Unlocking recoverable heat for UK heat networks

UK – A coordinated approach to carbon policy, planning and infrastructure funding is needed to unlock recoverable heat for UK heat networks, according to a new Energy Systems Nexus report. Its research identifies nearly 4,780 potential heat sources within 1km of heat network zones, but warns that commercial risk, limited data and a lack of guaranteed customers could prevent much of that energy being used.

The Recoverable Heat in Heat Networks report, co-funded by the United Kingdom National Nuclear Laboratory, E.ON and Amazon Web Services (AWS), examines how surplus heat from industry, data centres, energy-from-waste facilities, nuclear power and public infrastructure could contribute to low-carbon heating.

Heat networks currently supply around 3% of UK heat demand. Government ambitions envisage a rise to 7% by 2035 and 20% by 2050, increasing the importance of securing reliable, affordable sources of heat.

Commercial barriers outweigh technical limitations

The study reviewed 37 UK and international networks already using recovered heat, mapped potential sources close to heat network zones, assessed nine barriers and six approaches to heat pricing and profit-sharing, and interviewed 13 industry stakeholders.

It found that availability alone does not establish a viable project. Developers must match source temperature, operating hours and volume with network demand, capacity and construction timetables. The cost of connections and uncertainty over future heat purchases can undermine otherwise promising schemes.

Incentives are frequently misaligned between organisations supplying heat and those investing in networks. A data centre operator, for example, may have different operational priorities and contract requirements from an energy-from-waste plant or a nuclear facility.

It’s about who pays, where the risk sits, and whether there’s a sound business case at the end of it.

Chetan Lad, Head of UK Strategy, E.ON UK

Lad added that the technology is already proven, including through E.ON projects in Europe, but stronger market confidence, better data and contracts tailored to different heat sources are needed in the UK.

Planning beyond local heat network zones

The report cautions that zoning alone may not capture opportunities from large heat sources capable of serving demand across wider geographical areas. Nuclear power stations, in particular, could have regional significance but require long-term coordination between generation assets, transmission infrastructure and heat customers.

Iain Darby, Head of Strategic Research at the United Kingdom National Nuclear Laboratory, said nuclear heat could provide predictable, high-grade output at significant scale. However, integrating the infrastructure during initial reactor and network planning would be more practical than seeking to add connections later.

The report recommends mandatory techno-economic heat recovery assessments for planning applications above a specified energy-use threshold. It also calls for a continuously updated, open platform showing the location and characteristics of potential heat sources, helping developers and local authorities assess feasible connections.

Funding and contracts to share risk

Alongside improved planning, the report proposes maintaining Green Heat Network Funding for connections to recoverable heat sources within zones. It suggests examining whether the National Wealth Fund could support early construction through guarantees and loans linked to agreed project milestones.

Standardised contract templates could reduce negotiation costs and clarify responsibilities for supply interruptions, connection investment and long-term heat offtake. However, the report stresses that a single commercial model cannot suit every source: predictable high-temperature heat and variable lower-temperature output create different financing and operating risks.

It also recommends that England’s Zoning Coordination Bodies recognise wider energy-system benefits in procurement, including the potential for diversified heat sources to reduce pressure on electricity networks.

Carbon incentives and regulation

On carbon policy, Energy Systems Nexus advocates a Carbon Reporting and Innovation Office with an economy-wide remit for emissions monitoring, reporting and verification.

The report also proposes expanding the UK Emissions Trading Scheme to energy-from-waste facilities, with free allowances linked to heat recovered for networks, and eventually extending carbon pricing to domestic heating fuels.

Its recommendation refers to a 2028 start for energy-from-waste inclusion. However, the UK ETS Authority confirmed in August 2026 that waste incineration will not join the scheme in 2028 as originally planned. A revised timetable has yet to be announced.

These proposals come as Ofgem regulation and England’s heat network zoning framework reshape the sector, although the report argues that additional coordination is needed to translate policy momentum into operational projects.

Making recoverable heat a routine choice

Alex Buckman, Energy Systems Nexus Lead, said the greatest challenges were less about technology than aligning the interests of heat suppliers and network operators.

Achieving widespread uptake, the report concludes, will depend on treating heat recovery as a planned part of energy infrastructure rather than an opportunity pursued after sites are developed.

The full report is available from the Energy Systems Nexus reports library.