Energy Act 2023 — what it means for heat network operators

What the Energy Act 2023 established

Before the Energy Act 2023, heat networks were one of the least regulated energy sectors in Great Britain. Networks could set their own prices, handle complaints without independent oversight, and operate without demonstrating financial resilience. The Act changed all of that.

The Act gave Ofgem the powers to regulate heat networks — including the authority to set authorisation conditions, require registration, investigate complaints, and impose financial penalties. These powers were exercised through the Heat Networks (Market Framework) (Great Britain) Regulations 2025, which came into force on 27 January 2026.

The result is a framework broadly similar to how Ofgem regulates gas and electricity suppliers, but adapted for the structure of the heat network sector: multiple operators and suppliers of different sizes, serving everything from a pair of flats to district heating systems serving thousands of properties.

Deemed authorisation and what it means

Every heat network that was operating on 27 January 2026 was automatically granted deemed authorisation on that date. This is not the same as being registered or having met all the conditions — it is a temporary permission to continue operating while the registration process is completed.

Operators and suppliers must register with Ofgem by 26 January 2027. Registration requires submitting information about your network, your organisation, and your compliance arrangements through Ofgem's digital registration service, expected to open in Spring 2026.

The authorisation conditions

The Energy Act 2023 provided the basis for Ofgem to set authorisation conditions — the specific obligations that operators and suppliers must meet. Ofgem finalised these conditions in January 2026. They are divided into three sections:

• Section A — General conditions (A1–A15): Apply to all operators and suppliers. Cover consumer protection, billing, complaints, metering, vulnerable customer identification, and fit and proper persons requirements.
• Section B — Supplier conditions (B1–B12): Apply specifically to entities acting as heat suppliers. Cover contract terms, pricing transparency, disconnection, back-billing, and the Priority Services Register.
• Section C — Financial resilience conditions (C1–C2): Apply to all operators and suppliers. Require demonstration of adequate financial reserves and continuity arrangements.

Your role — operator, supplier, or both — determines which sections apply to you. Most entities managing their own networks are both and must meet all three sections.

Consumer protection obligations

A central purpose of the Energy Act 2023 was to extend consumer protection to heat network customers — residents who previously had no regulatory recourse when things went wrong. The Act created:

• Mandatory access to the Energy Ombudsman for unresolved complaints after 8 weeks
• Requirements to identify and protect vulnerable customers
• Obligations to provide clear billing and pricing information
• A framework for fair pricing that Ofgem can enforce
• Standards for how complaints must be handled and recorded

These obligations are not aspirational. They are conditions of operation. Failure to meet them exposes operators and suppliers to enforcement action, including financial penalties of up to £1 million or 10% of annual turnover, whichever is greater.

Reporting obligations

The Energy Act 2023 gave Ofgem the power to require data reporting from heat network operators and suppliers. Operators will begin reporting performance data from Spring 2026, with data backdated to April 2026. Reporting categories include:

• Consumer metrics: complaints volume, resolution times, Energy Ombudsman referrals
• Vulnerable customer data: Priority Services Register size, interaction records
• Financial resilience indicators
• Network performance: metering coverage, billing accuracy
• Pricing data: standing charges, unit rates, cost allocation methodologies

Operators who have not established data collection systems before the reporting period opens will face a period of retrospective data recovery that significantly increases the compliance burden.

Future developments under the Act

The Energy Act 2023 gave Ofgem and the Secretary of State powers that extend well beyond the initial authorisation framework. Two significant areas of future regulation are in development:

Heat Network Technical Assurance Scheme (HNTAS)

HNTAS will introduce mandatory technical performance standards for heat networks. These will address system efficiency, metering accuracy, temperature delivery, and heat loss. The scheme is currently in development and implementation timelines are not yet confirmed. Operators should document current technical performance data now in preparation.

Heat network zoning

The Act also provides powers to designate heat network zones — areas where new developments or existing buildings may be required to connect to a heat network rather than install individual gas boilers. Zoning decisions will be made by local authorities in consultation with central government. While zoning primarily affects network developers and local authorities, operators in designated zones will face additional obligations around connection offers and supply terms.

Implementation timeline

Frequently asked questions