Heat networks sector
Heat networks generate or take heat from a central source and distribute it to multiple homes and/or businesses via a network of underground pipes. They are an alternative to each property having its own gas-fired boiler and heat is often supplied alongside cooling and/or private wire electricity.
They come in many shapes and sizes, whether simply supplying multiple units within a single building (communal heating) or serving multiple buildings or developments (district heating). They will play a vital role in the transition to net zero by 2050, with Government aiming to grow the sector tenfold by 2050.
The sector is in the process of becoming regulated for the first time and so anyone who operates a network or supplies heat or cooling will need to understand how to comply.
Why choose our heat networks team?
Our dedicated team has collective experience of over sixty projects and we have acted for all manner of stakeholders, including new build property developers, landlords, commercial property owners, manufacturers, local authorities, investors, energy services companies (ESCOs) and outsourced service providers.
We offer a full service, covering any legal aspect of a heat network project, including:
- Project contracts
- Regulation
- Procurement
- Corporate
- Construction
- Real estate
- Sustainable development
- Banking and finance
- Environment
- Planning
- Data protection
- Tax
We provide end-to-end support across all phases of a project, including:
|
Structuring, planning & regulatory |
ESCO/service provider procurement | Infrastructure, design & build |
| Contract negotiation & grant of land rights | Board approval | Implementation & team training |
Key contact
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Get ready for heat network regulation – coming January 2026
From 27 January 2026, the vast majority of heat and cooling network operators and suppliers in the UK will have a legal obligation to comply with minimum consumer protection and technical standards.
In conjunction with this, regulation is being developed which will facilitate the roll out of heat zones, within which, connection to a heat network will become the default.
For more information on how to prepare for the introduction of regulation and heat zones, see our heat network regulation and zoning page.
“Freeths guided us through complex legal issues, breaking down intricate drafting into terms we could easily grasp. Thanks to their diligence we completed the agreement on time. We can't recommend Freeths highly enough to anyone seeking heat network legal advice - their commitment to clients is truly outstanding."
Senior Development Manager, National Housebuilder
Heat network project advisory: all types and sizes
- Long-term ESCO concession or evergreen arrangements where all risk is passed to an ESCO
- Shorter-term outsourced services agreements for heat metering, billing, tariff-setting, operation and maintenance
- Landlord-led schemes
- Recovered heat off-take arrangements
- Connections into existing heat networks
- Multi-development networks
- Joint venture arrangements
- Retrofitting networks
Our heat networks legal experts can assist:
- Residential and commercial property developers, landowners, local authorities or housing associations who are installing or connecting into heat networks
- Landlords or other heat suppliers keen to ensure compliance with incoming regulation
- ESCOs or service providers looking to offer heat-related services
- Asset owners looking to retrofit an existing heat network
- Sustainability officers setting and implementing a sustainability strategy
- Company directors wanting to understand corporate responsibility under regulation
- Investor looking for a new asset class / investment opportunity
- Manufacturers or other industrial business looking to recover and use waste heat
- Energy from waste or data centre operators looking to sell recovered heat
- Contractors in the heat network supply chain
- Community energy projects
What is a heat network?
A heat network is a system that uses one or more central sources to generate heat, which is then pumped through underground pipes to provide space heating and hot water to homes and businesses. They can operate at high or ambient temperatures and often the heat is supplied alongside cooling and private wire electricity.
They are a common feature of new build residential and mixed-use developments, city regeneration schemes and commercial/industrial buildings. Capturing and supplying waste heat from sources such as incinerators or data centres can also create revenue opportunities. Boosted by government funding and first-time regulation, the UK market is rapidly growing and attracting private investment.
Some heat networks are large enough to attract an energy services company (“ESCO”) to operate the network and supply heat to customers on a full-risk basis. Others are landowner-led where one or more services are outsourced to a service provider, such as operation, billing and customer services. Some schemes are best served by a hybrid of the two.
The most appropriate technology can depend on the customer demand profile, density of the buildings to be supplied, the ground conditions and the proximity of the site to a waste heat source. Larger schemes can utilise more than one type of generating plant along the network.
- Gas - the vast majority of the UK’s legacy heat networks are gas-fired high-temperature systems and can often be used to generate both heat and electricity, known as “combined heat and power” or “CHP”. They are no longer considered low-carbon and new installations will not meet planning or building regulation standards. Over time, existing systems will be phased out for lower-carbon solutions.
- Heat pumps – these run on electricity. They take ambient heat from the air, water or ground and can boost and/or reduce the temperature to provide heat and/or cooling. They can also boost the temperature of waste heat from sources such as industry and data centres. Large-scale heat pumps are the most widely used alternative to gas-fired CHP and smaller-scale ground source schemes are ideal for low density housing.
- Waste heat recovery – many commercial and industrial process create heat as a byproduct, which can be harnessed and either re-used by the owner or sold to third parties, perhaps neighbouring developments. Energy from waste plants and data centres are common sources.
- Geothermal – heat can be taken from the ground at temperatures ranging from 10°C to 40°C degrees, depending on the depth of the borehole. Former coal and tin mines provide ideal extraction infrastructure.
All heat networks run through land or buildings and so operators will have to ensure that they have sufficient access rights. Short-term service operators should be granted a simple access licence, whereas ESCOs taking long-term operational risk will expect a lease of the generating plant and a lease or easements over the network. It is imperative that landowners accommodate such rights in their development and disposal plans.
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Watch our latest webinars
We hosted a follow up webinar discussing the decarbonisation and impending regulation of heat networks, and were joined by Barn Evans, Director at Turley and Arran Morning, Head of Heat Network policy at the Department for Business, Energy and Industrial Strategy:
Heat Networks – Part 1 – an intro and hot topics – YouTube >
We hosted a follow up webinar discussing the decarbonisation and impending regulation of heat networks, and were joined by Barny Evans, Director at Turley and Arran Morning, Head of Heat Network policy at the Department for Business, Energy and Industrial Strategy:
Heat Networks – Part 2 – decarbonisation and regulation – YouTube >
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Meet our team
Kirstin Roberts FCIWM
Director
Danielle Sinclair
Managing Associate
Patrick Adie
National Head of Housebuilding & Strategic Land
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