As more residents are moving onto heat networks, one question comes up time and again: “Why do heat network prices differ from gas and electricity prices?”
At the same time, Ofgem now regulates heat networks. This puts a greater focus on transparency and helping residents understand what sits behind their tariff.
We’ve pulled together a clearer explanation of how heat network pricing works, what affects it, and why it looks different to energy costs you may see elsewhere.
Why heat usage isn’t comparable to gas and electricity
The energy consumed on a heat network is for inherently different uses than your gas and electricity consumption. For example:
- Heat via heat networks: hot water to your taps, and heating via underfloor heating or radiators.
- Gas via a boiler: hot water to your taps, heating via underfloor heating or radiators, and sometimes cooking.
- Electricity: lighting, appliances, electronics, and sometimes hot water to your taps and heating via underfloor heating or radiators.
With gas and electricity, you buy fuel and convert it into heating or hot water inside your own boiler or immersion system. With a heat network, this conversion happens centrally in the energy centre. The heat is then delivered via a network of insulated pipes to individual homes ready for use.
Because of this, heat network tariffs often include maintenance, infrastructure and long-term asset replacement costs that you’d otherwise pay for separately.
Factors that affect your heat network tariff
Unit rate
The unit rate for heating & hot water can be impacted by:
Incoming fuel price: If your heat network uses gas or electricity in the energy centre, the cost of bulk fuel directly affects your unit rate. Heat networks often purchase fuel on fixed-term contracts, so unit rates reflect when that energy was bought, not just current market rates.
How heat is generated: Different heat networks use different technologies and energy sources to generate heat. For example, some networks use commercial gas boilers, while others use electrically powered systems. Gas and electricity have different supply costs. As a result, the cost of producing heat can vary between heat networks and affect resident unit rates.
Network and energy centre efficiency: If the network’s efficient, minimal heat is lost between the energy centre and your home. This will make your unit rate closer to the cost of the incoming fuel. However, greater heat losses increase the amount of fuel needed to produce the same amount of heat. This can lead to higher unit rates.
Daily standing charge (DSC)
The standing charge reflects the fixed costs of maintaining and operating the heat network. This is typically paid for daily, and may include:
Incoming fuel costs: This is the standing charge for the bulk fuel supply to the network where gas or electricity is used in the energy centre. This includes transport and delivery of the fuel to the development. These delivery costs help maintain energy supply and ensure the system operates smoothly. Any increases in these costs may be passed onto consumers.
Maintenance: Regular servicing of the energy centre assets, pipework, heat interface units (HIUs), and water quality and system performance help ensure reliable supply of heating & hot water. Unlike individual boiler maintenance, these costs may be built into your tariff rather than billed separately. Some suppliers recover these costs through service charges, while others include them within rent.
Long-term upgrades: Heat operators often have a dedicated pool of money set aside over time needed to cover the long-term replacement of heat network assets, called a sinking fund. Heat suppliers may recover this cost through your standing charge, service charge or rent.
Inflation: Over time, as with everything, inflation can increase a heat network’s operational costs, such as software-as-a-service (SaaS) fees, Insite Energy’s metering & billing fees, and third-party admin fees.
Where we support your heat supplier in setting heat network tariffs, you can download your ‘Tariff breakdown’ document by searching for your home on our ‘Find your home’ page to see exactly what’s included.
Heat network prices compared to gas and electricity
It’s natural to look at how heat network prices compare to gas and electricity. To help provide that context, here are typical unit rates in pence per kilowatt-hour (p/kWh) and standing charges in pence per day (p/day):
|
Average unit rate (p/kWh) |
Average standing charge (p/day) |
|
|
Insite Energy |
14.49 |
50.70 |
|
Gas |
8.02 |
32.28 |
|
Electricity (single rate) |
26.55 |
57.72 |
Source: Ofgem (October 2026) & Insite Energy’s metering & billing portfolio averages (February 2026)
These figures are useful as a general benchmark, but they don’t reflect differences in how energy is delivered or what’s included in each tariff.
If you’re looking to estimate how your own heat network costs compare to a similar-size home if it had an individual gas boiler, we recommend the Heat Trust calculator. Just keep in mind, it relies on assumptions that may not fully reflect your home or usage.
Ofgem’s consumer protection regulations and heat network tariffs
Since the 27th January 2026, Ofgem is now the regulator of heat networks, bringing with it new regulations to protect heat network consumers. This means, come 27th January 2027:
- Heat suppliers must be transparent about how tariffs are set, requiring heat suppliers to provide 31 days’ notice where there is a unilateral disadvantageous increase.
-
Consumers benefit from clearer billing, and suppliers cannot back-bill charges that are more than 12 months old.
- Ofgem will keep pricing and fairness under ongoing review.
However, heat network prices are not directly capped in the same way as gas and electricity tariffs, reflecting the differences in how heat networks operate and how costs are structured. We explain this in more detail in our guide to the current state of heat network regulation, including what protections are already in place and what’s still to come.
It’s completely understandable to want to compare your heat network prices to gas, electricity, or the Ofgem price cap. However, heat networks deliver heat rather than raw fuel. They also include service and infrastructure costs. As a result, a direct comparison doesn’t reflect the full picture.
With increasing regulation and greater transparency, it’s becoming easier to understand what you’re paying for and why.
