Get in the Zone: why heat networks are the hottest thing in town

What is Heat Network Zoning?

Picture this: a strategic, methodical approach that requires specific buildings within designated areas to connect to heat networks. This isn’t just a bureaucratic exercise; it’s about ensuring a seamless transition to low-cost, low-carbon heat. Essentially, it’s like creating VIP zones for buildings to access the greenest, most efficient heating solutions available.

The Energy Act 2023 empowers the Secretary of State to set up this framework through regulations, establishing heat network zoning in England. DESNZ calls this zoning a “key policy solution” for hitting net zero targets. They aim to have local authorities designating these zones by 2025, which is practically tomorrow in legislative terms.

Who runs the show?

According to DESNZ’s February response to the Heat Network Zoning consultation, two new zoning bodies will be at the helm: the Heat Network Zoning Authority (aka the Central Authority) and Zone Coordinators.

The Central Authority

Think of the Central Authority as the grand maestro, orchestrating the national-level tasks and ensuring harmony across England. They’ll develop a standardized methodology for identifying these zones—no small feat.

Zone Coordinators

Zone Coordinators, on the other hand, are the boots on the ground. These teams, linked to or within local authorities, handle the nitty-gritty local tasks. They oversee one or more zones, which might not neatly align with existing local government boundaries (because why would anything be that simple?).

Appointment process

The Central Authority can take on Zone Coordinator duties but may also delegate to other local government levels. This isn’t a casual assignment; it involves a rigorous assessment of accountability, long-term strategy, financing, governance, and data management. Once through this gauntlet, two governance structures are available:

• Principal Structure: A team within local government, acting impartially.
• Optional Structure: A separate entity, possibly a joint venture.

Zone Coordinator Responsibilities

Zone Coordinators must:

• Maintain independence from the Central Authority while allowing for oversight.
• Provide quarterly reports to local councillors.
• Engage regularly with consumer groups, local businesses, and heat network experts.
• Develop conflict-of-interest measures.
• Produce an annual public report on remuneration and budgeting.
• Implement risk management procedures aligned with Central Authority guidance.

Their key duties include:

• Identifying and Reviewing Zones: Collecting data, conducting consultations, and registering zones.
• Zone Delivery: Publishing a Zonal Market Prospectus, managing developer appointments, and finalizing contracts.
• Zone Operation: Monitoring and enforcing developer performance, reporting data, and handling appeals with Central Authority support.

Funding the mission

Funding for Zone Coordinators will come from various sources:

• Central government exchequer funding.
• Heat network cost recovery mechanism under the Energy Act 2023.
• Zone Coordinator consent fees.

These funds need to be sustainable and proportionate, with fees based on the size and activity within each zone. Further consultations will fine-tune how consent fees are implemented.

Rolling out the red carpet for heat networks

The grand rollout of heat network zones begins in 2025. The recent consultation has closed, and preparations are underway to weave these zones into local plans and make sure everyone is on the same page.

Need help navigating the heat network maze?

If all this talk of zones and regulations has your head spinning, fear not! We are here to help you navigate the complexities of heat network zoning. Contact us today at enquiries@sharpepritchard.co.uk for expert advice and support on how these changes might impact you and your business.

Steve Gummer is a Partner and Kamran Zaheer is a Junior Associate at Sharpe Pritchard LLP.

This video is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email enquiries@sharpepritchard.co.uk