From Tuesday 27 January 2026 (the “Launch Date”), the remaining provisions of the Heat Networks (Market Framework) (Great Britain) Regulations 2025 (the “Regulations”) come into effect. In this note we set out some considerations and key actions for heat network operators and suppliers.
1. Authorisation and Registration
Authorisation has been required to operate a heat network or supply heat or cooling from a heat network since 1 April 2025. As part of the transitional arrangements, existing operators and suppliers qualify for deemed authorisation until 26 January 2027. New operators and suppliers commencing activities before 26 January 2027 will also benefit from deemed authorisation. All deemed authorised operators and suppliers must register their activities with Ofgem by 26 January 2027 using the new digital service.
ACTION:
- Make sure you register with Ofgem within the required timescales. The digital service is anticipated to launch in April 2026. It would be prudent to do this promptly once the digital service is available in case you encounter any issues.
2. Authorisation Conditions and Consumer Protection
From the Launch Date, the full suite of authorisation conditions apply to heat network operators and suppliers who benefit from deemed authorisation. Ofgem published the final draft conditions on 13 January available here Heat networks regulation: authorisation conditions | Ofgem. At the same time, Ofgem also published guidance on consumer protection, fair pricing and financial resilience. There are over 70 pages of authorisation conditions plus the guidance but some key themes include:
- Standards of Conduct: these include broad principles to be followed to achieve positive consumer outcomes such as provision of complete and accurate information to customers, acting promptly to address mistakes, ensuring vulnerable customers are treated fairly and actively engaging with customers.
- Supply Terms: these include detailed requirements for the content of heat supply agreements, customer complaint procedures and billing processes including support for customers in payment difficulty.
- Fair Pricing: charges imposed on customers must be fair and not disproportionate. Charges must be cost reflective and those costs must be efficient with authorised persons making only a fair and reasonable return. Prices should be communicated to customers clearly and transparently.
- Financial Resilience: there is a requirement to have sufficient resources available to deliver the regulated activities and to have the necessary rights over material assets and a continuity plan in place to ensure continuity of service if the authorised person ceases to carry on its activities.
ACTIONS:
- Read: familiarise yourself with the authorisation conditions and associated Ofgem guidance and ask if you need clarification.
- Assess: carry out a gap analysis for your existing processes and supply contracts to check for alignment with the authorisation conditions particularly around pricing, billing, complaints, vulnerable customers and information provision.
- Plan: develop a compliance action plan to prioritise and address any non-compliance identified.
3. Enforcement
From the Launch Date, Ofgem have full powers to take enforcement action should heat network operators or suppliers fail to comply with the authorisation conditions or commit certain offences under the Regulations (for example, failing to provide information required by Ofgem or providing false or misleading information).
Enforcement powers include the ability to make consumer redress orders. Under a consumer redress order a heat network operator or supplier might be required to pay compensation to the consumer, issue a written statement explaining the breach and its consequences or vary or terminate the consumer’s contract.
Ofgem have stated that they will take a principles-based, outcomes-focussed approach to regulation. They have also recognised that some operators and suppliers will face challenges in being fully compliant from the Launch Date and will work collaboratively with the sector to improve consumer outcomes. Ofgem will however take more serious action where proportionate, for example, authorised persons fail to work with Ofgem constructively, there is harm to consumers or there is a need to deter future non-compliance.
ACTIONS:
- Take positive action to implement your compliance plans. Engage constructively with Ofgem where required and seek advice where necessary.
- If you haven’t already, register with the Energy Ombudsman to ensure consumer disputes can be dealt with promptly.
4. Technical Standards
The UK government is introducing regulatory technical requirements and a Heat Network Technical Assurance Scheme (HNTAS) to help heat network operators demonstrate compliance with technical standards. The government published a consultation on 21 January 2026 seeking views on the scope of technical standards, governance of HNTAS and assessment and certification (available here Heat network technical standards - GOV.UK). The scheme is expected to be launched in 2027.
ACTION:
- Have your say by engaging with the consultation.
Get in touch
With over 20 years’ experience in heat networks, Brodies is well placed to support heat network operators and suppliers during this transition. If you have any questions on the regulations and what it means for your business, please contact Sarah-Jane McArthur.
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