Ofgem Sets Heat-Network Fee Collection From April 2028 After 17 Responses
Ofgem published its decision on recovering the costs of heat networks regulation on 10 November 2026. The regulator, given that role under the Energy Act 2023, said its oversight of heat networks in England, Scotland and Wales formally commenced in January 2026. Collection of regulatory fees from heat-network authorised persons will begin after the end of the initial period in January 2028, and from April 2028 at the earliest. Until then, the costs of that work continue to be recovered from gas and electricity licensees.
The February 2026 consultation received 17 responses. Eight came from energy network operators and three from local authorities. Two were from trade associations. The remaining four respondents were an asset owner and a metering and billing agent, together with a local community and a combined authority. On the proposed de-minimis threshold, 12 respondents agreed or partially agreed, including two who agreed and ten who partially agreed.
A government estimate cited in the decision puts the total annual cost of regulating the heat network market at around £12.2 million a year over a 10-year appraisal period. Heat networks currently provide about 3% of total heat. The Department for Energy Security and Net Zero has estimated that they could provide about 20% by 2050. By our calculation, that 2050 share would be about 6.7 times today's level.
Ofgem will collect the fees from heat network suppliers twice a year and apportion them by live customer numbers, meaning active customer accounts. Industrial heat networks, self-supply and shared ground loops are excluded from the cost-recovery policies in this decision.
A further consultation is planned in 2027 on the draft authorisation condition and on the detailed cost-recovery principles. The power to recover costs from gas and electricity licensees sits in section 222 of the Energy Act 2023, and the power to recover costs from heat networks sits in Regulation 20 of the Heat Networks (Market Framework) (Great Britain) Regulations 2025.