Heat Network Efficiency Scheme (HNES)

HNES is open to applicants who are responsible for operating or managing existing district heat networks or communal heating systems in England and Wales. This includes:

• Public sector organisations including NHS Trusts, Universities and Other Government Departments.

• Private sector organisations that are registered companies and submit annual accounts.

• Third sector organisations such as registered charities, community investment companies and other such organisations that are officially registered and submit annual accounts.

Successful applicants will be the recipients of grant funding and will be responsible for ensuring that grant funds are deployed in accordance with funding award, i.e. procuring or mobilising third-parties to deliver the funded activities. Applicants must be legal entities, with authority to sign-off investment decisions for the heat network they are responsible for and instruct delivery of funded works. Consultants cannot submit applications on behalf of their clients, but they can support in the development of the application form and supporting evidence. Individuals cannot apply to HNES. Potential applicants that are unsure whether their projects meet the HNES eligibility criteria should contact hnes@gemserv.com.

Grant application assessment and award will prioritise projects which:

• Support a higher proportion of residential “customers in need” (as aligned with HNES Objective 2). For the purposes of HNES, this is defined as:

“Dwellings supplied heat/energy by a heat network, in which a resident or residents are considered financially vulnerable and will therefore benefit significantly from reduced costs for heating or service improvements through HNES support. This includes any of the following categories (or equivalent) of status or accommodation type: social housing; low-income housing; customers in fuel poverty; extra care housing; low-income care homes and supported housing”.

Where applications do not include support for residential “customers in need”, or where this support (alongside evidence of how customer detriment will be improved) is not satisfactorily addressed, HNES reserves the right to reject the application.

• Deliver benefits which can demonstrate improvements to networks where baseline performance metrics are considered particularly poor, and/or can deliver a significant performance improvement over the baseline performance (as aligned with HNES Objective 1).

Networks that do not support residential "customers in need”, including non-residential heat networks such as hospital or university campuses or those supplying commercial buildings, are still able to apply. However, applicants with a high proportion of residential “customers in need” will be prioritised.

HNES will fund capital measures across the network categories outlines below, where the measures directly contribute to achieving the HNES objectives:

• Energy centre / plant room

• Primary / secondary distribution network

• Tertiary network

Works that are not eligible include, but are not limited to, the replacement of primary plant; changes to or replacement of pipework or heat emitters within the tertiary network; and installation of meters and metering equipment where this is a requirement under the Heat Networks Metering and Billing Regulations.

The aim of HNES is to improve heat network performance in existing/operational projects where customers and/or operators are experiencing sub-optimal outcomes. In particular, HNES will focus on addressing customer detriment as a way of supporting heat network consumers impacted by the increasing costs of living and energy, with focus on where customer need is greatest.

The HNES objectives are:

• Objective 1: Reduce carbon emissions by making heat networks more efficient.

• Objective 2: Reduce customer detriment to improve consumer confidence.

• Objective 3: Help prepare the heat network market for sector regulation and technical standards.

Objectives 1 and 2 form key principles against which the HNES assessment methodology has been developed.

Round 10 is now open for applications and will close on 19 September 2025. Access to the HNES online portal should be requested no later than Friday 5 September 2025.

Round 11 is expected to open 1 December 2025 and close on 6 February 2026.

Round 12 is expected to open in March 2026 and close in May 2026.

Round 13 is expected to open in August 2026 and close in October 2026.

All of these dates are subject to budget availability.

Application Assessment Timeline

The estimated timelines from the round closing date, which are subject to change:

Weeks 1-10: Application assessment period, including clarification period.

Weeks 11-14: Review of assessments by HNES Investment Committee (including clarifications) leading to decision on funding award recommendations.

Week 15-16: The Department for Energy Security and Net Zero internal approvals of funding recommendations.

Week 17: Confirmation to applicants of successful / unsuccessful applications. 

Week 18: Issue of Grant Funding Agreements to successful non-Local Authority applicants.

Weeks 17-21: Further approval process for Local Authority applicants. Issue of Memorandum of Understanding to successful Local Authority applicants.

Gemserv has been appointed Delivery Partner to deliver the scheme on behalf of the Department for Energy Security and Net Zero. Go to their website for more information: https://gemserv.com/heat-network-efficiency-scheme-hnes/

You must register an Expression of Interest by contacting hnes@gemserv.com to apply. In this email please include the information specified on page 29 in the Guidance for applicants document.

The HNES application guidance and relevant documentation can be found on the gov.uk website: https://www.gov.uk/government/publications/heat-network-efficiency-scheme-hnes

Once your Expression of Interest has been reviewed, you will be given access to the HNES online portal. Here, you must complete an online application form for either a capital grant funding application or a revenue grant funding application.

Please note, you will receive an email with a link to the HNES online portal from noreply@talansm.com.

Read the guidance on how to prepare your application. The guidance provides information on:

• the application process

• eligibility criteria

• how applications will be scored and assessed

• the monitoring and reporting obligations for successful applicants

The HNES application guidance and relevant documentation can be found on the gov.uk website: https://www.gov.uk/government/publications/heat-network-efficiency-scheme-hnes

Read the guidance on how to prepare your application. The guidance provides information on:

• the application process

• eligibility criteria

• how applications will be scored and assessed

• the monitoring and reporting obligations for successful applicants

Contact hnes@gemserv.com to register an Expression of Interest.

Gemserv has been appointed Delivery Partner to deliver the scheme on behalf of the Department for Energy Security and Net Zero. Go to their website for more information: https://gemserv.com/heat-network-efficiency-scheme-hnes/

Guidance

We have produced a series of guidance videos which set out practical steps that heat network operators can take to improve the performance of their systems under HNES.