For heat networks to work for the people who rely on them, they must be designed and operated with residents’ everyday experiences in mind.
Historically, maintenance of heat networks and charges for energy have been governed by the lease and charged via the service charge. This has meant that residents have not had the same level of clarity on energy and maintenance costs as they would have if they were billed separately. It has also meant that performance hasn’t been benchmarked, resulting in poorly performing networks with high maintenance costs, leaving residents frustrated and unsure where to turn.
With the introduction of a new regulated framework, residents can now benefit from systems and processes that address these challenges. Stuart Wilcox, Head of Critical Infrastructure and Mairead McErlean, Head of Compliance and Regulatory Affairs at FirstPort explain how the Energy Act aims to ensure fairer, more efficient systems.
Enhancing Consumer Protections Through the Energy Act
Historically, heat networks were governed only by lease terms and were largely unregulated - an issue that grew as many systems aged and became prone to faults, inefficient performance and rising energy use. This increased residents’ costs, which were often hard to understand due to unclear billing and limited guidance.
The Energy Act addresses these issues, introducing formal regulation for heat networks, including mandatory standards for design, installation, maintenance and operation.
For consumers, the most visible change is greater protection and transparency. Operators must now provide clear, plain language contracts that explain pricing, service levels, and what residents can do if something goes wrong. Transparent pricing is a central requirement, giving residents a better understanding of how their heat charges are calculated and what they are paying for.
Accountability and customer support and are also reinforced under the new regulations. Operators are required to publish detailed performance standards and clear complaint handling procedures, so residents know how to report faults, what response times to expect, and how issues will be escalated. They are also required to join an Ombudsman scheme, giving residents access to an independent body to resolve disputes fairly and efficiently.
The regulations also provide more robust protection for vulnerable customers. This includes strict rules around disconnections for nonpayment and the requirement for operators to offer support such as payment plans or tailored assistance to ensure residents remain safe and warm. Overall, the Energy Act brings heat networks in line with other regulated utilities – ensuring residents benefit from greater clarity, fairer treatment, and a more reliable service backed by enforceable standards and independent oversight.
What Is a Heat Network?
Heat networks generate heat centrally and distribute it to individual homes - an approach widely used overseas, with some networks supplying entire neighbourhoods. As Stuart notes: “Heat networks aren’t a new concept. Nordic countries, in particular, have been highly advanced in their use for many years. We’re now seeing this expertise spread across much of Europe and into the UK.”
In the UK, networks are typically small scale, serving single buildings or developments. They support net zero goals through greater energy and carbon efficiency and easier integration of low carbon heat sources. Government aims to grow their share of the heat market from 3% today to 20% by 2050.
What Funding Is Available?
The Heat Network Efficiency Scheme (HNES) funds both physical improvements and Optimisation Studies for underperforming systems. Stuart explains: “We’ve successfully applied for a number of these studies, which then gives us the benchmark to carry out detailed design studies, enabling us to apply for capital to fund improvements.”
Up to 49% of qualifying capital costs can be refunded - provided projects reduce carbon, improve efficiency or strengthen resilience. Last year, two FirstPort developments received funding for Optimisation Studies.
Case Study – Capital East Phase II
FirstPort secured £489,900 in HNES funding to upgrade the communal heat network supplying two buildings at Capital East Phase II in London. One of the first developments in the UK to have a communal heat network, the original prototype system at Capital East Phase II had reached the end of its life, resulting in inefficient performance, and excessive maintenance callouts. HNES funding enabled a full replacement with a modern, high-performing network serving over 380 homes.
Selected in HNES Round 7, the project focused on improving network efficiency, supported through a combination of physical upgrades and optimisation studies.
With the upgraded communal heating system now fully operational, residents are experiencing improved performance throughout its first peak winter season - alongside the expectation of lower energy costs compared with recent years. The modernised system is already delivering measurable improvements: since installation, reactive engineer callouts have fallen by 79% year on year. This significant reduction reflects a more efficient, resilient network that minimises disruption, enhances comfort, and helps residents feel confident in the long-term performance of their building’s heating infrastructure.
Understanding Legislative Implications
Previously, heat networks were governed mainly by lease terms. The Energy Act moves key oversight into statutory regulation, meaning statutory requirements override lease provisions.
However, this creates practical challenges, including separating energy charges from service charges and introducing standalone agreements. Speaking on the Built, Managed, Lived. podcast, Mairead notes: “There are some very definite practical issues, particularly separating the energy charges from the service charge in the lease and putting them into standalone agreements. We’re now waiting for further guidance from Ofgem on exactly how that is going to work.”
She adds that other legislation, such as the Landlord and Tenant Act, also applies: “In practice, some of these things don’t fit together perfectly and that’s something that will need to be clarified in the coming months and years.”
Looking to the Future
When implemented correctly, heat networks can deliver both immediate and long-term benefits. At a time when household budgets are under increasing pressure, more efficient systems help residents feel the impact straight away, through lower energy use and more stable performance – resulting in reduced energy bills and maintenance costs.
Over the longer term, heat networks provide valuable flexibility, as centralised systems can adopt new technologies far more easily than individual household boilers. As Stuart explains:
“The advantage of having a heat network is you can change the source of your heat relatively quickly and easily, and you have a bigger impact almost immediately.”
He adds:
“Rather than replacing boilers in each property, you’d go to the energy centre and upgrade your technology there, which gives the opportunity to look at different sources of heat, such as recycling of waste heat.”
This ability to adapt and modernise at scale means heat networks can continuously improve while keeping disruption to a minimum. And as Stuart reflects:
“Anybody working in heat networks right now has the ability to do something that makes meaningful change to residents. And I think that’s a good opportunity and a nice place for the industry to be in.”
A day in the life of heat networks
To coincide with the launch of our debut podcast episode Heat Networks: From Pipes to Policy, we’ve produced the following illustration explaining how heat networks quietly power everyday life:
