Ofgem Enforcement Guidance and Penalty Policy Consultation Published | Winter 2025: Ofgem Authorisation Application Consultation |
| January 2024: Development of HNTAS Digital Service commences | Winter 2025: Ofgem consultation on consolidated set of initial authorisation conditions | |
| April 2024: Heat Networks Consumer Protection consultation response published | Winter 2025: Ofgem Monitoring and Audit Guidance Consultation | |
| October 2024: HNTAS Pilot Programme commences for new build assurance process | Winter 2025/26: Ofgem Consultation on Authorisation SI followed by Guidance Consultation & Publication | |
| November 2024: Heat Networks (Market Framework) (Great Britain) Regulations 2025 laid | January 2026: Heat network regulation commences: Authorised persons have to the end of the initial period to register with Ofgem | |
| November 2024: Implementing Consumer Protections consultation published | Spring 2026: HNTAS consultation government response published | |
| November 2024: Ofgem Authorisation and Regulatory Oversight consultation published | Spring 2026: HNTAS SI laid | |
| Spring 2025: Ofgem Fair Pricing Protections consultation published | Spring 2026: Ofgem Guaranteed Standards of Performance (GSOP)s SI Statutory Consultation | |
| Spring 2025: Consumer advocacy & Redress schemes commenced | Spring 2026: HNTAS Digital Service goes live for new build and existing heat networks | |
| Autumn 2026: HNTAS SI comes into force, HNTAS regulatory “go-live” | ||
| Early 2027: Deadline for authorised persons to register with Ofgem & provide registration data | ||
| 2027 onwards: Ongoing review of market trends and reactions |
