The Environment Committee met to discuss the expansion of heat networks in London, hearing from consumer advocates, housing associations, government officials, and the Greater London Authority. Key discussions focused on improving consumer protections, the impact of new technical standards, the role of heat network zoning, and the potential for waste heat sources like data centres and energy-from-waste facilities to contribute to London's decarbonisation goals.

Expanding Heat Networks in London

The committee continued its investigation into expanding heat networks across London, hearing from a range of experts. Citizens Advice highlighted significant consumer issues, including extreme backbilling, price shocks of up to 300%, and cases of eviction due to housing debt linked to heat networks. Peabody, which manages around 11,000 homes connected to heat networks, described a diverse range of experiences, from 60-year-old networks to newly installed ones, noting confusion for residents about who is responsible for their heating and the challenges of understanding heat tariffs.

The introduction of new regulations from Ofgem, responsible for regulating heat networks from January 2026, was discussed as a significant step towards improving consumer experience. These regulations aim to mirror those in the gas and electricity markets, focusing on billing, vulnerable consumer treatment, and debt and disconnection. However, it was noted that this is the start of a journey, with suppliers having a year to register with Ofgem, and not all protections will be in place from day one.

Concerns were raised about fair pricing protections, with a lack of a price cap in the retail energy market for heat networks being a particular point of discussion. While transparency and data collection are seen as positive steps, more prescriptive principles are desired. The complexity of pricing structures, due to the variance in how heat networks are run, their age, size, and business models, was acknowledged.

The potential introduction of heat network zoning policies was discussed, with general agreement that they make sense if implemented in the right places and with robust consumer protections. Mandatory connection rules without adequate protections could put consumers at risk and damage the public perception of heat networks.

The committee also heard about the significant costs associated with upgrading existing heat networks to meet new technical standards, such as the Heat Network Technical Assurance Scheme (HNTAS). Peabody indicated that these costs could be substantial for older systems, potentially leading to price increases for consumers. Efforts to mitigate these costs through grants and efficiency improvements were discussed, but the challenge of subsidising these upgrades was acknowledged.

The role of the Greater London Authority (GLA) and local authorities in heat network zoning was explored. The GLA aims to play a strategic role, supporting boroughs and London Councils to ensure join-up across boroughs and achieve positive outcomes for Londoners. Local authorities are seen as crucial for facilitating these networks, but concerns were raised about their capacity and resources to manage zoning effectively.

The potential for data centres and energy-from-waste facilities to supply heat networks was highlighted as a significant strategic opportunity. However, challenges remain in matching heat supply with demand, particularly due to the timing of data centre capacity ramp-up and the cost of building new heat networks. International examples of successful heat export from data centres and energy-from-waste plants were discussed, with a common theme being the importance of existing heat networks or strong local authority coordination.

Concerns were raised about the lack of transparency in bundled costs, particularly for social housing residents where heating costs are included in service charges. While Ofgem's new regulations will introduce billing transparency and back-billing requirements, addressing bundled costs in social housing and leasehold cases is complex and may require legislative changes.

The committee also discussed the potential for a price cap for heat networks, with general agreement that it is complicated due to the sector's diversity. However, the need for fair pricing and consumer protection was strongly emphasized. The government has committed to exploring how to make low-carbon heat more cost-competitive, with zoning policy, utilising surplus heat, and encouraging thermal energy storage being identified as potential levers.

Finally, the committee heard about the importance of public confidence in heat networks, with concerns raised about the reliability and affordability of some existing schemes, particularly those operated by local authorities. The need for clear communication about the benefits of heat networks, such as boiler maintenance and replacement, was stressed, alongside the importance of robust regulation and consumer protection.

The meeting concluded with the committee noting its work programme and the date of its next meeting on 3 February 2026.