The transition into 2026 has been marked with numerous changes for the UK’s district heating industry. New regulation and legislation has come into force, triggering disruption for all parts of the industry’s supply chain. But with these changes comes increased certainty for investors – which is good news for all of us. To keep things simple (and save you a lot of reading) we’ve drafted a high-level summary of what’s come into play for heat networks, in January 2026.
Ofgem regulation
27th January was a landmark moment for the UK’s district heating sector, with Ofgem formally becoming the regulator for heat networks across the UK. This change follows the Energy Act 2023 and is designed to bring heat network governance into line with other energy sectors, giving consumers new protections and industry partners clearer regulatory expectations.
With Ofgem’s regime now in place, heat network operators and suppliers will need to comply with new rules on consumer protection, pricing transparency, billing clarity, and complaint handling. Ofgem will have the power to take action against unfair pricing or poor service and customers will be able to seek redress via the Energy Ombudsman.
For those delivering and managing heat networks, the most pertinent change is embedding compliance processes into their operations – including the need to register with Ofgem by January 2027. Looking ahead, the clearer regulatory framework should reduce risk, boost confidence in investment decisions, and help accelerate deployment at scale – the result of which will help UK Government to meet its ambitious net zero targets.
The Warm Homes Plan
In late January 2026 the UK government also published its £15 billion Warm Homes Plan. This strategy sets out a broad suite of policies to improve energy efficiency, cut bills, and accelerate the adoption of low-carbon heating technologies across millions of homes and buildings. At its heart, the plan aims to tackle fuel poverty while shifting the nation’s heating infrastructure towards cleaner solutions: including heat pumps and insulation, heat networks, and solar panels.
For the district heating industry the Warm Homes Plan is significant. It commits a £1.1 billion allocation specifically for heat networks within the overall investment envelope. This includes expanded funding via mechanisms like the Green Heat Network Fund (GHNF), which will be supported by £195 million per year out to 2029–30, and broader capital mobilisation from the National Wealth Fund. DESNZ (the Department for Energy Security and Net Zero) has also outlined its aim to more than double the amount of heat demand met via heat networks in England – to at least 7 % by 2035.
Beyond the headline figures, the plan signals lasting market support. With this level of public investment and policy focus, the market is now positioned to deliver on strategic decarbonisation goals and attract private capital. The plan dovetails with existing incentives for heat pumps and energy efficiency, meaning that heat networks can act as both a decarbonisation enabler and a customer-focused solution for local energy delivery.
Green Heat Network Fund awards next round of projects
The Green Heat Network Fund (GHNF) has kicked off 2026 with a fresh round of investment, announcing £47 million in funding for four low-carbon heat network projects across England.
This latest funding round supports innovative schemes in London, Greater Manchester and Sunderland. The awards will help bring forward networks that utilise a range of low-carbon heat sources (including heat recovered from waterways, wastewater treatment works and data centres) demonstrating the variety of technical approaches in and flexibility of the sector today. Among the projects receiving support are:
• Waterloo and South Bank heat network in London.
• Media City heat network expansion in Greater Manchester.
• Additional schemes in Hounslow and Sunderland.
Taken together, Ofgem’s new regulatory role, the Warm Homes Plan, and the latest round of Green Heat Network Fund awards paint a picture of an industry entering a new phase of maturity. There is now the policy signal and financial backing to scale heat networks as a key part of the UK’s net-zero transition.
That said, to fully realise this potential the industry must focus on two things: upskilling the workforce and securing resilient supply chains. With demand likely to grow rapidly, ensuring there are enough skilled professionals will be essential to delivery.
