The next-gen network
New legislation and a cohort of new-generation technologies have made heat networks a hot topic and a sound investment. In this article, Louise Manfredi, CEO of Leep Utilities, explains Ofgem’s regulations and the fifth-generation approaches driving this trend.
It was recently announced regulation of heat network providers in January 2026. For heat network customers, this is welcome news. Many have had far from ideal services, without the statutory and consumer protections that other utilities have. Providers will be required to meet technical and efficiency standards, while also providing clear and fair pricing structures, including notice of tariff changes. Ofgem will also provide a formal dispute resolution service for customers and suppliers.
The aim is to bring heat in line with the regulations of other utilities to improve and standardise the overall customer service.
Some providers already meet the requirements, while others will have to do a lot of work between now and 2026. However, the regulations also provide a dual purpose. They will also ensure a solid foundation for investment in the UK heat network market, which is set to grow by 500% over the next 25 years – regulation means investor confidence.
Supporting Net Zero and primed for market growth
Heat networks are increasing in popularity and number for a clear reason: They are ideal for providing efficient, low carbon heat. They work by generating heat centrally from a range of different sources and distributing it through a pipe network to nearby properties. This makes them ideal for dense and urban areas.
With the UK on a firm path to Net Zero greenhouse gas emissions by 2050, heat networks offer an unrivalled opportunity to reduce the carbon associated with heating homes and businesses, as well as providing cost effective energy solutions.
Currently, around 3% of total UK heat demand is met through heat networks. By 2050, to meet Net Zero, heat networks are projected to account for 18% of total demand. The investment that will fuel this 500% growth is estimated to be somewhere in the region of £80 billion. This is not just for building new heat networks, however. It’s also for upgrading older heat networks to meet the latest technical specifications that are being introduced.
Out with the old
Though they share the same principles, modern heat networks have come a long way from some of the first constructed, including the coal-fired Battersea power station heat network, built in the late 19th century. In a twist of fate, we played a key role in the redevelopment of this site over the last few years. Since those first networks we constructed, every new generation has become more efficient. They operate at lower network temperatures to reduce heat loss, and increasingly integrate sustainable fuel sources.
Today, there are approximately 18,000 heat networks in the UK. Many, however, are legacy third-generation networks that were built from the 1970s onwards in response to the oil crisis of the time. These networks are mostly fuelled by centralised gas boilers and heat the network to nearly 100°C. This is both unsustainable and unnecessarily hot, requiring significant energy to reach that temperature. The subsequent fourth-generation heat networks addressed some of the failings of the earlier technology. They reduced the network temperature below 70°C and allowed renewable power sources and energy from waste to be used as energy sources, rather than gas. Yet, it’s the focus on Net Zero which has pushed the technology into a new generation of heat network.
In with the new – next-generation heat
Fifth-generation heat networks are a major evolution in how we deliver heating and cooling. These systems operate at near-ambient temperatures, typically between 10–30°C, allowing them to integrate a wide range of low-grade and waste heat sources that were previously unusable. For example, we can now recover energy from unconventional sources, such as sewage treatment processes, or waste heat from the ventilation shafts of the London Underground – something that is already happening today. It also includes heat rejected from cooling systems, which will help to create a more balanced and efficient thermal energy network.
Fifth-generation systems don’t rely on a single centralised energy centre. Instead they work via a decentralised network of heat pumps that raise the ambient temperature to meet internal demands of the buildings they’re fitted to. Because of this, the same systems can provide cooling by operating in reverse, which puts surplus heat back into the network where it can be reused by others. In effect, each building becomes a heat sink for every other building, reducing waste and improving efficiency.
In the short-term transition towards low emission heating, a range of technologies will play a central role. In the longer term, however, the transition is likely to be led by the deployment of large-scale heat pumps capable of displacing gas-fired CHP and traditional boiler plants.
These will eventually allow for interconnected city-scale networks, creating more resilient and lower emission heat infrastructure.
This is an exciting time for heat networks, and we are actively pursuing optimisation strategies and assessing future opportunities across our own portfolio of heat networks. Those like Media City UK in Salford, where a central energy centre provides heating, cooling and power to a 200-acre mixed-use site, demonstrate what’s already achievable and what future expansion could deliver.
As networks develop further, with regulation bolstering investor and consumer confidence, Leep is focused on how it can play an even greater role in supporting the UK’s journey toward Net Zero.
