Our recommendations for improving regulation for heat networks

At the end of January, new consumer protection regulations came into force meaning housing associations that operate heat networks are treated as regulated energy suppliers. Since then, the government consulted on the minimum technical standards heat networks will be required to meet.

The National Housing Federation supports the aims of the government to improve the efficiency of heat networks, lower consumer bills and improve consumers’ experiences. However, we believe that the Heat Network Technical Assurance Standards (HNTAS), as proposed, will not achieve the outcomes the government is hoping for.

The HNTAS consultation sought views on proposals regarding:

The scope of technical standards regulation.
Governance structure for the scheme.
Overarching technical, assessment and certification requirements.
The role of assessors and certifiers in the scheme.
Enforcement, appeals and complaints.
Support and incentives to facilitate heat network compliance.

Our key concerns

Cost

The cost of complying with the HNTAS regulations, alongside compliance with a revised Decent Homes Standard and minimum energy efficiency standards (MEES), will place significant financial pressure on housing associations. Housing associations have told us that average cost per home will come in significantly higher than the £5,500 identified in government documents. This may come at the cost of building new homes or delaying investment in existing homes to meet net zero targets.

These costs have largely not been factored into business plans. For supported housing providers (who manage a significant proportion of heat networks in social housing) this regulation comes at a time of significant financial stress after years of funding cuts. Across the whole sector, they fear costs would have to be passed onto residents and leaseholders, at a time when service charges are also increasing across the country.

Complexity

HNTAS is incredibly complex and difficult to understand. Housing associations often do not have specific heat network expertise in their organisations. This issue particularly affects smaller and supported housing providers, which have raised concerns about how they will source and fund the additional staff necessary to manage heat networks.

Timing

In its current form, HNTAS would need housing associations to do significant capital work on their heat networks over the same time period (up to 2035) when they’re implementing MEES and a revised Decent Homes Standard, and delivering new social homes.

We also have significant concerns about the capacity of the existing heat network workforce and the ability to adequately expand and upskill this workforce at the pace necessary for the scale and speed of work proposed in these regulations.

Our recommendations

Decisions on HNTAS should be paused until a full review of the outlined governance and assurance requirements has been undertaken. We urge the government to reconsider the coverage of HNTAS, the milestones and timeframes (including how works can be spread over a 20 to 30-year period), and do more to better understand what additional funding is needed by the sector to improve the efficiency of heat networks.

The government should allow time for consumer protections to become more established, alongside exploring how other existing legislation (such as Awaab’s Law) can be used to support consumer protection in a way that builds trust and confidence in heat networks without placing unnecessary and duplicative requirements upon social landlords.

The Metering and Monitoring Standard should be decoupled from HNTAS, pausing and reviewing the proposals to ensure that these support consumer protections without significantly increasing disruption or cost to residents, especially those in vulnerable circumstances.

We are continuing to engage with DESNZ about the proposals, as well as working closely with Ofgem on how the consumer protections regulations will work in practice.

Read our response to the HNTAS consultation and more about the broader regulatory regime.

We work closely with our partner Chirpy Heat on all heat network work. Chirpy Heat can support housing associations in understanding what the proposed regulations will mean in practice, as well as what steps can be taken to prepare for regulatory change.