Heat networks

Under the Heat Network Zoning framework, once a zone is designated, local planning authorities can require offtakers to connect to the designated heat network and demonstrate compliance through the planning and development process, unless you prove it’s not technically or financially viable. You can find more about the Heat Network Zoning Framework here. 

For operators: 

Operators must be authorised to “operate” or “supply” heat networks. From 27 January 2026 it’s a criminal offence to carry on without a licence; existing schemes enter a deemed authorisation register between 1 April 2025 and 26 January 2027.

New authorisation conditions will impose binding rules on performance, reporting, billing transparency and consumer protection. Ofgem gains audit and enforcement powers, plus a penalty regime for breaches.

For offtakers:

Offtakers gain stronger safeguards: access to a dedicated consumer-advocacy service, formal complaints handling and clear billing standards under Ofgem’s guidance.

As Ofgem takes on regulation, contracts will need to adapt. Operators are likely to pass through additional costs - licence fees, compliance expenses and reporting requirements - so offtakers should insist on built-in flexibility within tariff formulas, cost-recovery mechanisms and service-level clauses. At the same time, greater market transparency will shift the balance of power. With Ofgem publishing performance metrics, requiring advance notice of price changes and overseeing consumer protections, offtakers will gain the leverage they need to challenge poor delivery or unfair charges.

Offtakers must put a Connection Agreement in place to govern the design, installation, commissioning and adoption of network infrastructure. This agreement sets out project milestones, connection charges, whether paid upfront or amortised, and handover criteria for primary pipework and equipment.

Alongside connection, a Supply (or Offtake) Agreement defines the ongoing terms for heat delivery. It covers tariff calculation and adjustment mechanisms, service-level guarantees (temperature, continuity, fault response), billing procedures, meter validation and termination rights.

Securing site rights requires a lease or licence for the energy centre or plantroom plus easements or wayleaves. These documents grant the operator legal access to install, maintain and replace communal pipework across third-party land or communal areas.

Finally, offtakers should ensure metering and maintenance obligations are captured, either within the Supply Agreement or via a standalone Metering Services and O&M Agreement. This clarifies who installs and services heat interface units, manages meter data in line with metering and billing regulations, and handles routine upkeep of both primary and secondary systems.

Our specialist team can help ensure you have the correct contractual agreements in place for your needs. 

By default, obtaining planning permission for heat‐network connections sits with the developer/offtaker. You’re the one laying pipes, building plant rooms or digging up roads, so you must secure consents, discharge any conditions and deal with local highways and planning teams, as well as the environment agency.

That said, it’s common to contract the operator in to pull together and submit the applications on your behalf.

Mills & Reeve’s energy law experts work closely with our construction specialists, so we can advise what you might need if you’re thinking about building or connecting to a heat network. 

Should your heat network fall short of its performance commitments, the first step is to review your offtake agreement and service-level obligations to pinpoint exactly where the operator has underdelivered. If there’s a breach, serve a formal notice setting out the failures and a reasonable deadline for remedy.

Should the operator miss that deadline, invoke the contract’s dispute-resolution process, whether mediation or arbitration, and lodge a parallel complaint under their internal procedures. If you reach a stalemate, you can ask the Energy Ombudsman to step in for an independent decision.

Our heat network solicitors draw on deep sector experience to steer clients through each of these stages, protecting your rights and securing the best possible outcome. For clear, pragmatic advice tailored to your project, please get in touch and we’d be happy to help.