Preparing for heat network regulations: key considerations for local authorities

Support for early planning

Heat networks across Great Britain are entering a fundamental transition. From January 2026, they will move from an unregulated sector to a fully regulated utility, overseen by Ofgem through the Energy Act 2023 and the Heat Networks (Scotland) Act 2021. For many councils, this is not simply a technical change but a significant organisational one. This report provides an essential early guide for local authorities preparing for this shift, helping them understand how the new consumer protection, technical assurance, and registration requirements will apply in practice.

The report highlights that regulatory obligations depend heavily on the different ways a local authority may be involved in heat networks. It introduces seven use cases that range from full ownership and operation, to minority stakes in joint ventures, through to enabling roles, communal housing systems, anchor customer arrangements, community-led partnerships, and combined authority coordination.

For each use case, the report goes into greater detail outlining the council’s roles and responsibilities, key challenges, and recommended preparation needs. Each use case is supported with a place-based case study to illustrate the role a council is playing within its local heat work or with specialist advice and insights.

Throughout the report, local authorities are advised that they may be regulated without realising it due to the updated definitions of communal and district heat networks under the Energy Act which capture a broader set of buildings, including libraries with sublet cafés, multi-use civic buildings, schools with nurseries, and council-owned housing blocks. The report also emphasises that housing teams will be among the first affected. New duties around transparent billing, fair pricing, complaints handling, and Priority Services Registers will require substantial changes for councils managing communally heated buildings.

Across all use cases, the report encourages councils to start preparing now, with early actions including auditing communal systems, reviewing contracts and governance, identifying internal leads, and assessing compliance risks. With obligations phasing in from 2026 and registration required by January 2027, the report emphasises that next year represents a critical window to avoid last-minute pressures, strengthen consumer protections and ensure heat networks contribute to local affordability and net zero goals.

Key findings

• Updated heat network definitions mean more local authority buildings fall under regulation, increasing compliance responsibilities across housing and estates.
• Seven use cases outline the roles local authorities could play and recommend acting early by mapping their ownership, operational, and enabling functions.
• Effective preparation for Ofgem’s new regulations will include strong governance, contract alignment, and internal coordination.