Heat networks must be the backbone of Britain’s warm homes future

Channa Karunaratne, District Energy Market Lead at AECOM, discusses the importance of heat networks to the future of the UK’s energy transition and how a system-wide approach is vital.

The government’s Warm Homes Plan is a long-overdue signal that the electrification of heat is finally being taken seriously. The commitment of £1.5bn for heat networks is a clear statement of priority and recognition that district heating must play a far larger role in how the UK delivers low-carbon, secure and resilient heat at stable costs for consumers over the coming decades. With over 50 percent of our energy coming from renewables, and recent announcements of price reductions in electricity, there is a clear trajectory around the benefits of heat networks.

The warm homes funding provides continued support over the next four years for the Green Heat Network Fund and the Heat Network Efficiency scheme, backs the rollout of national heat network zoning, and crucially, brings in the National Wealth Fund to widen financing options. Alongside this, Ofgem is now formally the regulator of heat, bringing the sector in line with gas and electricity markets and providing confidence for investors.

But investment alone will not deliver transformation. While heat pumps will provide a significant proportion of electrified heat, heat networks are expected to meet around 20 percent of national demand, a figure that likely understates their true potential. If, however, heat networks remain a supporting add-on to a strategy still framed primarily around heat pumps, we risk missing the biggest prize: a joined-up, system-wide approach that can deliver future energy infrastructure at scale, more efficiently and at lower overall cost.

There’s no doubt that heat pumps will play a crucial role in the UK’s future energy pathway. They are a proven technology and will be critical in many building types and locations, particularly where individual electrification is the most practical route. But the energy transition cannot be delivered through a single technology alone. The challenge is too large, the building stock too diverse and the energy system too interconnected for a one-size-fits-all approach.

That is why heat networks must move from the margins to the mainstream, and the key building blocks are now falling into place. The market is buoyant, Ofgem technical standards are out for consultation, national heat network policy is established with secondary legislation imminent, and government has been clear on both lowering the price of heat and the need to incentivise connections.

District heating, already the default in many European cities, provides heat at neighbourhood scale through underground pipes, supplying homes and businesses from centralised low-carbon sources. These systems can deliver the same heat with around 60 percent of the electricity demand compared with every building running its own heat pump, which is a critical advantage as the electricity system comes under growing pressure from wider electrification.

More importantly, heat networks do more than decarbonise heat, they unlock wider opportunities for smarter, more efficient infrastructure. They provide a backbone that can enable EV charging, private power networks, new fibre connections and local generation. Crucially, they also unlock industrial-scale waste heat recovery and integration across the wider energy system. Something that individual technologies cannot. In this sense, heat networks are not just a low‑carbon solution, but a new utility that can become part of the fabric of our towns and cities, supporting a broader, more integrated energy transition.

The UK has vast reserves of surplus heat every day from data centres, industrial processes, energy-from-waste plants and water treatment works. Almost all of it disappears into the atmosphere, even though it could be captured and used to supply low-carbon heat to homes, businesses and public buildings. This is one of the most underused forms of energy available, but it requires the right infrastructure to connect supply with demand.

Heat networks address this challenge. Data centres and wastewater facilities require cooling, and by reusing excess heat, heat networks reduce cooling demand and energy bills, delivering mutual benefits for all parties involved. AECOM research has found that London’s data centres alone release enough waste heat to supply half a million homes. Networks that recover this heat could reach efficiencies of 800%, turning what is currently wasted into one of the cleanest and most strategic heat resources available to the UK.

Yet, if we are serious about making heat networks central to the Warm Homes Plan, we must go further than today’s isolated schemes.

Most UK heat networks remain distribution-scale, serving individual developments or districts in relative isolation. What we now need is transmission-scale heat infrastructure, the heat equivalent of the electricity grid, capable of connecting multiple major heat sources to many urban demand centres. Cities like Copenhagen and Oslo have shown what becomes possible when heat is planned as a strategic utility rather than delivered project by project.

The UK is beginning to take its first steps in this direction. One of our clients is current planning a long-distance strategic heat map, transmitting low-carbon heat from an energy-from-waste campus to several district heat networks across the capital. It is a credible example of how we can decarbonise heat while strengthening energy security, using London’s own waste to supply hundreds of thousands of homes with recovered heat.

This kind of backbone infrastructure demands joined-up planning. Heat networks cannot be rolled out in isolation, disconnected from wider decisions about housing growth, industrial development, grid capacity or regional energy strategy. They must be integrated into how the UK plans its future energy system, so that zoning, regulation, investment and delivery all work in alignment rather than in parallel.

The Energy Act 2023 laid the groundwork by recognising heat as a regulated utility. The Warm Homes Plan now provides the funding signal. The next step is to treat heat networks not as a niche alternative, but as a central pillar of the energy transition.

If we want warm homes, resilient cities, lower bills, a stronger energy system and real progress on emissions, we need to stop thinking of heat as something solved one building at a time. District heating is not the supporting act. It should be the backbone for our cities.