Ofgem has begun regulating heat networks, which provide heating, cooling and hot water to multiple properties in a building or to multiple buildings from a single source.
Previously, as a mostly unregulated market, heat network consumers were not offered many protections. Ofgem said it will begin to introduce some core protections, including:
how customers are billed; customer service standards; complaints handling and protections for vulnerable consumers. However the regulator has said it will have to work with the heat networks industry and consumer bodies to begin regulating as many parties are not currently regulated as energy providers.
Among the challenges it cited: poor design; variations in customer service and consumer protection; the large number and diversity of organisations, public bodies and private individuals and other entities who operate heat networks; and the interaction with housing regulation. It said, “To address these challenges, we are taking a phased approach to introducing regulation and will be employing a range of different regulatory methods.”

Energy UK’s chief executive Dhara Vyas said: “Ensuring households on heat networks are protected in the same way as other energy customers will raise standards across Britain’s thousands of existing heat networks and lay a foundation from which the sector can grow. Last week’s Warm Homes Plan set out an ambitious goal of doubling the amount of heat demand met by heat networks over the next 10 years. This new framework of consumer protections will provide confidence for customers and investors and serve as a launchpad for the development of new large-scale developments like city-wide, low-carbon networks.”

Aaron Gould, Interim CEO of ADE: Heat Networks, said: “After 15 years of talking about it, the wait is over. Today marks the turning point where consumer protection becomes a reality, derisking the investment we need to build a national clean heat system. Ofgem’s open, collaborative approach shows how far we’ve come. But this is just the start; the real work begins now to turn this framework into affordable, secure and low-carbon heat.”