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Clean Heat and Heat Networks: What’s next

Regulatory, zoning and practical insight for developers, consumers and heat source owners.

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Clean heat is central to the UK’s decarbonisation ambitions, and heat networks are playing an increasingly important role in delivering low‑carbon heat at scale. As regulation comes into force and zoning proposals reshape aspects of the market, attention is shifting from policy intent to practical implementation, compliance and long‑term operation.

A growing range of organisations are now engaging with heat networks – from developers and investors to consumers and heat source owners – often for the first time.

Burges Salmon advises clients across the full clean heat and heat network lifecycle, combining deep regulatory insight with real‑world delivery experience. This hub brings together our expertise and insight to help organisations understand what’s changing, what it means for them, and how to navigate the opportunities and challenges ahead.

What it means for you

What developers need to think about now

Heat networks are moving from policy to delivery. With new regulation in force and zoning proposals reshaping aspects of the market, developers now need to focus on building stakeholder relationships to deliver at scale and pace (for example, access to low-cost heat), compliance, and building long‑term asset value.

Deliverability and risk

As the market matures, deliverability is under closer scrutiny.

Developers are increasingly focused on:

Collaborating with other stakeholders (including heat source owners and consumers) in new ways so that each party achieves its objectives more efficiently than working alone.
Developing new commercial models which attribute the regulatory burden to those best able to manage it.
Managing revenue risk and asset value where pricing and service are regulated.
Allocating construction, availability and operational risk in a fundable way.
Building flexibility to respond to future regulatory change.

Zoning and scale

In England, zoning introduces new commercial and competitive dynamics for developers.

Issues to consider include:

How heat network zones are identified, designated and competed for.
The role and powers of Zone Coordination Bodies.
The interaction between zonal networks and campus networks, particularly for major developments.
The implications of the Advanced Zoning Programme and incumbency.
The practical impact of the Requirement to Connect.

Early engagement is key to positioning projects effectively within future zones.

Regulation

The regulatory framework now has a direct bearing on how heat network projects are designed and operated.

Key considerations include:

Registration and authorisation requirements under the Market Framework Regulations, including the separation of supply and operation, and Ofgem’s oversight of network by network compliance.
Heat Network Authorisation General Conditions, covering pricing, technical capability, financial responsibility and continuity planning.
The growing importance of HNTAS and technical standards in driving confidence, adoption and funding.
Where shared ground loop systems benefit from simpler regulatory treatment.

Regulatory strategy is now a core part of project structuring, not a post delivery issue.

How we can support you

We advise developers and investors across the full lifecycle of heat network projects, combining deep regulatory insight with real‑world delivery experience.

Our expertise includes:

Regulatory compliance, registration and authorisation.
Zone development competition strategy and bid support.
Project structuring for investment, delivery and regulatory compliance.
Procurement, contracting, adoption and operation.

Our cross-sector expertise enables us to support heat networks with the benefit of a wider energy infrastructure perspective. For example, heat networks have an important role to play in helping to reduce strain on electricity grid infrastructure, in balancing supply and demand and in making more effective use of existing resources.

What consumers need to think about now

Heat networks increasingly affect the organisations that use, commission or inherit them – not just those that build them. New regulation, zoning proposals and consumer protection requirements mean that decisions taken now can have long‑term cost, compliance and service implications.

Understanding when obligations apply, and how risks can be managed or shared, is essential.

Regulation

The new regulatory regime brings greater protection for end users but also introduces new responsibilities.

Key issues include:

Recognising when an organisation is regulated (as an operator or supplier) and the compliance implications of that status.
The impact of the authorisation regime on existing and future heat supply arrangements.
The scope of consumer protection measures, including pricing transparency, service standards and complaint handling.

Early clarity on regulatory responsibilities helps avoid unnecessary cost and liability.

Zoning, development and connection

In England, for consumers within a designated heat zone heat networks offer access to the lowest cost, low-carbon heating solution, however there may also be a requirement to connect.

Areas of focus include:

How heat network zones affect both new and existing buildings.
The implications of the Requirement to Connect for relevant categories of building (e.g. new buildings, existing large buildings (both public and commercial) and social housing).
The relationship between zonal networks and campus networks, including for phased or mixed‑use sites.
How new towns and master‑planned developments interact with zone designation and zone development competitions.

Procurement, partnering and compliance risk

Many customers will look to manage exposure through commercial structure and partnering.

Common considerations include:

for public sector consumers, compliance with the Procurement Act when connecting to a heat network or contracting for a heat supply.
Using partnering or outsourcing models to manage regulatory responsibility.
Managing long‑term cost, service and asset risk, particularly for social housing and public estates.
Understanding rights, exemptions and appeal mechanisms where applicable.

How we can support you

We work with public and private sector consumers in navigating the practical impact of heat network regulation and zoning.

Our work includes:

Advising on regulatory exposure and risk allocation.
Supporting procurement, contracting and partnering models.
Advising on Requirement to Connect, exemptions and appeals.
Helping clients manage long‑term compliance, cost and service risk.

We help consumers engage with heat networks confidently, with a clear understanding of obligations and options.

What heat source owners need to think about now

Heat networks present a growing opportunity to make effective use of surplus heat, for both commercial and social benefit, but doing so requires careful consideration of regulation, risk allocation and long‑term operational impact.

As zoning and regulation evolve, heat source owners are increasingly being expected to engage with networks in a structured way. Understanding how obligations apply – and how commercial arrangements can be designed – is key to unlocking value while protecting core operations.

Regulation and interface with existing obligations

Heat source owners often operate within their own regulatory and operational frameworks, which need to interface with heat network regulation.

Key issues include:

How the heat source owner’s applicable regulatory regime may affect the way it supplies or provides access to heat as a secondary activity, including to protect the heat source owner’s core business and the interests of its customers.
Understanding where Requirement to Connect or heat supply obligations may arise.

Commercial structure and risk allocation

Successful projects depend on balancing opportunity with operational risk.

Common considerations include:

Structuring availability and supply commitments that respect technical and operational constraints.
Pricing in a way that reflects the agreed risk share.
Designing arrangements that protect core activities while enabling predictable, long‑term heat offtake.
Addressing seasonality, storage and reliability, particularly for heat sources in continuous operation.

Sector‑specific considerations

Different heat sources raise different challenges and opportunities, for example:

Energy from Waste: revenue replacement, security of supply and long‑term pricing.
Wastewater: regulatory ring‑fencing, pricing constraints and operational flexibility.
Data centres: co‑location, reliable DC cooling (heat transfer) and technical delivery.
Industrial and ambient sources: supply/availability commitments, infrastructure interfaces and consent issues.

How we can support you

We support heat source owners in structuring heat network participation that is commercially viable, compliant and aligned with operational priorities.

Our support includes:

Advising on regulatory exposure and interface.
Structuring supply, availability and pricing arrangements.
Managing risk allocation and long‑term contractual frameworks.
Supporting engagement with developers, zone bodies and operators.

We help clients turn heat recovery opportunities into deliverable, well‑structured projects.

What developers need to think about now

Heat networks are moving from policy to delivery. With new regulation in force and zoning proposals reshaping aspects of the market, developers now need to focus on building stakeholder relationships to deliver at scale and pace (for example, access to low-cost heat), compliance, and building long‑term asset value.

Deliverability and risk

As the market matures, deliverability is under closer scrutiny.

Developers are increasingly focused on:

Collaborating with other stakeholders (including heat source owners and consumers) in new ways so that each party achieves its objectives more efficiently than working alone.
Developing new commercial models which attribute the regulatory burden to those best able to manage it.
Managing revenue risk and asset value where pricing and service are regulated.
Allocating construction, availability and operational risk in a fundable way.
Building flexibility to respond to future regulatory change.

Zoning and scale

In England, zoning introduces new commercial and competitive dynamics for developers.

Issues to consider include:

How heat network zones are identified, designated and competed for.
The role and powers of Zone Coordination Bodies.
The interaction between zonal networks and campus networks, particularly for major developments.
The implications of the Advanced Zoning Programme and incumbency.
The practical impact of the Requirement to Connect.

Early engagement is key to positioning projects effectively within future zones.

Regulation

The regulatory framework now has a direct bearing on how heat network projects are designed and operated.

Key considerations include:

Registration and authorisation requirements under the Market Framework Regulations, including the separation of supply and operation, and Ofgem’s oversight of network by network compliance.
Heat Network Authorisation General Conditions, covering pricing, technical capability, financial responsibility and continuity planning.
The growing importance of HNTAS and technical standards in driving confidence, adoption and funding.
Where shared ground loop systems benefit from simpler regulatory treatment.

Regulatory strategy is now a core part of project structuring, not a post delivery issue.

How we can support you

We advise developers and investors across the full lifecycle of heat network projects, combining deep regulatory insight with real‑world delivery experience.

Our expertise includes:

Regulatory compliance, registration and authorisation.
Zone development competition strategy and bid support.
Project structuring for investment, delivery and regulatory compliance.
Procurement, contracting, adoption and operation.

Our cross-sector expertise enables us to support heat networks with the benefit of a wider energy infrastructure perspective. For example, heat networks have an important role to play in helping to reduce strain on electricity grid infrastructure, in balancing supply and demand and in making more effective use of existing resources.

What consumers need to think about now

Heat networks increasingly affect the organisations that use, commission or inherit them – not just those that build them. New regulation, zoning proposals and consumer protection requirements mean that decisions taken now can have long‑term cost, compliance and service implications.

Understanding when obligations apply, and how risks can be managed or shared, is essential.

Regulation

The new regulatory regime brings greater protection for end users but also introduces new responsibilities.

Key issues include:

Recognising when an organisation is regulated (as an operator or supplier) and the compliance implications of that status.
The impact of the authorisation regime on existing and future heat supply arrangements.
The scope of consumer protection measures, including pricing transparency, service standards and complaint handling.

Early clarity on regulatory responsibilities helps avoid unnecessary cost and liability.

Zoning, development and connection

In England, for consumers within a designated heat zone heat networks offer access to the lowest cost, low-carbon heating solution, however there may also be a requirement to connect.

Areas of focus include:

How heat network zones affect both new and existing buildings.
The implications of the Requirement to Connect for relevant categories of building (e.g. new buildings, existing large buildings (both public and commercial) and social housing).
The relationship between zonal networks and campus networks, including for phased or mixed‑use sites.
How new towns and master‑planned developments interact with zone designation and zone development competitions.

Procurement, partnering and compliance risk

Many customers will look to manage exposure through commercial structure and partnering.

Common considerations include:

for public sector consumers, compliance with the Procurement Act when connecting to a heat network or contracting for a heat supply.
Using partnering or outsourcing models to manage regulatory responsibility.
Managing long‑term cost, service and asset risk, particularly for social housing and public estates.
Understanding rights, exemptions and appeal mechanisms where applicable.

How we can support you

We work with public and private sector consumers in navigating the practical impact of heat network regulation and zoning.

Our work includes:

Advising on regulatory exposure and risk allocation.
Supporting procurement, contracting and partnering models.
Advising on Requirement to Connect, exemptions and appeals.
Helping clients manage long‑term compliance, cost and service risk.

We help consumers engage with heat networks confidently, with a clear understanding of obligations and options.

What heat source owners need to think about now

Heat networks present a growing opportunity to make effective use of surplus heat, for both commercial and social benefit, but doing so requires careful consideration of regulation, risk allocation and long‑term operational impact.

As zoning and regulation evolve, heat source owners are increasingly being expected to engage with networks in a structured way. Understanding how obligations apply – and how commercial arrangements can be designed – is key to unlocking value while protecting core operations.

Regulation and interface with existing obligations

Heat source owners often operate within their own regulatory and operational frameworks, which need to interface with heat network regulation.

Key issues include:

How the heat source owner’s applicable regulatory regime may affect the way it supplies or provides access to heat as a secondary activity, including to protect the heat source owner’s core business and the interests of its customers.
Understanding where Requirement to Connect or heat supply obligations may arise.

Commercial structure and risk allocation

Successful projects depend on balancing opportunity with operational risk.

Common considerations include:

Structuring availability and supply commitments that respect technical and operational constraints.
Pricing in a way that reflects the agreed risk share.
Designing arrangements that protect core activities while enabling predictable, long‑term heat offtake.
Addressing seasonality, storage and reliability, particularly for heat sources in continuous operation.

Sector‑specific considerations

Different heat sources raise different challenges and opportunities, for example:

Energy from Waste: revenue replacement, security of supply and long‑term pricing.
Wastewater: regulatory ring‑fencing, pricing constraints and operational flexibility.
Data centres: co‑location, reliable DC cooling (heat transfer) and technical delivery.
Industrial and ambient sources: supply/availability commitments, infrastructure interfaces and consent issues.

How we can support you

We support heat source owners in structuring heat network participation that is commercially viable, compliant and aligned with operational priorities.

Our support includes:

Advising on regulatory exposure and interface.
Structuring supply, availability and pricing arrangements.
Managing risk allocation and long‑term contractual frameworks.
Supporting engagement with developers, zone bodies and operators.

We help clients turn heat recovery opportunities into deliverable, well‑structured projects.

In Focus

Existing networks: From deemed authorisation to compliance

For operators of existing heat networks, the introduction of the Market Framework Regulations and HNA general conditions does not immediately change the ability to operate.

Heat Networks Regulation: What it means in practice

The 2025 regulations bring heat networks under full utility-style regulation, with compliance required by 2028.

The potential for heat networks in our communities

Our report gathers insights from 80 UK-based investors and developers, alongside expert interviews on the future of heat networks in the UK and Europe.

Download the report