Heat Network Zoning: What the Government’s 2026 Response Means for Local Authorities

Tom Knox analyses the government's reply to the consultation on heat network zoning and shares the main takeaways for the impact it will have.

In January 2026, the government published its formal response to the consultation on heat network zoning, setting out how it intends to implement zoning in England under powers introduced by the Energy Act 2023. The consultation, which ran in late 2023, sought views on how heat network zones should be identified, governed and delivered, and how new powers to require connections, appoint developers and integrate heat sources should operate in practice.

The government’s 2026 response largely affirms the direction set out in the consultation but introduces important clarifications and refinements based on stakeholder feedback from local authorities, industry, developers and consumer groups. While the overall policy intent remains unchanged, the response provides greater detail on governance arrangements, delivery mechanisms and consumer protections, while also acknowledging areas where further legislation and guidance will be required.

Crucially, the response confirms a nationally consistent framework overseen by a new heat network zoning authority, while placing local authorities at the centre of delivery through zone coordination bodies responsible for designating zones, appointing developers and overseeing delivery. It also addresses concerns raised during consultation around governance complexity, enforcement burden, pricing oversight and deliverability.

This article intends to inform local authorities of some of the main takeaways from the government response to the heat network zoning 2023 consultation.

Zoning implementation regulations

The response confirms that heat network zoning will be delivered through zoning implementation regulations in England in 2026, following parliamentary scrutiny. It is intended that stakeholders will be given an opportunity to comment on draft regulations before they are laid, which is expected to be in Spring 2026.

The framework includes (but is not limited to):

• new national and local zoning bodies;
• a national methodology and pipeline for identifying and sequencing zones;
• a route to market for appointing developers and managing performance;
• connection requirements for certain buildings and exemptions;
• backstop powers to connect recoverable heat sources; and
• a carbon emissions limit from 2030.

Governance: national standards + local delivery

The Heat Network Zoning Authority

Secondary legislation will establish the Heat Network Zoning Authority, initially within the Department for Energy Security and Net Zero and later within the Warm Homes Agency once established.

The Heat Network Zoning Authority’s role will be to:

• set national standards and strategic direction;
• monitor and evaluate rollout;
• support and fund local delivery; and
• maintain national tools, including the zoning digital service and pipeline.

The response states that the Heat Network Zoning Authority will centrally fund zone coordination bodies, continuing the approach used through the Advanced Zoning Programme, which has already provided millions of pounds to local areas.

Zone coordination bodies (where local authorities sit)

Local government will be enabled to create zone coordination bodies responsible for:

• collecting data and refining zone boundaries;
• consulting on boundaries;
• designating zones;
• producing zonal market prospectuses;
• running competitive processes to appoint developers; and
• monitoring delivery and engagement.

The response anticipates cases where the Heat Network Zoning Authority may act as a zone coordination body, although minimum governance requirements will still apply.

Local authority implication

The response confirms a significant expansion of councils’ role in heat decarbonisation, with local authorities responsible for structured delivery and ongoing oversight of zones, supported by national funding and standards.

How zones will be identified, sequenced and communicated

The response confirms the development of a zoning digital service: an online portal providing general zoning information and zone-specific details, including interactive maps. The service is currently in ‘private beta’, with a ‘public beta’ planned before regulations come into force.

A published zoning pipeline will list areas expected to be designated and under construction in the near future. It will be reviewed annually and published via the digital service.

Local authority implication

The pipeline provides advance visibility, which will help enable early governance planning, stakeholder engagement and preparation for authorities considering developer roles.

Route to market: consents + conditions

Zone delivery will rely on exclusive rights granted through a consent model, designed to avoid duplicating regulation alongside technical standards and consumer protection regimes. Under this model, a competitively appointed developer is given exclusive rights to deliver heat networks within a zone, enabling coordinated investment while existing technical and consumer protection regimes govern standards and pricing.

Two-tier consent conditions

The zoning framework applies obligations in two stages (Tier 1 and Tier 2), reflecting the separation between safeguarding future delivery and enabling active network construction.

Tier 1 conditions take effect when a heat network zone is formally designated, introducing planning safeguards that protect the future viability of heat networks without requiring buildings to connect. Tier 2 conditions apply only after a zone delivery body has been competitively appointed and granted consent, activating exclusive delivery rights and enabling connection obligations for specific buildings where a network can be provided. Designated zone coordination bodies will be responsible for monitoring these conditions.

The two tiers differ both in when they apply and how breaches are enforced:

• Tier 1 conditions: unremedied breaches of Tier 1 conditions may ultimately result in consent revocation. These include community benefit outcomes, information-sharing obligations and serious technical breaches such as persistent emissions-limit non-compliance, corrupt practices or inaccurate bid information.
• Tier 2 conditions: breaches are penalised but cannot alone result in revocation. Sanctions include financial penalties, removal of undeveloped phase areas and recording breaches on a developers list that may restrict future bids.

Local authority implication

Zoning means local authorities must be proactive in managing zone delivery. It is not simply a case of appointing a developer and stepping back.

Social value (community benefit outcomes)

Bidders must commit to five minimum social value outcomes, aligned with wider procurement principles:

• integrated communities;
• local job creation;
• environmental protection and improvement;
• health and wellbeing; and
• education and training.

These commitments become conditions of consent and must be reviewed at least every five years. Additional outcomes may be proposed with approval.

Can local authorities be zone developers?

The response addresses calls for a stronger local authority developer role but highlights risks including conflicts of interest, competition-law challenges and reduced market confidence.

Public sector developers may compete alongside private developers. Councils should win through competition and, if successful, adopt suitable delivery structures under the consent framework.

Local authority implication

Councils retain a route to development but must manage governance separation where acting as both coordinator and bidder.

Which buildings can be required to connect?

Three categories of buildings may be required to connect within a proposed timeframe:

1. new buildings permitted after zone designation;
2. pre-existing communally heated buildings; and
3. pre-existing non-domestic buildings above 100 MWh annual demand with wet systems.

Connection may only be required where requested by the developer and the zone coordination body is confident that connection is deliverable within the proposed timeframe.

Energy Act 2023 and connection fees

The response confirms the Energy Act 2023 does not currently allow developers to charge connection fees for mandatory connections. The government intends to address this through future primary legislation.

Until then, compulsory connection is expected to be limited, with greater reliance on negotiated agreements.

Local authority implication

Early zoning will depend more on negotiation rather than enforcement.

Exemptions and fairness

Building owners and developers may apply for exemptions to connections based on defined criteria, including existing low-carbon systems or structural incompatibility.

The framework distinguishes between long-term conditional exemptions and short-term deferrals, supported by national guidance to ensure consistency.

Recoverable heat sources

Zone coordination bodies will identify recoverable heat sources (where heat is produced as a by-product of a process) and publish the results in zonal market prospectuses, which set out the heat network opportunity for an area. Heat network developers are expected to negotiate voluntary commercial agreements with heat source owners to supply this heat; however, where agreement cannot be reached, a statutory backstop will allow for mandatory connection based on a national pricing guidance.

Local authority implication

This is a strong impetus to unlock the utilisation of waste heat, but with some negotiation and dispute risks (despite the backstop).

Emissions limits from 2030

From 2030, zoned heat networks will be subject to a carbon intensity limit based on a 15% gas and 85% air source heat pump benchmark. Limits will tighten over time toward net zero, with reporting via the Heat Network Technical Assurance Scheme.

Local authority implication

Local authorities will need to consider emissions compliance not just at procurement, but over the lifetime of the zone, including monitoring performance and managing the risk of non-compliance as limits tighten.

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