Heat Network Efficiency Scheme (HNES) 2026–2027: Up to 50% of Capital Costs for Existing Heat Networks in England and Wales

Heat Network Efficiency Scheme (HNES) 2026–2027: Up to 50% of Capital Costs for Existing Heat Networks in England and Wales

The Heat Network Efficiency Scheme (HNES) is a UK Government grant programme for existing district heating and communal heating systems in England and Wales. It is designed for networks that are already operating but are delivering poor outcomes for customers or operators because of avoidable technical, operational, metering, control, or insulation problems. The scheme can pay for an optimisation study, physical improvement works, or both through separate revenue and capital routes.

The next published timetable is useful for organisations planning a 2026 application. Round 13 is expected to open on 17 August 2026 and close on 9 October 2026, subject to budget availability. A further round is expected to open in December 2026 and close in February 2027, also subject to budget availability. Those are planning dates rather than a guarantee that a form will be available on a particular day, so a prospective applicant should contact the delivery team and monitor the official GOV.UK page before committing to a submission date.

Key details

What HNES is intended to solve

The scheme is not a general-purpose energy grant for a new heating project. It targets a network that is already in service and has a demonstrable performance problem. The official description connects that problem to customer detriment, including poor service, high costs, unreliable heat delivery, or the effects of inefficiency being passed through to customers. It also connects the scheme to carbon reduction and preparation for future heat-network regulation and technical standards.

That focus matters when deciding whether to apply. A proposal that simply says a network would be more efficient with new equipment is incomplete. A stronger case identifies the current failure or loss, explains which customers experience it, and shows why the proposed investigation or intervention is proportionate. Useful evidence may include heat-loss data, return-temperature data, complaints, billing or metering problems, unplanned outages, maintenance records, poor system balancing, or a survey showing that the network is not meeting expected service levels. The scheme page does not require one universal evidence pack in its summary, so the detailed guidance and application form should control the final list.

What the grant can pay for

HNES has two connected but distinct funding routes. A revenue grant can fund external third-party support for an Optimisation Study. The purpose of that study is to examine the network, establish the causes of sub-optimal performance, and recommend costed interventions or improvement measures. The study should therefore produce decisions that can be acted on, not just a descriptive report. HNES typically funds £15,000 to £24,000 per project for this type of application, although the official overview says an applicant may request a different amount with compelling justification.

A capital grant can part-fund the installation of eligible measures. The scheme can support up to, but not including, 50% of eligible project costs, including non-recoverable VAT. The applicant must cover the balance and should not assume that every item in a wider refurbishment plan will qualify. Capital examples on the official page include:

• reconfiguring the hydraulic arrangements of heat-supply pipework;
• replacing or removing pumps or pipework;
• replacing heat interface units;
• improving heat-generation plant controls;
• improving controls for pumps, distribution networks, thermal storage, or tertiary systems;
• system balancing or flushing;
• heat-distribution network controls;
• pipework insulation; and
• metering equipment or smart solutions.

The list is illustrative rather than a substitute for the full guidance. A project can contain residential, commercial, or mixed customers. The overview also says there is no restriction on the existing primary heat-generation plant, so a network using a boiler, heat pump, combined heat and power system, or another plant type may still be relevant. District cooling can be included where the proposed improvements meet HNES objectives.

Who can apply

The direct applicant must be a legal entity responsible for operating or managing the existing network. The official eligibility list includes local authorities and other public bodies, registered companies that submit annual accounts, and registered charities, community investment companies, and other officially registered third-sector organisations that submit annual accounts. NHS trusts and universities are also named among the public-sector examples.

The applicant must have authority to sign off investment decisions for the heat network and to instruct the people or contractors who will deliver the funded activities. This is more specific than merely being interested in an energy project. A consultant, equipment supplier, resident group, or individual may be useful to the project, but cannot apply as an individual under the published rules. The successful applicant receives the grant and remains responsible for deploying it in accordance with the award, including procuring or mobilising third parties.

Before requesting a form, confirm who owns the asset, who operates it, who controls the relevant budget, and who can sign the grant agreement. If those responsibilities sit across a landlord, managing agent, local authority, housing association, university, or energy-service company, settle the accountable-entity question early. An application that has a technically strong idea but no clear authority to procure or approve the work is exposed to avoidable eligibility and delivery risk.

How the application process works

The official application page says applicants should read the guidance before preparing a submission. The guidance covers the application process, eligibility, how applications are scored and assessed, and monitoring and reporting obligations for successful applicants. The application form is requested by emailing [email protected], the address provided for the scheme delivery partner. The overview also recommends contacting the team with an outline of the scheme and the intended funding round, attending an application seminar, and requesting a meeting with relationship managers before preparing the submission.

A practical sequence is:

1. Identify the operational heat network and the customer or performance problem.
2. Decide whether the immediate need is an optimisation study, an eligible capital intervention, or a staged route beginning with diagnosis.
3. Confirm the legal applicant, decision-making authority, accounts, procurement route, and match-funding position.
4. Contact Talan for the application pack and identify which round you intend to target.
5. Assemble the technical, customer, financial, and delivery evidence requested by the current form.
6. Submit by the round deadline and retain proof of submission.

Because Round 13 and Round 14 dates are marked as expected and dependent on budget availability, applicants should not treat the date in this guide as a replacement for the official notice. The official page currently says Round 12 closed on 22 May 2026 and that Round 13 details will be published shortly. It also provides the mailing-list route for announcements. That is the right place to confirm that the round is open, the form has not changed, and the closing time is still valid.

What reviewers are likely to need to see

HNES states that applications are assessed competitively by a technical assessment team. Meeting the eligibility rules and submitting a good application does not guarantee an award. The published priorities are value for money, customer detriment, network operational performance and losses, and carbon-emissions savings. It follows that the application should connect its evidence to those priorities in a traceable way.

For customer detriment, quantify who is affected and how. A network serving many residential customers in need may have a stronger case than one with only minor inconvenience, but the applicant should substantiate that conclusion rather than rely on labels. For operational performance, show the baseline: losses, temperatures, pump energy, metering gaps, control faults, outages, or other measures relevant to the system. For carbon savings, distinguish measured baseline data from an engineer’s forecast and state the assumptions behind the estimate. For value for money, explain the cost of the proposed work, the expected operational and customer benefits, and why the selected intervention is more credible than cheaper or larger alternatives.

An optimisation-study request should also explain how the study will lead to an investment decision. Name the data the consultant will inspect, the questions the study must answer, and the form of the final recommendations. A capital request should demonstrate that the measure is sufficiently defined to install, that the applicant can procure it, and that the remaining share of costs is realistic. Do not present an unpriced wish list as a capital plan.

Materials to prepare before requesting the form

The current official summary does not publish a universal checklist, and the detailed application guidance should be treated as authoritative. In practice, an operator can reduce delay by preparing a concise evidence folder with:

• legal name, registration details, and the proposed accountable signatory;
• a description of the network, its ownership or operating role, location, customer mix, and primary heat-generation plant;
• recent information on heat generation, distribution, losses, temperatures, metering, controls, outages, maintenance, and customer issues;
• evidence of customer detriment and an explanation of which groups experience it;
• the proposed optimisation study or capital measure, with scope, procurement approach, milestones, and responsible people;
• an itemised budget separating eligible costs, non-recoverable VAT, any requested HNES contribution, and the applicant’s contribution;
• a baseline and a method for estimating carbon, efficiency, reliability, and customer outcomes; and
• a plan for monitoring, reporting, and operating the improvements after completion.

For a revenue application, obtain a sensible brief or quotation for the external study if available. For a capital application, gather technical specifications and supplier or contractor estimates without treating a quote as proof that the work is eligible. The goal is to make the reviewer’s job easier: each cost should map to a defined activity and each claimed benefit should map to a baseline.

Timeline and planning advice

As of 11 August 2026, the next published dates are Round 13 opening on 17 August and closing on 9 October 2026, with Round 14 expected from December 2026 to February 2027. The scheme itself spans multiple financial years, and the GOV.UK application page describes it as a £107 million programme covering 2023–24 through 2029–30. The overview page separately describes a £75 million capital budget through 2027–28 and a revenue budget that has been allocated across earlier years; applicants should use the current round materials for the live budget position.

If the network has a well-defined capital problem and match funding is available, prepare for Round 13. If the technical diagnosis is incomplete, an optimisation study may be the more defensible first application. If internal approvals or procurement will take several months, use the expected Round 14 window as a planning target while still monitoring for changes. In all cases, leave time for the application pack, technical review, clarification questions, approvals, and a final check that the proposed works remain eligible.

Common mistakes to avoid

The most serious mistake is applying for a new network. HNES is for existing, operational district or communal systems. A second is describing a general decarbonisation ambition without showing the current performance problem or customer impact. A third is confusing a revenue study with a capital installation: the proposal should say exactly which route is requested and why.

Other avoidable problems include naming an applicant that cannot approve the investment, omitting the source of the capital match, including costs without checking the detailed eligibility rules, using carbon projections with no baseline, and treating expected round dates as fixed. It is also risky to promise savings that the network cannot measure. A modest, well-supported improvement plan is more credible than a large claim built on untested assumptions.

Frequently asked questions

Can a private company apply?

Yes, if it is a registered company, submits annual accounts, is responsible for the relevant existing network, and has authority to approve and instruct the funded work.

Can a local authority or university apply?

Yes. The official overview expressly includes local authorities, universities, NHS trusts, and other public-sector organisations among the applicant examples.

Can an individual apply?

No. Applicants must be legal entities with the required authority over the network and investment decision.

Does HNES pay all capital costs?

No. Capital support is up to, but not including, 50% of eligible project costs, including non-recoverable VAT. Revenue optimisation-study support can cover up to 100% of eligible costs, subject to the scheme’s assessment and budget.

What if the requested revenue amount is above £24,000?

The scheme says it typically funds £15,000–£24,000 per revenue project. A different request may be submitted, but the applicant must provide compelling justification for the amount.

Is the 9 October 2026 date guaranteed?

No. The official overview marks the Round 13 dates as expected and subject to budget availability. Confirm the live timetable with the scheme team and official GOV.UK page before submitting.

Official links and next step

Start with the official HNES overview, which contains the eligibility, funding routes, examples of measures, expected round dates, assessment priorities, and contact details. Then read the Apply for the Heat Network Efficiency Scheme page, including the current applicant guidance, before emailing [email protected] to request the form and identify the round you intend to target. Treat the official guidance and application pack as controlling if they differ from this summary.