Guidance on Regulations: heat networks (metering and billing) (update)

Heat networks account for only a small proportion of UK heating systems. As a result, their locations were unrecorded and their operation was unregulated until 2014.

The purpose of the Heat Network (Metering and Billing) Regulations (‘the Regulations’), which came into force initially in 2014, is to drive energy efficiency and reduce carbon emissions from heating. The energy efficiency is achieved through the installation of metering devices and billing based on consumption, which will decrease the use of energy and reduce consumer bills, and result in associated carbon emission savings. Metering also supports fair and transparent billing for customers on heat networks. In addition, the Regulations have led to the creation of the first database of UK heat networks.

Under the Regulations, the operators of heat networks must submit notifications for the heat networks they operate. They must, where required, install metering devices on those networks.

Operators whose networks are fitted with metering devices must meet ongoing obligations including using these devices to bill customers based on their consumption of heating, cooling or hot water.

The Regulations were subsequently amended in 2015, and most recently, in November 2020. The links to Regulations and amendments are provided at the bottom of the page.

What is covered

Heat networks are systems in which heating, cooling or hot water is generated at a central source and supplied by the operator to multiple third party customers through a pipe network serving either multiple buildings or multiple occupants in a single building.

The Regulations describe four main components of a heat network:

• it must provide a shared source of heat for multiple users
• the heat transfer medium must be water, steam or chilled liquids
• the heat must be used for heating, cooling hot water or processes
• the heat must be sold to final customers by heat suppliers

For a heat network to be covered by the Regulations, the heat must be transferred by water, steam, or chilled liquids, but the central heat source can use any type of technology.

Extent of obligation

The Regulations place a number of obligations on heat suppliers. A heat supplier is defined as any person or organisation that supplies and charges for the supply of heating, cooling or hot water to customers through a heat network.

It is important to note that a heat supplier is a different concept from a fuel supplier. A fuel supplier provides a source of fuel (such as gas or electricity) into a heat network’s energy centre, but may not be involved in using that fuel to generate heating, cooling or hot water.

A heat supplier is the party with day-to-day responsibility for operating a network to generate heating, cooling or hot water and distribute this supply to customers. Where multiple parties are involved in running a network, the heat supplier is the beneficiary of the customers’ payments. Typically, this is the party using customers’ payments to pay fuel bills to keep the network running.

How to comply

Heat suppliers with a new heat network must submit an initial notification to the Office for Product Safety and Standards (OPSS) on or before the day it becomes operational, meaning the day it first supplies heating, cooling or hot water to customers. This involves completing a copy of the heat network notification template below and emailing it (in Excel format) to heatnotifications@beis.gov.uk.

After the initial notification, heat suppliers must submit a renotification within every four-year period thereafter, in respect of all networks that they operate. Suppliers should inform OPSS of heat networks that have ceased to operate, as these do not need to be included in renotifications. Where a new supplier has taken over a network, it becomes a regulated entity under the Regulations and must fulfil the obligations, including the submission of renotifications.

Notifications and renotifications must be submitted in a format prescribed by the Secretary of State or Scottish Ministers:

Heat networks notification template 2020 (MS Excel Spreadsheet, 555KB)

Heat suppliers are advised to consult the user guide when completing the notification template:

Heat networks notification template user guide (PDF, 522KB, 21 pages)

The current template above is an updated version of the previous notification template that has been adapted to reflect the amendments made to the Regulations in November 2020. OPSS is planning to release a new template in the future to assist heat suppliers in complying with Regulation 3. The version of the notification template available on the OPSS website at any given time is the version approved by the Secretary of State or Scottish Ministers and should be used by heat suppliers when submitting the notification.

The amendments to the Regulations in 2020 introduce building classes that require some heat suppliers with unmetered networks to install metering devices in the buildings they serve.

The three building classes are:

• Viable – meters must be installed
• Open – meters must be installed if the result of a cost-effectiveness assessment is positive
• Exempt – meters do not have to be installed

A cost-effectiveness assessment tool has been developed to support heat suppliers to assess whether it is cost-effective to install metering devices, which is available on this webpage. The results of cost-effectiveness assessments must be reported in the notification or renotification template, and the cost-effectiveness assessment with any accompanying documents must be submitted to OPSS upon request.

Where cost-effectiveness assessments have established a duty to install metering devices, heat suppliers must carry out this installation work in line with the timelines stipulated in the legislation. The results of this work must be reported to OPSS.

The cost-effectiveness tool was built to aid heat suppliers in their determination of cost-effectiveness. Two versions are available: the reduced input tool (where energy consumption is known and a quote for metering installation costs is available) and the full input tool (where energy consumption for a building is either estimated or consumption is known but a quote for metering installation costs is not available). Heat suppliers only need to complete one of these tools, in accordance with the information that is available to them, as described in the brackets:

Full input cost-effectiveness tool (XLSM, 849KB) (FCET)

Reduced input cost-effectiveness tool (XLSM, 114KB) (RCET)

Heat suppliers are advised to consult the respective guidance hen completing either of the cost-effectiveness tools:

User guide on heat metering cost-effectiveness tool (PDF, 2.63MB, 69 pages)

Where metering devices are present on networks (regardless of the date of installation), heat suppliers must ensure these devices accurately record customers’ consumption of heating, cooling or hot water and that they remain in continuous operation.

Heat suppliers must use meter readings to bill to customers. Bills must be issued at least annually and be based on customers’ consumption of heating, cooling or hot water, unless an exemption applies.

Full regulatory requirements and detailed explanations on how to comply with them are set out in guidance for Heat Network (Metering and Billing) Regulations 2014 (as amended in 2015 and 2020).

Guidance on Heat Metering and Billing Regulations 2014 (as amended in 2015 and 2020) (PDF, 750KB, 38 pages)

Some of these requirements are affected by transitional arrangements in place between 27/11/2020 and 01/09/2022. For more details on these arrangements, please consult the legislation and guidance.

Our involvement

OPSS has been appointed by BEIS to enforce the Regulations in the UK. This involves receiving and processing heat network notifications, maintaining a UK-wide heat network database (which is not publicly accessible), pursuing outstanding re-notification submissions, verifying that metering devices have been installed where required and are accurate and continuously operate, and verifying that billing is based on consumption data where required. OPSS also responds to information provided by heat suppliers and heat network customers regarding notification, metering and billing issues affecting specific networks.

Where to find out more

Heat Network (Metering and Billing) Regulations 2014

Heat Network (Metering and Billing) (Amendment) Regulations 2015

Heat Network (Metering and Billing) (Amendment) Regulations 2020

If you have questions regarding the role of OPSS or the nature of its enforcement activities, please use the contact details on our enforcement services page. If you have questions relating specifically to these Regulations, please contact the heat networks team at heatnotifications@beis.gov.uk.