Heat Network Zoning in England: What It Means for Funding

Heat network zoning is a planning and regulatory tool that the government is building for England. It marks out areas where a heat network is expected to be the cheapest low-carbon heating option, and it can require certain buildings to connect once a zone is formally designated. This guide sets out what zoning is, who decides, which non-domestic buildings may be affected, how exemptions work, and where funding fits. Everything here was checked on 31 October 2026.

Status line, checked 31 October 2026: the government response on zoning (gov.uk, updated 21 January 2026) sets out the design of the regime, but a legal note from Bevan Brittan dated 22 October 2026 still describes the Heat Network Zones (England) Regulations 2026 as draft. We could not confirm on 31 October 2026 that they have been made, so check gov.uk before relying on any date or duty below. This site is an independent information publisher, not an installer, and it does not give legal advice.

If you run, develop or own a heat network, or you manage a large building that might sit inside a future zone, the practical question is twofold: which funds pay for the network, and should your own building connect or install its own heat pump. For the wider picture, see our page on heat network funding.

What heat network zoning is

Zoning designates areas where heat networks are expected to be the lowest-cost, low-carbon heating option. Instead of each building choosing its own system in isolation, a zone gives a network developer a defined area in which to build and connect customers. The aim is to give developers and investors enough certainty about future demand to build networks that would otherwise be hard to finance.

Zoning sits alongside other measures. Ofgem consumer-protection regulation of heat networks applies across Great Britain from 27 January 2026. Heat network emissions limits apply from 2030. The government has set targets of 7% of heat demand (27 TWh) from heat networks by 2035 and about a fifth by 2050. The zoning regime is described as applying across England.

Who designates zones

A heat network zoning authority identifies zones. It starts inside DESNZ and is expected to move to the Warm Homes Agency later. It uses a National Zoning Model to identify candidate areas and publishes maps.

Local zone coordination bodies then refine and consult on the zones. The statutory consultation before designation lasts at least 6 weeks, so owners and operators have a defined window to respond. If local parties do not agree on a coordination body within 28 days of a formal invitation, the zoning authority can designate itself to do the job.

The government also planned to lay the implementing regulations in spring 2026 and to support at least 10 of the biggest English towns and cities to set up zones soon afterwards. Because the regulations still appeared as draft on 22 October 2026, treat any local timetable as provisional until a coordination body publishes its own.

Which buildings may be required to connect

Connection duties only bite once a zone is designated and a zone developer has been appointed. At that point, the following may be required to connect within a specified timeframe:

Two safeguards limit the duty. Connection is required only if the zone developer requests it, and only if the coordination body is confident the connection can be made in the proposed timeframe. Until primary legislation is passed, connection notices cannot require payment.

The 100 MWh test matters most for non-domestic estates. If a site has an annual average heat demand above 100 MWh and a wet heating system, it falls into the group that may be asked to connect. Estates teams should start by finding out each building's annual heat use from meter data or bills, and by recording what type of heating distribution each building has.

• new buildings receiving planning permission after the zone is designated;
• existing communally heated buildings, both domestic and non-domestic;
• existing non-domestic buildings with annual average heat demand above 100 MWh and a wet heating system (one that distributes heat through water, for example radiators or underfloor pipework).

Exemptions and heat suppliers

Owners can apply for an exemption. The examples given are existing low-carbon heating and structural incompatibility. Exemptions can be conditional or temporary, so an exemption granted today may carry conditions you need to track.

Zoning also reaches the other end of the pipe. Coordination bodies can require heat sources to connect and supply heat where that is viable. The examples named are data centres, water treatment works and waste incinerators. If you operate a site that produces waste heat, ask your local coordination body how it intends to approach this.

Penalties for breaching zoning requirements are up to £1 million or 10% of annual turnover, whichever is higher, with appeals to the First-tier Tribunal. That is a reason to keep a clear written record of any notice you receive and of every response you send.

Where the funding comes from

Zoning is not a grant. It creates demand and certainty; capital still has to come from somewhere. As checked on 31 October 2026, the main routes are as follows.

Green Heat Network Fund (GHNF). Per the gov.uk GHNF page (last updated 10 June 2026), GHNF funds new low-carbon heat networks, including cooling, and the retrofit and expansion of existing networks. Public, private and third-sector organisations in England and Wales can apply; individuals, households and sole traders cannot. Funding can be drawn down until the 2029 to 2030 financial year. Round 11 closed on 2 May 2026 and Round 12 closed at 11.59pm on 25 September 2026. The page lists no Round 13 or later round, so no GHNF round was shown open on 31 October 2026. The delivery partner is Triple Point Heat Networks Investment Management, and GHNF is a core element of the Heat Network Transformation Programme.

Heat Network Efficiency Scheme (HNES). Per the gov.uk HNES overview (last updated 12 October 2026), HNES funds improvements to existing district or communal heating projects that are operating sub-optimally and causing poor outcomes for customers and operators. Organisations in the public, private or third sectors can apply, in England and Wales only. It is a £107 million grant programme spanning 2023-2024 to 2029-2030. Round 13 has closed; applications for Round 14 are expected to open on 30 November 2026, subject to budget availability, with details to follow.

Boiler Upgrade Scheme (BUS). BUS is relevant only to a small building-level heat pump, not to a network. Ofgem lists £7,500 for air-to-water, ground-source or water-source heat pumps, with £9,000 for air-to-water or ground-source in an eligible off-gas-grid property, available until 31 March 2027. One installation is limited to 45 kWth (300 kWth for a shared ground loop, per Ofgem installer guidance). Ofgem gives no detailed non-domestic eligibility wording, so confirm eligibility with an MCS installer or DESNZ. Our overview of heat pump grants for business covers the wider picture.

PSDS Phase 4 closed to new applications in November 2024, with no further investment committed beyond awarded projects, and IETF is closed with no successor planned (Salix; gov.uk). Do not build a plan around either.

Connect to the network or install your own heat pump

A building inside a future zone should weigh connection against its own heat pump rather than treat the choice as settled. Both can be valid. Connection moves capital cost and plant to the network operator. A building-level heat pump keeps control on site and may be the right answer if you qualify for an exemption, for example because you already have low-carbon heating.

Whichever way you lean, compare on a like-for-like basis: capital cost, running cost, plant space released, resilience, the contract terms offered by the network, and the funding each route can access. Our guide to the cost after grants shows how to put the numbers side by side.

If you fund a heat pump yourself, capital allowances may help. The Annual Investment Allowance and other capital allowances (AIA, £1 million a year) apply to qualifying plant and machinery, and the relief applies to the cost the business funds itself. Confirm the position with an accountant.

How to prepare, step by step

There is no application form for zoning itself, so preparation means getting your information in order before a consultation or a notice arrives.

• Check gov.uk for the current status of the Heat Network Zones (England) Regulations and for any published zoning maps.
• Work out annual average heat demand for each building and compare it with the 100 MWh test.
• Record the heating system in each building, including whether it is a wet system, its age and its condition.
• List anything that could support an exemption, such as existing low-carbon heating or structural constraints, and keep the evidence.
• Watch for the formal consultation of at least 6 weeks in your area and put a named person in charge of responding.
• If you operate a network, ask the scheme administrators which route fits: GHNF for new networks and retrofit or expansion, HNES for existing networks that underperform.
• Read the applicant guidance before you contact a scheme. For HNES, read the guidance and then email hnes@talan.com to request an application form. For GHNF, enquiries go to enquiries@tp-heatnetworks.org.

Common mistakes

The first mistake is assuming zoning is already in force everywhere. The regime is being built in stages, and the regulations appeared as draft on 22 October 2026. The second is assuming every building must connect. Duties depend on a designated zone, an appointed developer and a request to connect, and they come with exemptions.

The third is treating GHNF as open. No round was shown open on 31 October 2026. The fourth is assuming BUS can pay for a network; it supports a heat pump in a building, not a district scheme. The fifth is leaving evidence gathering until a notice lands, when your response window may be short.

If the route you want is closed

With no GHNF round shown open, a developer can use the time to firm up a project so it is ready if a later round is announced. Check the gov.uk GHNF page regularly, since it lists the rounds. Operators of an existing network that is underperforming can prepare for HNES Round 14, expected to open on 30 November 2026 subject to budget availability, by reading the August 2026 applicant guidance now.

If your building is better served by its own heat pump, look at BUS for a small installation and at self-funded options with capital allowances. Send an enquiry and we reply by email.

Frequently asked questions

What is heat network zoning?

Heat network zoning designates areas of England where a heat network is expected to be the lowest-cost, low-carbon heating option. A zoning authority identifies zones using a National Zoning Model, local coordination bodies consult on them, and once a zone is designated and a developer appointed, some buildings may be required to connect.

Who decides which buildings must connect?

The zoning authority and local zone coordination bodies shape the zones, but connection is required only if the zone developer requests it and the coordination body is confident the connection can be made in the proposed timeframe. Owners can apply for exemptions, which can be conditional or temporary.

Does the 100 MWh test apply to my building?

It applies to existing non-domestic buildings with annual average heat demand above 100 MWh and a wet heating system, but only inside a designated zone with an appointed developer. Check your meter data and heating type now, and confirm the current rules on gov.uk because the regulations still appeared as draft on 22 October 2026.

Is any heat network funding open?

On 31 October 2026 the gov.uk GHNF page listed no round open after Round 12 closed on 25 September 2026. HNES Round 13 has closed, and Round 14 is expected to open on 30 November 2026, subject to budget availability, with details to follow.

Can the Boiler Upgrade Scheme fund a heat network?

No. BUS supports a small building-level heat pump, for example £7,500 for an air-to-water, ground-source or water-source heat pump, up to 45 kWth for one installation. Ofgem gives no detailed non-domestic eligibility wording, so confirm eligibility with an MCS installer or DESNZ.

What happens if a building breaches zoning rules?

Penalties for breaching zoning requirements are up to £1 million or 10% of annual turnover, whichever is higher, with appeals to the First-tier Tribunal. Until primary legislation is passed, connection notices cannot require payment. Keep written records of every notice and response.