Heat networks operate by supplying heat via a central source to customers. In effect, it means that there is no need for every building to have an individual boiler or electric heaters.

The networks can cover areas that range from being local neighbourhoods to powering entire cities.

Under the new Government plans, homes and businesses which are supplied by heat networks could receive greater consumer protection than is currently being offered.

The new protections would match those that are offered to those on traditional gas and electricity contracts.

Fairer prices for heat network customers would be ensured, as they would be included in any future price caps on energy bills.

Additionally, from 2025, Ofgem will be able to step in where homes and businesses have issues with unequal pricing, alongside poor customer service and reliability.

Operators could also be subject to fines for substandard services, and they would also have to pay for compensation to customers if there is a supply outage.

This is particularly welcome after reports last year that half a million households were trapped in unregulated heat networks despite soaring energy prices.

Millions being invested

Lord Callanan, the minister for energy efficiency and green finance, said: “We’re investing millions to build new heat networks, reducing emissions and providing low-cost heating to communities across the country.

“Heat networks allow people to heat their homes more cleanly, while cutting their costs and reducing carbon emissions. They are also an important tool in our push for greater energy security and independence.”

Caroline Bragg, the interim CEO of the Association for Decentralised Energy commented: “We commend the Government’s decision to launch a consultation with Ofgem on consumer protections for heat networks, a milestone long awaited by our sector.

“If the UK is to successfully deliver on Net Zero, [then] zero carbon heat networks must indisputably take centre stage as the primary heating solution for buildings, and so it is critical that the millions of businesses and households that will benefit from them are properly supported.”

Stephen Knight, the director of Heat Trust, a non-profit organisation which protects heat network customers, said: “As the national consumer champion for heat networks, Heat Trust has long campaigned for the regulation of the sector and we therefore welcome this important consultation.

“Heat networks have a key role to play in the decarbonisation of heating in the UK, but customer experiences must improve if consumers are to gain confidence in district and communal heating systems. Whilst many heat network customers get a reliable and value-for-money heating system, sadly, too many do not. Too often customers experience high prices, unreliable systems, and poor customer service.”