It’s been years in the making but today, Jan 27th 2026, the regulation of all the country’s heat networks goes live. This will have significant and ongoing impacts for people living on heat networks and social housing providers that manage them. Many housing providers are now developing their plans to stay on the right side of compliance and deliver better heat networks for thousands of homes. The next year will also be critical to the new regulations and the new regulator to housing, Ofgem, and whether the approach taken has been the right one. The stakes are high for both sides and more importantly, customers. What are the early indications, and do they tell us anything about how this will play out? Time to ponder.

Why Have New Regulations Arrived?

Let’s remind ourselves of the ‘why’ on the new regulations. This country has been slow to the heat network party and over the last 50 years has, in a piecemeal fashion, created a fleet of some 14,000 heat networks with over half a million customers. Whilst very few of these networks are the same and often suffer from being poorly designed and delivered, they have been left to be sorted out by social housing providers that manage two thirds of them. Most heat networks only just cover costs, and many lose money. For heat network customers they have had little to no protections, as they do for gas and electricity, and even worse they are on a natural monopoly – with no opportunity to shop for better suppliers or deals. So, lots to address and this has been at the heart of new regulations that bring heat networks into line with other utilities and makes housing providers fully regulated energy suppliers. Not surprisingly this will be a big change for everyone and brings challenges for housing and Ofgem.

How Will the Regulations Work?

I’ll come back to some of the detail on the regulations – and there are many – but let’s look at the ‘how’. Understandably Ofgem took the existing utility regulation playbook and has aimed to apply it to heat networks. This has brought challenges because they are very different markets with thousands of heat network providers, sometimes managing only small number of customers (some less than 10), compared to big energy companies that are now down to 20 or so and who manage millions of customers. So, heat networks are a diversity and complexity challenge. What cannot be faulted is Ofgem desire to work with the housing sector and this has been reciprocated – both sides know they have lots to learn from each other if this is to work. This is why we have also been working with the National Housing Federation, Chartered Institute of Housing, Local Government Association, housing providers and Ofgem in the Regulation Task Group to provide the opportunity for both sides to set out their challenges, aims and issues and – most of all – to have a meaningful dialogue.

What is Within the Regulations?

So, the regulations themselves – what of those? These are made quite a bit more complex because they are aiming to tackle multiple objectives and not all of them work together as a whole. The three main areas are consumer protection, technical standards and heat zones. Let’s tackle those in reverse order. Heat zones will designate areas, usually urban, that will develop new heat networks and in many cases mandate connection to heat networks. The ambitions of heat zones are big, but the actual detail on them remains very small. Critically, it has not addressed, in a policy that has an element of mandating, how consumers will be protected on price and service. Much, much more homework needs to be done to address not just the supply side (pipes, finance and commercials) but the demand side (customers, cost, connections, service and the creation of monopoly providers).

High Costs and Complexity for Housing Providers

The technical standards in the form of the Heat Network Technical Assurance Scheme (HNTAS) are now out to consultation and even the industry body says they are ‘overwhelmingly complex’ and we have had two notable comments in the sector – that they go way beyond something as important as building safety and, as one said, appear to be ‘the longest suicide note in history’ for heat networks in this country. With implementation costs of £3bn and certification costs of £1bn you can see their point – heat networks have, almost overnight, become expensive, complicated and regulated. This one needs a complete rethink.

Protecting Consumers

Now on to the one that actually went live today – consumer protection. This has been broadly supported by all sides, recognising the anomaly of customers having little protection and being on a natural monopoly. Behind the consumer protection part of the regulations there are lots of details and some reasonably significant challenges set out in the Ofgem Authorisation Conditions and also plenty on what will be required on reporting. But, by and large, protecting consumers and regulation is in the social housing wheelhouse and many are now assessing their position, their portfolio, the regulation and their plans to meet them. Will everyone be fully compliant in 12 months’ time? No. But they will be on their way. Equally, will Ofgem be totally on top of regulation in 12 months? No. But they too will be well on their way.

And that’s the point – no one has done this before and we see time and again housing providers and Ofgem undertaking their ‘best endeavours’ to make this work. And they will if they continue to do this together. In this I am only talking about consumer protection – heat zonesand HNTAS need to learn the lessons of consumer protection and begin a real dialogue that focuses on the consumer and not the supply chain or even consultants.

Looking Ahead: A Defining Year

So, 2026 will be a big year as we see consumer protection regulations move from a theoretical challenge to a real one with real consequences. But much is already happening and day in day out we see housing providers do as they always do and just get on with it.  Will they and Ofgem get it all right? Nope. But it won’t be because they don’t want to or aren’t doing the best they can with very limited resources. If we remember this, we have a real chance of making consumer protection regulations work. And if they work, they will not only transform the lives of thousands of households, many on low incomes, but ensure heat networks play a role in the low-carbon future.

Chirpy Heat Insight Group

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