The UK government has announced £19 million in funding to expand the country's network of low carbon heating, alongside plans to appoint Ofgem as the official regulator for heat networks across Great Britain.
The funding, revealed on Wednesday 29 December, will support the creation of five new heat networks: two in Bristol and one each in Liverpool, London and Worthing. The projects aim to provide households, university residences and public buildings with more affordable and reliable heating as an alternative to individual gas boilers.
Heat networks work by supplying heat from a central source, such as rivers, sewers or industrial waste heat, through a system of underground pipes carrying hot water to multiple buildings, similar to a shared central heating system serving an entire area.
The £19.1 million investment forms part of the government's wider £320 million Heat Networks Investment Project (HNIP), which supports the development of heat networks across England and Wales. Other government-funded projects already under way include Leeds City Council's 16km district heat network, the Cardiff Town Heat Network in South Wales, and Newcastle University's district heat network on its city centre campus.
According to the government, heat networks currently meet around 2% of UK heat demand but could meet approximately a fifth of demand by 2050. The Climate Change Committee has recommended their expansion as a cost-effective way of delivering low carbon heat.
Minister for Climate Change Lord Callanan said almost a third of all UK carbon emissions come from heating homes, describing efforts to tackle this as central to reducing pollution, cutting bills and lowering reliance on fossil fuels. He said the funding builds on commitments made in the Heat and Buildings Strategy to regulate heat networks, protect consumers and support green jobs and investment.
To underpin the expansion, the government confirmed that Ofgem will be appointed as the heat networks regulator for Great Britain. The regulator will be responsible for enforcing rules on pricing and service quality, while supporting the growth and decarbonisation of the sector. Ofgem's role will form part of a new Heat Networks Market Framework intended to strengthen investor confidence in the market.
Ofgem chief executive Jonathan Brearley said the organisation welcomed its appointment, noting that heat networks could play a significant role in reducing carbon emissions from heating and supporting the UK's climate targets. He said Ofgem would work with the government to design a regulatory framework that attracts investment while ensuring consumers, particularly those in vulnerable circumstances, receive a fair price and a reliable heat supply during the transition to net zero.
The government's response to its Heat Networks Market Framework consultation, published the same day, sets out proposals for new legislation to regulate the sector. Ministers have committed to introducing this legislation within the current Parliament. As well as appointing Ofgem as regulator, the plans include naming Citizens Advice as the consumer advocacy body for the sector.
The proposed legislation is intended to protect around half a million consumers across roughly 14,000 heat networks in Great Britain, comprising approximately 2,000 district heat networks and 12,000 communal heat networks.
Officials said the combination of new capital investment and a formal regulatory framework was designed to give consumers, investors and developers greater confidence in heat networks, with the aim of reducing bills, addressing fuel poverty and supporting local regeneration.
The announcement is linked to wider government commitments, including the Prime Minister's 10 Point Plan, which aims to make UK homes, schools and hospitals greener and more energy efficient while creating 50,000 jobs by 2030. It also supports a new target requiring all new heating systems installed in UK homes by 2035 to use low-carbon technologies. This builds on more than £3.9 billion of funding announced under the Heat and Buildings Strategy to decarbonise heat and buildings, covering schemes such as the Social Housing Decarbonisation Fund, the Home Upgrade Grant scheme, the £450 million Boiler Upgrade Scheme, the Heat Networks Transformation Programme, and the Public Sector Decarbonisation Scheme.
Details of the individual projects receiving funding were also published. The Royal Borough of Kensington and Chelsea has been awarded more than £1.1 million to develop a zero carbon heat network using air source heat pumps, which will supply heat to 826 existing homes as well as several public buildings and business units in the Notting Dale area.
Worthing Borough Council has received more than £5.3 million to replace gas boilers in 27 buildings with a heat network powered by a centralised heat pump drawing heat from the sewer beneath the town.
Bristol City Council has been awarded a total of more than £6.4 million to support two new low carbon heat networks in the Temple and Bedminster districts. Combined, these are expected to deliver heat to more than 6,000 residences using ground and water source heat pumps, along with waste heat from Bristol University's Temple Quarter Enterprise Campus.
In Liverpool, Peel Energy, through its supply company Mersey Heat, is developing a district heat network serving the Liverpool Waters development and surrounding areas. The £6.2 million HNIP funding award will support a transition to a heat pump solution as the main generation source and the connection of a central cluster of existing buildings. Once complete, Mersey Heat is expected to provide low carbon heat and hot water to up to 9,000 homes.
