Heat Network Regulation: Action plan for future market leaders

Recently, we explored the regulatory changes coming for the UK heat network sector in In January 2026.

We set out how, as Ofgem takes regulatory control, suppliers face a stark choice: adapt quickly to thrive in a growing market or risk business failure under unprecedented scrutiny. With less than nine months to prepare, the clock is ticking - and many suppliers remain dangerously unprepared.

This is both an opportunity and a risk for heat network suppliers. Those who can get it right will stand to win from the coming growth in the market. Those who get it wrong will find themselves exposed, and eventually, risk exiting the market.

This week, we turn to the important question of what those in the sector should be doing right now to prepare.

Preparing for the Transition

With the introduction of regulation now just nine months away, it’s vital heat network suppliers put in place their action plan now. 

The journey will look different for each supplier, depending on their starting point. Each should be assessing where they are now and the gap to be bridged, with line of sight on the priority areas of focus and an action plan to deliver on them. Drawing on those with experience from the regulated sector or Heat Trust membership will be an advantage. 

What would an Ofgem audit of your operation reveal today? Are you confident your business could withstand regulatory scrutiny?

1) Master the regulatory framework

• Engage in the process between now and implementation
• Immerse yourself in the new rules and their implications
• Consult with Ofgem, Heat Trust, trade associations and those working in the regulated sector to gain the insights that will protect your business from future penalties

2) Audit your compliance position

• Conduct a thorough gap analysis comparing current operations against the requirements coming
• Quantify your exposure and prioritise high-risk areas that could trigger regulatory action

3) Mobilise a cross-functional team

• Assemble key stakeholders from operations, customer service, legal, and finance with clear accountability for compliance deliverables
• Establish governance that drives progress through regular reviews

4) Document all network assets

• Compile comprehensive technical documentation that will withstand regulatory scrutiny.
• Update your system diagrams, capacity specifications, and efficiency metrics to eliminate information gaps.

5) Transform billing infrastructure

• Change metering and billing systems to meet new transparency and information requirements
• Review your customer communications to ensure the outcomes they’re delivering are what’s expected

6) Elevate customer service standards

• Redesign complaints handling procedures to meet Ofgem expectations
• Establish relationships with the new Ombudsman  and develop robust processes to identify when customer circumstances give rise to vulnerability
• Develop the support mechanisms necessary to help them

7) Optimise technical performance

• Benchmark current network efficiency and identify improvement opportunities
• Develop performance monitoring systems and create a credible decarbonisation roadmap that aligns with regulatory expectations

8) Secure your operating license

• Compile the documentation necessary to evidence technical and financial capability
• Develop the compliance manuals and staff training that ensure organisation-wide readiness

9) Revise contractual relationships

• Align customer contracts with new regulatory requirements and develop a communication strategy for changes
• Identify where supplier agreements and internal policies will need updating to reflect incoming obligations

10) Implement robust reporting mechanisms

• Establish automated compliance reporting capabilities
• Deploy systems to track regulatory KPIs and institute internal auditing processes that proactively identify issues before Ofgem does

A defining moment for heat network suppliers

The heat network sector stands at a pivotal moment. The introduction of statutory regulation will separate forward-thinking suppliers from those clinging to outdated practices. For suppliers willing to invest in compliance, the rewards are substantial: market credibility, competitive advantage and access to the UK's ambitious heat network expansion plans. Those who delay face a harsh reality of regulatory scrutiny, financial penalties, and potential exit. 

The market leaders of tomorrow will be those who act decisively today, turning regulatory requirements into strategic advantages, that position them for long-term growth in an increasingly critical part of the UK's energy future.

When January 2026 arrives, will your operation be scrambling to comply or confidently leading the market? The actions you take in the next nine months will determine your answer.

About BFY

David Watson is a former Managing Director of Heat Trust where he worked both across the sector to develop the Heat Trust Code of Practice and with both government and Ofgem on the requirements for the forthcoming regulatory regime. He is now Principal at BFY.

BFY is an employee-owned management consultancy, working with clients across the regulated utilities market to improve customer and commercial outcomes. They were recently announced as Europe’s fastest growing management consultancy. 

For more on heat network regulation and the implications for you, contact David Watson.

This is the second part of our article on the upcoming Heat Network Regulation. To revisit part one, where we explored what the changes are and why they matter, click here.