Two months to go: preparing for heat network regulation

Heat networks are a key component of the UK government’s strategy to achieve net zero emissions by 2050. In just two months, providers will enter a new regulatory regime, with the Office of Gas and Electricity Markets (Ofgem) assuming supervisory responsibility.

The forthcoming framework is designed to give heat network customers protections equivalent to those enjoyed by gas and electricity consumers, establish minimum technical standards, and create designated heat network zones.

This article explores the upcoming heat network regulatory framework which will introduce the new regulatory scheme from January 2026. We explain why compliance matters, outline key requirements and provide practical steps for stakeholders to prepare for the changes.

Why does compliance matter?

Under the new regulations, Ofgem will have the authority to impose penalties where an authorisation condition or relevant requirement has been breached. Non-compliance could lead to significant financial and reputational consequences.

Entities involved in the provision of heat networks should consider:

• Are they affected by the regulations? For example, are they a heat supplier or operator?
• If so, are they already compliant - or how can they achieve compliance?

Ofgem is currently consulting on the full suite of authorisation conditions, having previously consulted on them separately over the last year. All relevant heat network consultations can be found here. 

What is the focus of the new regulation? 

Registration and authorisation

Ahead of the January 2026 implementation date, Ofgem is encouraging all heat network suppliers and operators to register with the Energy Ombudsman. Once the regulations take effect, providers must obtain Ofgem authorisation and ensure full compliance with all requirements.

Networks operating before January 2027 will receive deemed authorisation, meaning they are automatically authorised. New schemes starting after this date must apply for authorisation before commencing operations.

Even with deemed authorisation, all operators must register with Ofgem before 26 January 2027 via the Heat Networks Digital Service. Registration will identify regulated entities and establish a compliance baseline for ongoing supervision.

Consumer protections

The new regulatory framework introduces significant measures to safeguard heat network customers.

• Ofgem will benchmark heat network prices against gas and heat pump alternatives and will have powers to investigate pricing to ensure fairness. 
• From 2027, Guaranteed Standards of Performance (GSOPs) will apply, setting clear expectations for service delivery, including repair times and outage response. 
• The new regulations also adopt Ofgem’s definition of vulnerability, requiring suppliers to maintain a Priority Services Register and provide tailored support for vulnerable consumers. 

How can stakeholders prepare?

Stakeholders, including operators, landlords, and suppliers, should begin taking steps now to ensure compliance. First, confirm whether your organisation is classified as an operator or supplier under the new rules and clarify internal roles and responsibilities.

If your organisation is subject to the new regulation, you should as a priority:

• Register with Ofgem for deemed authorisation.
• Review existing billing and customer supply contracts to meet transparency requirements. 
• Upgrade metering and billing systems to align with technical standards.
• Implement robust consumer protection measures, including complaints handling and support for vulnerable customers.
• Review your change-in-law clauses in long-term contracts to understand who is responsible for the additional costs of complying with these regulatory changes.

Where you need support in understanding how these changes affect you, or require specific guidance on the changes you have identified, please get in contact with Brian Farrell.