A new report from ADE: Heat Networks argues that government action to make heat networks cost-competitive with gas could reduce household heating bills, cut emissions and unlock £100 billion of private investment across the UK.
The Cost of Heat Report outlines a phased strategy to remove the financial barriers preventing wider adoption of district heat networks.
The organisation says that while heat networks have the potential to deliver lower-cost, low-carbon heating, targeted government support is needed to compete with fossil gas during the sector’s early expansion.
The proposed roadmap includes fairer carbon pricing in the short term, followed by targeted electricity discounts and increased grant funding to lower operating costs.
In the longer term, the report recommends introducing a Regulated Asset Base (RAB) model to reduce financing costs and construction risks, enabling heat networks to become cheaper than gas as the market matures.
Heat networks are expected to play a significant role in decarbonising buildings by using renewable and recovered heat sources to provide efficient, centralised heating. Expanding their deployment would reduce dependence on imported natural gas, improve energy security and help Britain meet its net zero commitments.
Chris Unsworth, Head of ADE: Heat Networks, said: “Closing the cost gap between heat networks and gas is achievable and affordable if the government makes a clear commitment. We have a roadmap that works. It requires short-term measures to level the playing field which will deliver lower bills for consumers, £100 billion in private investment and 100,000 jobs.”
The report warns that failing to act could cost the electricity system £86 billion in avoided savings, prevent the creation of around 100,000 jobs and leave consumers exposed to volatile international gas prices.
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