Ofgem and the Department for Energy Security and Net Zero have published a consultation seeking views on the future regulation of heat networks, Consumer Scotland said on 8 August 20231. The proposals cover consumer protection, technical standards and carbon limits for the networks, which supply heat from a central source through underground pipes carrying hot water1.
The introduction of regulation is expected to commence from 2025, according to Consumer Scotland, and will establish Ofgem as regulator for heat networks so that consumers can get a fair price and a reliable supply of heat1. The body said the regime will help ensure all heat network consumers are given a comparable level of protection to customers of gas and electricity in the regulated energy sector1. It added that Ofgem will help facilitate market growth by ensuring heat network developers can access powers equivalent to other utilities, enabling networks to be built more quickly and cost effectively1. Regulation will also support decarbonisation and energy efficiency improvements by raising technical standards and introducing carbon emissions limits on heat networks1.
The consultation also sets out the role Consumer Scotland will play, becoming the consumer advocate for heat networks in Scotland, with Citizens Advice taking on a similar role in England and Wales to ensure parity across the UK1. Consumer Scotland said it will carry out research into the issues and experiences heat network users face, formally represent consumers on industry and advisory groups, and develop work on consumers in vulnerable circumstances1. It said it will respond to the consultation, and that it has been working with the Scottish Government, the Department for Energy Security and Net Zero and Ofgem during the development of regulation1.
"The introduction of regulation, which is expected to commence from 2025, will help ensure all heat network consumers are given a comparable level of protection to customers of gas and electricity in the regulated energy sector."
At present, around 1.5% of Scotland's heat is supplied from heat networks, and the Scottish Government has set a target to increase this to 8% by 2030, equivalent to around 650,000 additional homes, Consumer Scotland said1. It said the consultation is particularly important as it will provide better consumer protection for heat network users at this time of expansion1. The consultation document itself has not been reported, and no closing date for responses has been reported.
Why it matters for households
Heat networks are distinct from the gas and electricity market: households on a network buy heat rather than a fuel, and until regulation begins they sit outside the price cap and supply licence conditions that apply to gas and electricity suppliers. Consumer Scotland's comparison with the regulated energy sector indicates the intended change is to bring protections closer to those that apply to conventional supply1. For a household on a network, the practical questions are price, reliability of supply and what happens when something goes wrong; the consultation covers the first two through Ofgem's proposed role, and the third through the new advocacy arrangements1. The heat network regulation guide sets out how the regime is structured. The wider framework of rules, consultations and how they become law is covered in the energy regulation and policy guide, and the department's role in the DESNZ guide.
What happens next
Regulation is expected to commence from 20251. Consumer Scotland said it will respond to the consultation and will continue working with government, Ofgem and the industry, and with Citizens Advice, as the regime is developed1.