The Ofgem authorisation regime: what every heat network operator needs to know
From 27 January 2026, Ofgem formally became the regulator for heat networks across Great Britain. For housing associations and local authorities operating communal or district heat networks, this is arguably the most significant operational change the sector has ever faced. Understanding your obligations, and the timeline for meeting them, is now a matter of regulatory compliance.
What has changed
The Energy Act 2023, passed by the UK Parliament in October 2023, gave Ofgem the statutory powers to regulate the heat networks sector across England, Scotland, and Wales. Building on that foundation, the Heat Networks (Market Framework) (Great Britain) Regulations 2025 introduced a comprehensive authorisation regime that brings heat networks into line with other regulated utilities - gas and electricity.
The logic is straightforward: heat network customers, particularly those in residential schemes, have historically had fewer statutory protections than customers of gas or electricity suppliers. They cannot switch supplier, they often have limited visibility of how their charges are calculated, and until recently there was no independent route to escalate a complaint. The new regime is designed to change all of that.
The key obligations:
Authorisation.
Anyone carrying out "regulated activities" (supplying heat, operating a heat network, or both) must now be authorised by Ofgem. For existing networks, a transitional "deemed authorisation" was introduced to ease the changeover. Existing operators and suppliers have until 26 January 2027 to register the details of their regulated activities with Ofgem. After that date, all new heat networks must apply directly for authorisation before commencing operations.
For housing associations and local authorities, this means identifying whether you are the operator, the supplier, or both under the definitions in the 2025 Regulations and ensuring the correct entity is registered with Ofgem within the deadline.
Consumer protection.
The regulations introduce a range of consumer protections comparable to those in gas and electricity supply. From 1 April 2025, heat network customers in Scotland gained access to Consumer Scotland and Advice Direct Scotland for advice and advocacy, and the Energy Ombudsman as an independent route to escalate unresolved complaints. For housing associations, this means that residents on your heat networks now have formal, statutory recourse if they have concerns about service quality, billing, or pricing; independent of you as their landlord.
Transparency and billing.
Authorisation conditions require heat network operators and suppliers to meet standards of transparency in how charges are communicated to customers. This includes obligations around how tariffs are set and how bills are presented. For schemes where metering and billing is handled in-house, or through older systems, a review of current arrangements against the forthcoming authorisation conditions is a sensible step now.
Financial resilience.
In line with other regulated utilities, operators must now demonstrate financial resilience to Ofgem. A Special Administration Regime (SAR) (a statutory mechanism designed to protect customers if a heat network operator becomes unable to continue) has also been introduced. This is a signal that heat networks are now treated as critical consumer infrastructure, not simply a building services arrangement.
Technical standards - HNTAS.
The Heat Network Technical Assurance Scheme (HNTAS) is being developed by the UK Government to establish mandated technical standards for heat networks. Certification under HNTAS will become a regulatory requirement, and schemes will be expected to begin preparing for this now, including data monitoring, performance benchmarking, and documentation of scheme design and operation.
The Scotland-specific layer
It is important to understand that the Ofgem authorisation regime operates alongside, not instead of, the Scottish regulatory framework established by the Heat Networks (Scotland) Act 2021. The Scottish Government has confirmed it is working with Ofgem to ensure the two regimes are interoperable and minimise duplication. The draft Buildings (Heating and Energy Performance) and Heat Networks (Scotland) Bill, published in November 2025, also proposes an opt-in licensing regime enabling heat network developers to access additional powers, such as rights for roadworks and wayleaves, on top of the GB-wide authorisation.
In practice, this means that operators in Scotland are navigating two regulatory frameworks simultaneously, one set by Ofgem at a GB level, and one developing through Scottish primary and secondary legislation. Keeping pace with both requires active engagement.
How Switch2 can help
At Switch2, we have been working alongside our housing association and local authority customers throughout the development of this regulatory framework. Our metering and billing operations, smart metering equipment, and operations and maintenance services are all designed with regulatory compliance in mind. As one of the largest heat network services providers in the country, with dedicated Scottish resource, we are well placed to support you in understanding your authorisation obligations, reviewing your current metering and billing arrangements, and preparing your scheme for the standards that are coming.
Ofgem's registration deadline of January 2027 may feel distant, but the practical steps involved, identifying your regulated entities, reviewing authorisation conditions, and ensuring your consumer-facing processes meet the new standards, all take time. Now is the right moment to begin.
The final article in this series looks at what all of this means specifically for social housing landlords, covering the Social Housing Net Zero Standard and the New Build Heat Standard.
