Our expert team at Colloide have compiled a list of your most frequently asked questions on district heating network systems and answered them all below. We will continue to update this page as the energy and renewable sectors progress towards net zero targets and innovation continues with district heating technologies. The go-to place for all your district heating queries. If you have a question that we have not yet covered, please feel free to let us know by emailing [email protected].
What is a district heating network?
A district heating network; also known as a heat network, is a system that delivers heat from a central energy source to multiple buildings via a network of highly insulated underground pipes.
Instead of each building operating its own boiler, heat is produced at a central facility called an energy centre. This heat is then distributed as hot water or steam to a range of connected properties, such as homes, offices, or commercial spaces.
Within each building, a heat interface unit (HIU) or heat exchanger transfers this energy into the building’s internal heating and hot water systems.
What is a district cooling system?
A district cooling system is a centralised network that produces chilled water at a central plant and distributes it to multiple buildings through a network of highly insulated pipes.
Instead of each building operating its own air conditioning equipment, cooling is generated at a central energy centre and delivered to connected properties. This chilled water is then used within each building to provide indoor cooling.
The key difference between district heating and district cooling is that district heating supplies heat, while district cooling delivers chilled water to remove heat and maintain comfortable indoor temperatures.
District cooling systems are commonly used in city centres, hospitals, universities, airports, and residential developments in warmer climates. They can help reduce carbon emissions, lower maintenance requirements for individual buildings, and can be integrated with district heating networks to share infrastructure and support low-carbon energy systems.
Discover the innovative Bunhill 2 Energy Centre that has a combined district heating and cooling system. Where the heating is delivered to local housing and cooling is delivered to the London Underground.
How does a district heating system work?
A district heating system transfers thermal energy from a centralised energy centre to multiple buildings via a closed-loop network of pre-insulated underground pipework.
The system operates across four key stages:
1. Heat generation
Thermal energy is generated at a central plant using a range of technologies, including combined heat and power (CHP), large-scale heat pumps, energy-from-waste (EfW) facilities, biomass boilers, geothermal sources, and industrial waste heat recovery. Peak-load and backup capacity is often provided by gas-fired boilers.
Modern systems are increasingly designed as low-carbon networks, integrating renewable and recovered heat sources to reduce overall carbon intensity.
2. Distribution network
Heat is transferred to a circulating fluid—typically water—and distributed through a closed-loop network comprising:
A flow (supply) main, delivering hot water to connected loads
A return main, conveying cooler water back to the energy centre
Systems are commonly designed as low temperature hot water (LTHW) networks (e.g. ~65–90°C flow), improving efficiency and reducing distribution losses. Higher temperature or steam networks may be used for legacy systems or specific industrial demands.
Hydraulic design considerations include flow rates, pressure regimes, diversity factors, and minimisation of thermal losses through pipe insulation and network optimisation.
3. Building interface (substations / HIUs)
At each connected building, a heat interface unit (HIU) or energy substation hydraulically separates the primary (district) and secondary (building) systems via heat exchangers. These units:
Transfer heat to space heating and domestic hot water (DHW) systems
Provide control, metering, and temperature regulation
Maintain system separation to protect network integrity
In larger buildings, centralised substations may distribute heat internally to secondary circuits.
4. Return and recirculation
Following heat exchange, the reduced-temperature return water is conveyed back to the energy centre for reheating, completing the thermodynamic cycle. Efficient systems aim to maintain low return temperatures to maximise plant performance and network efficiency.
District heating systems benefit from economies of scale, improved plant efficiency, and the ability to integrate diverse and low-grade heat sources. When optimised, they provide a robust, low-carbon solution for supplying heat to residential, commercial, and industrial loads.
Is District Heating expensive?
District heating is often assumed to be expensive, but in practice its cost depends on how the system is designed, built, and operated.
There can be higher upfront costs to install the network infrastructure, such as the energy centre and underground pipework. However, these costs are typically balanced over time by the efficiency of producing heat at scale and the ability to use lower-cost or low-carbon energy sources, including renewable energy and recovered waste heat.
In well-designed systems; particularly in areas where buildings are close together, district heating can offer competitive, and sometimes lower, running costs compared to individual heating systems. It can also reduce the need for maintenance within buildings, as there are no individual boilers to service or replace.
That said, costs can vary between networks. Smaller or less efficient systems, or those in low-density areas, may be more expensive to operate. In the UK, heat networks are becoming more regulated, but historically pricing has not always been subject to the same controls as gas and electricity. Customers are usually connected to a single network, meaning they cannot switch suppliers in the same way which can also influence costs for consumers.
Overall, district heating can be a cost-effective and reliable solution, particularly when systems are carefully designed and make use of efficient or low-carbon heat sources.
How many district heating schemes are there in the UK?
There are currently over 17,000 heat networks operating across the UK, providing heating and hot water to around 500,000 customers.
This figure includes both:
- District heating networks, which supply multiple buildings across an area, and
- Communal heating systems, which typically serve a single building (such as a block of flats)
The majority; around 80–85%, are smaller communal systems, with a smaller number of larger district heating schemes.
At present, heat networks supply only around 2–3% of the UK’s total heat demand, meaning the sector is still relatively small compared to many European countries. However, it is growing rapidly, with government targets aiming for heat networks to supply up to 15–18% of UK heat by 2050 as part of the transition to net zero.
Most heat networks are located in urban areas, particularly in England, with a high concentration in cities such as London.
The sector is also evolving, with Ofgem becoming the regulator for heat networks from 2026, introducing greater consumer protection and oversight as the market expands.
The Government’s Heat Network Map illustrates the distribution of heat networks across the UK.
Heat sources used for district heating systems
District heating systems are highly flexible and can use a wide range of heat sources. This allows them to be designed around local resources, with an increasing focus on low-carbon and renewable energy.
Common heat sources include:
- Combined Heat and Power (CHP):
Generates both electricity and useful heat from a single fuel source, improving overall efficiency. - Waste heat recovery:
Heat that would otherwise be lost can be captured and reused. This includes heat from industrial processes, energy-from-waste plants, data centres, transport systems (such as underground rail), and even sewer or water networks. - Renewable energy sources:
These include geothermal energy, solar thermal systems, and biomass. Heat pumps are also widely used to extract heat from the air, ground, rivers, or wastewater. - Energy-from-waste (EfW):
Heat generated from waste incineration can be captured and supplied to networks, reducing landfill and utilising an existing resource. - Conventional boilers:
Gas or other fossil fuel boilers are sometimes used, particularly for peak demand or backup capacity where low-carbon sources alone are insufficient.
In practice, many district heating systems use a combination of these sources. For example, a network might rely on waste heat or heat pumps for its primary supply, with CHP or boilers providing additional capacity during periods of high demand.
This flexibility is one of the key advantages of district heating, as it allows systems to evolve over time—integrating new technologies and increasing the use of low-carbon heat sources as they become available.
Why is district heating important?
District heating is important because heating is one of the largest contributors to carbon emissions, and decarbonising heat is essential to meeting climate targets.
A significant proportion of global CO₂ emissions comes from the way we heat buildings. District heating offers a practical solution by enabling the use of low-carbon and renewable energy sources, as well as capturing waste heat that would otherwise be lost from industry, infrastructure, and energy generation.
By centralising heat production, district heating systems can:
- Reduce carbon emissions by replacing individual fossil fuel boilers with cleaner energy sources
- Improve energy efficiency by generating heat at scale and reusing surplus heat
- Support the transition to net zero by integrating technologies such as heat pumps, biomass, and geothermal energy
District heating also delivers wider benefits. It can provide a reliable and consistent heat supply, reduce the need for equipment within individual buildings, and improve urban air quality by lowering on-site combustion.
In addition, it can help make better use of existing energy resources. Large amounts of heat are currently wasted from sources such as data centres, industrial processes, and transport systems, district heating networks allow this energy to be captured and reused.
As energy systems evolve, district heating is expected to play a key role in delivering affordable, low-carbon heat at scale, particularly in towns and cities where demand is high. It is widely recognised as an important part of the transition to a more sustainable and efficient energy system.
Benefits & Limitations of District Heating Systems
Advantages
Supports the decarbonisation of buildings by reducing reliance on individual fossil fuel heating systems and enabling the use of low-carbon and renewable energy sources.
Improves overall energy efficiency by generating heat centrally at scale, which is typically more efficient than individual systems.
Enables the recovery and reuse of waste heat from sources such as data centres, industrial processes, and wastewater systems, making better use of available energy.
Can tackle fuel poverty and reduce housing management costs.
Can reduce heating costs per user in high-density areas by benefiting from economies of scale and shared infrastructure.
Offers greater price stability by allowing a mix of energy sources and reducing exposure to fluctuations in individual fuel markets.
Reduces the need for individual boilers within buildings, freeing up space and lowering maintenance requirements for property owners and occupants.
Improves local air quality by reducing on-site combustion of fossil fuels, particularly in urban environments.
Offers flexibility for future expansion, allowing additional buildings and new heat sources to be integrated as networks grow.
Contributes to local economic growth by creating jobs during the development, construction, and operation of heat networks.
Disadvantages
Requires high upfront investment to develop the energy centre and pipe network, although funding support and long-term operation can offset these costs.
Can be less cost-effective in low-density or rural areas, where fewer buildings are connected and pipe infrastructure needs to cover larger distances.
Customer choice can be limited, as users are typically connected to a single network and cannot switch suppliers in the same way as with gas or electricity.
Pricing and consumer protection have historically been less regulated than other energy markets, although this is improving with new regulatory frameworks.
Costs to consumers may vary depending on how efficiently the network is designed and operated, with poorly performing systems potentially leading to higher bills.
Requires effective demand management and system optimisation to ensure efficient heat distribution and minimise energy losses.
Heat losses can occur through the network, particularly in older or poorly insulated systems, reducing overall efficiency.
Installation can be disruptive, especially in urban areas, due to the need for extensive underground pipework.
Long development and planning timelines can delay implementation compared to individual heating solutions.
Difference between communal and district heat networks
The terms communal and district heating are often used interchangeably, but they refer to different scales of heat networks. Both fall under the broader term “heat networks”, which describes systems that distribute heat from a central source to multiple users.
The main difference is scale and coverage:
- Communal heat networks typically serve a single building or a small group of buildings (such as a block of flats or a residential development). Heat is generated locally and distributed through pipework within the building or site.
- District heat networks operate on a much larger scale, distributing heat from a central energy centre across a wider area—such as a neighbourhood, town, or city. These systems often use larger underground pipe networks and can connect multiple communal systems together.
In many cases, the two systems are connected. A district network may supply heat to several communal networks, which then distribute heat within individual buildings.
For example, a city-wide district heating network might deliver heat to a residential estate, where a communal system then distributes that heat between individual apartments. In the Bunhill 2 District Heating System, the Energy Centre generates heat from Moreland Street and circulates the heat as far as Bath Street (near Old Street Station). The pipework connects a number of dwellings and estates such as Rahere House, Ironmonger Row Leisure Centre and Godfrey house.
While Rahere is connected to the Bunhill District Network it forms part of the Kings Square Community Network, sharing its heat with President House and the new Kings Square extension. Godfrey House has its own Community network connecting it to Newland, Patterson and Bath houses.
Is district heating regulated?
In the UK, district heating is regulated. The Energy Act 2023 introduced a new regulatory framework for heat networks, appointing Ofgem as the regulator to ensure that customers receive a fair price and a reliable supply of heat as the sector supports the transition to net zero.
The Heat Network (Metering and Billing) Regulations came into effect in 2014 with the aim to:
- Provide consumer protections through requirements on heat network performance and consumer information
- Improve energy efficiency through the installation of metering devices and billing based on consumption
- Support fair and transparent billing for customers on heat networks
- Encourage reduced energy use, resulting in associated carbon emission savings
From January 2026, new regulations were introduced under the Heat Networks (Market Framework) (Great Britain) Regulations 2026, with Ofgem formally becoming the sector regulator. These regulations strengthen consumer protections, introduce requirements around pricing transparency and service standards, and align heat networks more closely with other regulated utilities such as gas and electricity.
As part of this transition, there has been a partial revocation of the earlier metering and billing regulations in Great Britain to avoid duplication. Heat network operators are now required to meet authorisation conditions and register with Ofgem, with a new digital registration service (Operational Spring 2026) and full compliance expected by 2027.
Overall, this new regulatory framework is designed to improve consumer protection, ensure fair pricing, and support the continued growth of heat networks across the UK.
Find out more information and guidance for heat suppliers on https://www.gov.uk/guidance/heat-networks
Support for the district heating sector.
There is a range of support available for the district heating sector as countries aim to increase the deployment of heat networks. Within the UK, key support mechanisms include:
Heat Network Transformation Programme (HNTP)
The Heat Network Transformation Programme (HNTP) is the UK Government’s primary programme supporting the development, construction, improvement, and decarbonisation of heat networks. It provides funding and policy support to grow the market, improve consumer outcomes, and reduce carbon emissions from heat.
HNTP includes both capital funding (through schemes such as the Green Heat Network Fund) and development support, including feasibility studies, commercialisation, and early-stage project planning, often delivered in partnership with local authorities.
Heat Network Efficiency Scheme (HNES)
The Heat Network Efficiency Scheme (HNES) is designed to improve the performance of existing, operational heat networks, particularly where customers are experiencing poor outcomes.
The scheme focuses on:
- Improving system efficiency and reducing heat losses
- Lowering carbon emissions
- Addressing customer detriment, particularly in response to rising energy costs
- Preparing networks for upcoming regulation and technical standards
Heat Networks Delivery Unit (HNDU)
The Heat Networks Delivery Unit (HNDU) provides support to local authorities in England and Wales during the early stages of heat network development.
This includes activities such as:
- Heat mapping
- Energy master planning
- Techno-economic feasibility studies
- Detailed project development
Green Heat Network Fund (GHNF)
The Green Heat Network Fund (GHNF), launched in 2022, provides capital grants to public, private, and third-sector organisations for the commercialisation and construction of low-carbon heat networks in England.
The fund aims to:
- Reduce the carbon intensity of heat supplied
- Increase the use of low-carbon and renewable heat sources
- Support market growth and supply chain development
- Enable the transition towards net zero
Heat Network Zoning
Heat network zoning is a policy introduced under the Energy Act 2023, which enables the identification of areas where heat networks are the most cost-effective and low-carbon heating solution.
Local authorities will designate zones; primarily in urban areas, where heat networks are expected to be developed. Zoning is intended to:
- Accelerate deployment of heat networks
- Provide greater certainty for investors and developers
- Support consumers in accessing lower-carbon heating
Sources:
National Housing Federation – Housing associations and heat network regulation
Energy UK Explains: Heat Networks – Energy UK
District Heating – Energy System – IEA
CO₂ emissions – Our World in Data
Regulations: heat networks (metering and billing) – GOV.UK
Green Heat Network Fund: scheme overview
Heat Network Efficiency Scheme (HNES): overview – GOV.UK
*Colloide is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in this material is provided “as is” from “various sources”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.
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