On 27 January 2026, Great Britain’s heat network sector reached a significant milestone when statutory regulation entered into force. As the heat network regulator, Ofgem now oversees the sector’s compliance with new consumer protection rules and will soon require all heat networks to register on a new digital service.
In this article, we provide key information on how the sector can prepare for regulation.
What happened on 27 January 2026?
This is when consumer protection rules entered into force in the form of authorisation conditions. Ofgem now have powers to take action to ensure that heat networks comply with these conditions. On 13 January, Ofgem published the final version of the authorisation conditions that entered into force on 27 January. They include rules on registration, fair pricing, financial resilience, standards of conduct and billing.
Who is affected?
Ofgem now regulates both communal heat networks (supplying heating, cooling or hot water to a single building with multiple premises) and district heat networks (supplying heating, cooling or hot water to two or more buildings). The regulated entities are those that operate a heat network and those that supply heat, cooling or hot water to the end consumer. For many heat networks, the operator and supplier will be the same entity.
How will Ofgem approach regulating the sector?
Ofgem recognises that regulatory readiness will vary across the sector given its diversity. The regulator reiterated in this recent publication that the early stages of regulation will involve “working with the sector to embed the new rules”. Reading between the lines, it’s clear that Ofgem won’t be taking a heavy-handed approach to compliance and enforcement action whilst operators and suppliers adapt to the changes. The ask of the sector is for efforts to focus on “improving consumer outcomes”.
How can I register my heat network(s)?
Although regulation entered into force on 27 January, you can’t register your heat networks because Ofgem’s digital service is not yet ready. Service launch is expected in Spring 2026. In the meantime, legislation provides that all operators and suppliers are automatically authorised to continue their functions. This automatic authorisation ends on 26 January 2027, by which point all operating heat networks will need to be registered to the digital service.
What should I do to prepare?
We recommend taking a staged approach to understanding your organisation’s compliance position:
- Audit all housing and building stock connected to a communal heating system.
- Establish which systems are classed as a heat network, and therefore in scope of Ofgem’s heat network regulatory framework.
- Review commercial models against the definitions of, and requirements on, heat network operators and suppliers.
- Conduct a comprehensive review of all regulatory requirements and capture them in a matrix.
- Conduct an audit of your systems and operations against the regulatory requirements to understand your compliance risk position.
- Identify changes needed to systems and operations to ensure compliance.
- Implement continuous improvement systems for ongoing compliance through staff training and ongoing audits.
How can Engage provide support?
At Engage, we have a team of expert consultants with extensive and direct experience in:
- Designing and interpreting the incoming heat network regulations
- Supporting regulated entities to comply with regulatory requirements
We can therefore support you across all stages of the compliance journey. If you’d like to find out more, speak to one of our heat network experts, Lorenzo Wong and Sophie Dooley.
