Once built, they will be exceptionally difficult and expensive to change. Early design and ownership decisions therefore matter. Denmark’s experience is instructive. Heat networks there were not developed city by city, but town by town and village by village, with many local distribution systems built to serve individual communities. While effective locally, this approach created small, separate energy islands. Over time, it became clear that greater efficiency, system resilience and flexibility could be achieved by connecting these systems together.
Denmark has since invested heavily in regional heat transmission highways, allowing heat utility companies, often co-owned by the communities they serve, to procure, store and transport heat at the lowest possible cost, while delivering it into locally run distribution networks. This later integration has brought substantial benefits, but at considerable cost. The lesson for the UK is clear: without holistic, regionally coordinated planning from the outset, we risk locking ourselves into fragmented heat network zones and repeating an expensive process of retrofitting connectivity that could and should be designed in from the start.
The question now is institutional: who should own this infrastructure once it exists?
UK precedents for public and community ownership
To understand what public ownership of essential infrastructure can look like in practice, it is worth recalling the example of Scottish Water.
In 1989, water authorities in England and Wales were privatised. Five years later, a similar proposal was made for Scotland’s three water authorities. Strathclyde Regional Council responded by holding a referendum. More than 97 per cent of voters (around 1.2 million people) rejected privatisation.
The UK government accepted the result. Scotland’s water authorities remained publicly owned and were later merged to form Scottish Water in 2002. Since then, operating surpluses have been reinvested directly into the network rather than distributed to shareholders.
The outcomes are well documented. Scotland’s rivers and lochs are in significantly better ecological condition than those in England, where only around 14 per cent of rivers and lakes are classified as being in good ecological health. While Scotland’s water system still requires investment, it has not been systematically weakened by profit extraction.
A more directly comparable example exists closer to home. Shetland Heat Energy and Power (SHEAP) has been operating for decades, supplying reliable, low-cost heat to public buildings and homes using local waste heat streams. It is community-owned, not-for-profit, and embedded in the local economy, supporting employment, energy autonomy and long-term affordability.
SHEAP demonstrates that community-owned heat networks are neither theoretical nor novel. They can operate successfully over long periods, provided they have access to patient capital and stable governance. The difficulty today is not technical feasibility, but finance. Comparable projects now struggle to get off the ground because the funding mechanisms that once enabled them no longer exist.
Heat networks are generational assets
Heat networks share many characteristics with water infrastructure. They are capital-intensive, slow to repay, and designed to operate for 50 – 60 years or more. Like a mortgage, they are paid down gradually by the people who rely on them. Once that debt is repaid, ownership matters.
Heat networks should therefore be treated as critical energy infrastructure. Assets of this scale – buried in the ground and expected to operate for close to a century are – in practice, irreversible. Once constructed, communities are locked into their technical and commercial terms. For infrastructure with such permanence and strategic importance, long-term ownership should sit with the public, even where private capital and expertise are used in delivery.
Private developers, ESCOs and institutional investors, including pension funds, have a legitimate role in financing and delivering these projects. There is no serious argument for excluding private capital. But there is a distinction between financing infrastructure and owning it indefinitely.
If returns continue to be extracted long after capital costs have been recovered, the long-term economic value of the asset is lost to the community. Bills remain higher than they need to be, and reinvestment competes with shareholder returns. Over decades, that difference compounds.
Not-for-profit does not mean inefficient
Recent criticism has portrayed heat networks as outdated or as failed “socialist experiments”. This mischaracterises both the technology and the ownership models under discussion.
A not-for-profit organisation is not defined by ideology, but by purpose. Its core function is to finance and operate activities that serve a community need rather than to generate distributable profits for private owners. Crucially, this does not remove the requirement to operate commercially. Not-for-profit heat network operators must still balance costs, manage risk and seek out the cheapest and most reliable sources of heat available to them.
In practice, this commercial discipline often strengthens outcomes. The obligation to minimise costs for consumers discourages wasteful expenditure on unnecessarily expensive heat sources or poorly justified “vanity projects”, while protecting household bills over the long term. Any operating surplus is reinvested directly into the system rather than extracted as profit.
In the context of heat networks, reinvestment can include funding routine maintenance, upgrading plant, connecting new heat sources, expanding networks into lower-margin areas, or reducing consumer tariffs. These are precisely the activities that are frequently deprioritised when shareholder returns take precedence.
Far from being inefficient, not-for-profit heat networks are often more adaptable over time. Because they are not required to maximise profit, they can respond to system needs: expanding where commercial incentives are weak, upgrading assets when it improves long-term performance, and prioritising affordability and resilience alongside decarbonisation.
A no-regret form of infrastructure
Heat networks have another critical advantage that is often overlooked in policy debates: they are energy-source agnostic.
Once a building is connected via a heat interface unit (HIU), the upstream heat source can change without replacing the consumer’s equipment. Heat can come from large heat pumps today, waste heat tomorrow, geothermal sources in future, or technologies not yet deployed at scale. The network remains.
This is fundamentally different from individual gas boilers, which lock households into a single fuel, one that the UK cannot supply in sufficient quantity from domestic sources. Heat networks therefore offer one of the strongest available routes to energy resilience: reducing exposure to volatile international gas markets while maximising the use of homegrown energy and unavoidable waste heat.
From a system perspective, this makes heat networks a no-regret investment. Even if the optimal heat source changes over time, the network retains its value.
The missing piece: public finance and coordination
Other countries have recognised this. In Denmark, municipalities routinely finance heat networks using council-backed credit. Borrowing costs are low, payback periods are long, and ownership remains at municipal or regional level. Private firms design, build and operate systems, but once the debt is repaid, the infrastructure belongs to the public.
The UK lacks an equivalent mechanism. That absence is quietly shaping outcomes, pushing projects towards ownership models optimised for short- to medium-term returns rather than long-term affordability.
Public ownership does not require nationalisation or a centrally controlled rollout. Large heat networks are often best owned at municipal or regional level, where local authorities understand anchor loads, land use, waste heat sources and long-term development plans. In practice, regional ownership often simplifies delivery.
It also raises a practical point. Who, other than the public sector, can realistically fund and coordinate the connection of major waste heat sources such as data centres, power production, industrial sites, wastewater treatment works – whose value lies in system-wide efficiency rather than standalone commercial returns?
A clear policy ask
This is where central government must act deliberately. DESNZ and GB Energy should establish a national framework that enables municipal and community ownership of large heat networks, supported by access to low-cost, long-term public finance. Crucially, this framework must be underpinned by strategic, regional system planning, rather than the incremental development of isolated heat network zones.
Without such coordination, the UK risks creating a patchwork of small, separate energy islands, networks that function locally but lack the ability to share heat, integrate large waste heat sources, or balance supply across wider geographies. This fragmentation would lock in inefficiencies that are costly and difficult to resolve later.
GB Energy’s role should therefore extend beyond individual project support. It should act as a national system architect: setting design principles that prioritise interconnectivity, supporting regional delivery bodies, coordinating the development of heat transmission corridors, and ensuring that local distribution networks can ultimately plug into wider regional systems.
Without this intervention, the risk is not that heat networks fail. It is that they succeed in isolation, delivering heat locally, but missing the opportunity to build a resilient, flexible and genuinely low-cost national heat system.
Manchester’s heat networks will still be operating in the 2080s. The ownership and planning structures chosen now will determine whether these networks evolve into a connected, resilient public utility, or remain a patchwork of disconnected assets – leaving future generations not only to retrofit them at great expense, but also exposed to costs and commercial terms over which they have little democratic or long-term control.
