The announcement comes in response to recommendations by the Competition and Markets Authority (CMA) and by industry specialists such as Switch2 through the Association for Decentralised Energy (ADE) Heat Network Industry Task Force.

The regulatory plan is part of the government's market framework: Heat networks: ensuring sustained investment and protecting consumers, published on December 7 2018. Its aim is to encourage further investment in the sector, protect customers and support decarbonisation.

Commenting on the announcement, Kirsty Lambert, director at Switch2 Energy, said: “This is great news for the long-term growth of the district and community heating sector. It will make sure that the entire industry commits to rigorous customer service and performance standards that specialists like us already adhere to through the CIBSE/ADE code of practice and The Heat Trust.

“We are very pleased to see the government's long-term thinking and recognition of the important role that heat networks play in decarbonising the UK energy supply. The potential for heat networks to deliver reliable, affordable and low carbon heat is hugely under-exploited, but this market framework could provide a major boost to the industry.”

ADE director Dr Tim Rotheray said: “Government has recognised that creating a market that protects customers and reduces investment risk are two sides of the same coin and that a well-considered regulatory framework can support the creation of such a market. In proposing a framework that tackles investment risk and assures customers of the level of service they will receive, government is putting the appropriate steps in to create a self-sustaining, cost-effective market that will benefit all.”  

The government is currently seeking industry views as part of the development process for its heat networks market framework. It intends to consult on policy options for the framework in summer 2019.