What heat network connection actually costs and who pays

The first question most facilities managers ask about heat network zoning is "what will this cost us?" It's the right question, and the honest answer is that it depends on your building, the network and the deal you negotiate. What we can do is set out where the money goes when a commercial building joins a district heating scheme, what you stop paying for, and how to compare the options fairly. We don't quote prices here. Figures vary widely between networks and buildings, and any number we gave you would be a guess.

Where things stand on pricing

Zoning isn't in force yet. The zoning regulations are not yet laid before Parliament[source], and no zones have been designated.

The government set out its zoning policy in its response to consultation, published 21 January 2026[source]. That policy covers who must connect, the timetable and exemptions. The detailed rules on how zone developers must price connections and heat are not set out in our facts, and we'd rather say that plainly than guess. Whatever the final rules say, ask the zone developer for full written terms before you sign anything.

If you do receive a heat network connection notice, the agreement phase gives you at least 6 months from receiving the notice[source] to agree a connection date or apply for a temporary exemption. That's your window to get the numbers in writing and test them.

The connection charge

This is the one-off charge for bringing the network to your building. It typically covers the branch pipe from the main in the street to your boundary or plant room, and the substation or heat interface unit that transfers heat from the network to your building's own system.

What drives it is mostly physical. How far is your building from the main? Does the route cross roads, car parks or planted areas that need reinstating? How large is your heat demand, and so how big is the pipework and heat exchanger? Is there room for the substation, or does space need to be created?

Ask exactly what the charge includes. Is the substation owned and maintained by the developer or handed to you? Who pays for the meter? Are civils works on your land included? Two quotes with the same headline figure can cover very different things.

Works on your side of the substation

The pipes, pumps, radiators and air handling coils inside your building are often called the secondary side. The network generally won't pay for changes here, and they can be a significant part of the total.

The biggest issue is usually temperature. Modern heat networks tend to run cooler than old gas boiler systems, and they work best when water comes back from your building as cool as possible. An older system designed around hot flow temperatures may need changes to work well. These could include larger radiators or replacement coils in some areas, rebalancing the system, replacing three-way valves with two-way valves, and new controls.

Plant room changes are the other common item. You'll be removing boilers, flues and possibly gas supplies, and installing the substation and associated pipework. That can mean temporary heating during changeover, which needs planning around your building's operations.

Here's the point people miss. Many of these secondary-side changes would also be needed if you installed your own heat pump instead, because heat pumps also work best at lower temperatures. So they aren't really a cost of connection. They're a cost of moving off gas, whichever route you choose. A feasibility study should tell you which works are genuinely connection-specific.

Ongoing heat charges

Once connected, you pay for heat rather than fuel. Charges are usually built from two parts.

A standing charge. A fixed amount, often based on the capacity reserved for your building, covering the network's fixed costs of serving you. You pay it whether you use much heat or not.

A unit rate. A charge per kWh of heat delivered, measured by a heat meter at your substation.

Some contracts add other elements, such as a charge for the maximum demand you draw, or penalties if your return temperatures are too high. Both standing charge and unit rate usually rise each year in line with some form of index. Ask which index, how often it's applied, and whether the price is linked to a benchmark such as the cost of running a gas boiler or heat pump yourself.

Contract length matters as much as the price. Heat supply contracts tend to run for many years. Read the terms on price review, termination, what happens if the network has an outage, and service levels.

What you stop paying for

A fair picture includes the costs that disappear. With a heat network you generally avoid:

• buying and installing replacement boilers or heat pumps when your current plant wears out
• servicing, repairs, gas safety checks and insurance for that plant
• fuel price risk on gas or electricity for heating, though you take on the network's price terms instead
• the plant room and roof space that heating plant occupies, which may be worth something as storage, lettable space or room for other equipment

How much these are worth depends on where you are in your plant's life. A building whose boilers were replaced last year has less to gain right now than one whose boilers are failing.

Building a fair comparison

Comparing a heat network on annual heat bills alone will give you the wrong answer. You need a whole-life comparison, usually over 15 to 25 years, covering upfront costs, running costs, maintenance and plant replacement for each realistic option.

Here's a hypothetical worked example to show the method. The numbers are invented and chosen to make the arithmetic easy. They are not typical prices.

Say your office uses 400,000 kWh of heat a year and you compare two options over 20 years. Both need the same £150,000 of secondary-side works.

Option A: your own heat pump. Plant and installation £450,000. Electricity £40,000 a year and maintenance £8,000 a year, so £48,000 a year, or £960,000 over 20 years. A major component replacement in year 12 at £80,000. Total: £450,000 + £150,000 + £960,000 + £80,000 = £1,640,000.

Option B: heat network. Connection charge £250,000. Standing charge £20,000 a year, unit rate 8p per kWh (400,000 × £0.08 = £32,000 a year), and £3,000 a year towards substation upkeep. That's £55,000 a year, or £1,100,000 over 20 years. Total: £250,000 + £150,000 + £1,100,000 = £1,500,000.

On those made-up figures, the network is £140,000 cheaper. Now change one number. At a unit rate of 10p, the heat cost rises to £40,000 a year, the annual total to £63,000, and the 20-year total to £1,660,000. The network is now £20,000 dearer.

That's the real lesson: the answer is sensitive to the unit rate, indexation and plant replacement assumptions. A proper appraisal would also allow for inflation and discounting, test several scenarios, and include carbon. Our heat network vs heat pump guide covers the non-cost differences.

Who pays: landlords and tenants

In multi-let buildings, the question of who pays is often harder than the question of how much. Capital costs such as the connection charge and secondary-side works usually sit with the landlord, but leases may allow some costs to be recovered through the service charge. Ongoing heat charges may be passed to tenants through the service charge or by sub-metering.

Every lease is different, and a change from in-house boilers to bought-in heat may not fit neatly into old service charge wording. Our guide for landlords and leaseholders goes into this. Before you agree anything that affects tenants, take legal advice on your lease terms.

Consumer protection now that Ofgem regulates

Heat networks are no longer unregulated. Ofgem became the regulator on 27 January 2026[source], with authorisation conditions applying to networks from that date. Before that, the consumer advocate and complaints roles began on 1 April 2025[source].

The consumer advocate is Citizens Advice, for heat network consumers in England and Wales[source]. For disputes, the Energy Ombudsman accepts heat network disputes, usually after 8 weeks with the supplier[source]. Technical standards are also coming: the Heat Network Technical Assurance Scheme has a planned launch in 2027, phased in[source].

Much of this framework was designed with household customers in mind. A large commercial customer should check which protections apply to an organisation of its size and type, and shouldn't rely on regulation in place of a well-drafted contract.

Getting help

If a developer has approached you, or you expect to be in a zone, independent advice can pay for itself. Heat network consultants who specialise in connection negotiation can review terms and benchmark charges. Feasibility specialists can cost your secondary-side works and build the whole-life comparison. Our guide on choosing a consultant explains what to look for.