The Scottish Government published the draft Buildings (Heating and Energy Performance) and Heat Networks (Scotland) Bill in November 20251. The draft proposes an opt in licensing regime that would let heat network developers in Scotland access rights and powers for matters such as road works, survey and compulsory purchase1. It also proposes that certain buildings within a designated heat network zone cease using polluting heating systems and adopt a decarbonised heat solution1.
The government states the draft Bill is intended to give clarity to industry and stakeholders and to support the decarbonisation of heat in buildings, described as moving away from fossil fuel heating such as gas boilers1. On the demand side, the government says the requirement on buildings in zones would provide some assurance of demand for heat from heat networks, supporting their development1.
"The draft (Heating and Energy Performance) and Heat Networks (Scotland) Bill also includes proposals that require certain buildings, within a designated heat network zone, to cease their use of polluting heating systems and adopt a decarbonised heat solution."
Heat networks supply heat to homes and other buildings from a central source, avoiding the need for individual gas boilers1. Just under 2% of Scotland's heat is supplied from heat networks1. Targets set in the Heat Networks (Scotland) Act 2021 require thermal energy supplied through heat networks to reach 2.6 terawatt hours of output by 2027, 6 terawatt hours by 2030 and 7 terawatt hours by 2035, which the government equates to approximately 3%, 8% and 9% of current non-electrical heat consumption respectively1.
| Target year | Thermal energy output | Share of current non-electrical heat consumption |
|---|---|---|
| 2027 | 2.6 TWh | about 3% |
| 2030 | 6 TWh | about 8% |
| 2035 | 7 TWh | about 9% |
Regulation of heat networks is devolved to the Scottish Parliament, and the Heat Networks (Scotland) Act 2021 introduced powers to regulate the market in Scotland for the first time1. Consumer protection matters including pricing, transparency and quality of service are reserved, with the UK Parliament retaining power to legislate1. The Energy Act 2023 was passed by the UK Parliament in October 20231.
The phase in of consumer protection and authorisation regulations across Great Britain has begun. Advice and advocacy services started for consumers in April 2025; in Scotland, Consumer Scotland, Advice Direct Scotland and the Citizen's Advice Extra Help Unit will advocate for Scottish consumers and escalate key issues, with the Energy Ombudsman providing an independent escalation route for complaints1. On 27 January 2026, Ofgem's formal role as regulator of heat networks began with the initial set of rules in place1. Existing heat network operators and suppliers have been given a deemed authorisation and have until 26 January 2027 to register with Ofgem; after that date all new heat networks must apply to Ofgem for authorisation1. Ofgem will collect data through registration to inform work on pricing benchmarks and Guaranteed Standards of Performance1.
Why it matters for households
For a household whose home is heated through a heat network, the practical changes sit mainly with the operator and supplier rather than the home. The registration deadline of 26 January 2027 and Ofgem's rules create a route to hold operators and suppliers accountable where service falls short of expectations, and the government says protections will give consumers greater confidence through a more consistent standard of service across the sector1. The draft Bill's zoning proposals matter most to homes inside a designated heat network zone, where certain buildings would be required to stop using polluting heating and adopt a decarbonised heat solution1. That would affect the choice of heating system in those buildings, though the draft does not set out which buildings or which measures in the text published so far. For homes outside zones, no change to heating arrangements is proposed in the draft. The scale of the sector remains small: just under 2% of Scotland's heat comes from heat networks1, against a 2035 target of 7 terawatt hours, about 9% of current non-electrical heat consumption1.
What happens next
The draft Bill was published in November 20251. Existing heat network operators and suppliers must register with Ofgem by 26 January 2027, after which new heat networks must apply for authorisation1. The government says it continues to work with the UK Government and Ofgem to make the GB wide and Scottish regulatory regimes interoperable and to minimise duplication where possible1. The government also publishes biannual progress reports on projects funded through Scotland's Heat Network Fund, which launched in February 2022 and provides capital grant funding to public and private sector organisations1.