Heat networks for the public sector: what, why and how
Neil Smillie, Associate at Mott MacDonald
Heat networks are a key component in the UK’s decarbonisation strategy. 2-3% of buildings in the UK are currently connected to heat networks, but it is believed that heat networks will need to supply almost 20% of heat by 2050 to help the UK to reach net zero. Cities, however, will need more than 20% of their heat from heat networks, making heat networks an essential part of London’s decarbonisation strategy.
Waste heat studies conducted under the Mayor of London’s previous decarbonisation programme, the Local Energy Accelerator, explored how heat networks could use excess heat. The Greater London Authority (GLA) identified multiple strategic network areas through local area energy planning, mapping how available waste heat sources across London could be used to heat homes and businesses. This research forms the opportunity for boroughs to develop local projects.
The potential, capacity and need for this technology to be embraced are all there. Here’s what you need to know to plan or develop a heat network.
- What are heat networks?
- Heat network feasibility study
- Helpful resources and learnings around heat networks
What are heat networks?
Heat network systems allow the transfer of energy from one location to another, in the form of heating or cooling. The systems are usually quite large, which can make it trickier to implement them in areas where multiple utilities are already present (i.e. under roads, railways, etc.). Unlike traditional systems that use cables or gas pipelines, heat networks use underground water pipes to distribute heat. They remove the need for individual boilers and can connect to systems that use low carbon heat sources, waste heat, or environmental heat from aquifers or boreholes.
Heat network feasibility study
A heat network feasibility study helps determine if it is the right solution for that site and whether there is the necessary support. For a project to progress there needs to be:
- time to develop the project
- funding
- someone within the organisation that is passionate and can drive the study
- permission to develop the heat network
- technical support.
The depth of the feasibility study may depend on how you are looking to finance the heat network project. Organisations can look internally, to their local authority, or create a prospectus detailing the potential for a heat network that goes out to heat network developers as an opportunity.
For more detail about networks, known challenges and learnings from live heat network projects, check out the slide deck from our Heat network deep dive webinar.
Helpful resources and learnings around heat networks
Financial model template
This heat network financial model template from the Department for Energy Security and Net Zero can help to evaluate a prospective heat network opportunity.
The model is designed specifically for heat network development in the UK. Financial modellers can use it to evaluate, among other things:
- capital funding repayment structures
- heat pricing strategy
- commercial viability
- emissions analysis of the network
- project summary largely in line with the Green Heat Network Fund (GHNF) requirements and thresholds (e.g. less than 100gCO2e/kWh, grant funding less than 4.5p per kWh of supplied heat over the first 15 years).
Zero Carbon Accelerator case studies
White City, London Borough of Hammersmith and Fulham: A clean heat network for White City in the Hammersmith and Fulham Council area is being developed with Zero Carbon Accelerator support, aligned to RIBA Stage 2 feasibility and including potential connections to local large-scale consumers.
There are additional opportunities for organisations to connect and interconnect to a heat network including the Phoenix Fitness Centre and Janet Adegoke Swimming Pool, Hammersmith Hospital, White City Living, Television Centre, Imperial College White City North and South campuses and Old Oak and Park Royal Development Corporation (OPDC).
If your project has similar connection opportunities to this, contact us directly to see how you can benefit from these learnings.
Check out the London Heatmap to see existing and proposed heat networks in London, including contact information for network operators.
London Borough of Barnet: The project involves creating feasibility studies for heat networks for the Hendon and Finchley areas to determine viability against green heat network fund metrics.
The study incorporated a review of existing borough and area wide feasibility studies of North London heat network areas, to ensure the solutions developed considered options for future integration into a larger area-wide network.
Pepys Estate, London Borough of Lewisham: This project aims to support this housing estate to address gas safety and fuel poverty for an estimated 726 homes. It encompasses:
- an estate-wide decarbonisation strategy with integrated systems
- plans for connecting to a heat network in the future
- replacing end of life gas and electric infrastructure.
This project will create replicable templates and guidance to maximise impact and inspire further housing estate decarbonisation across London. This will cover how to consider future heat network connectivity at a neighbourhood scale.
Funding and finance
Our Green Funding and Finance Finder features potential sources of financial support for your project in one place, whether you’re looking for grants, loans, or investment opportunities. Use this tool to find opportunities that are specifically for heat network related projects.
This includes (as of September 2025):
- Green Bonds: Green bonds are designed to fund projects with environmental benefits. They can be issued by public entities like local authorities and public banks, or by private companies.
- The London Efficient and Decentralised Generation of Energy (‘EDGE’) Fund: This Fund is investing £100m into projects that support the Mayor of London’s net zero ambitions across London.