Heat Network Efficiency Scheme (HNES)
UK Government, Department for Energy Security and Net Zero (DESNZ) · England and Wales
The Heat Network Efficiency Scheme (HNES) provides funding to public, private and third sector applicants for improvements to existing district heating or communal heating projects in England and Wales that are operating sub-optimally and resulting in poor outcomes for customers and operators. Funding is available through revenue grants for Optimisation Studies and capital grants for eligible improvement measures. (Find a Grant)
Summary
Deadline
31 Mar 2030
Updated
16 Oct 2026
The Heat Network Efficiency Scheme (HNES) provides funding to public, private and third sector applicants for improvements to existing district heating or communal heating projects in England and Wales that are operating sub-optimally and resulting in poor outcomes for customers and operators. Funding is available through revenue grants for Optimisation Studies and capital grants for eligible improvement measures. (Find a Grant)
Eligibility
Applicant types
See eligibility requirements
Industries
Energy, utilities, district heating, communal heating and heat network management
Match funding
Capital grants can fund up to, but not including, 50% of eligible project costs, including non-recoverable VAT where requested. The remaining eligible costs must be funded by the applicant. (Find a Grant)
Eligible applicants
Organisations responsible for operating or managing existing district heat networks or communal heating systems in England and Wales, including public sector organisations, private registered companies, and eligible third sector organisations. (Find a Grant)
Funding and scope
Benefit amount
Capital grants: up to, but not including, 50% of eligible project costs. Revenue grants: up to 100% of eligible project costs for Optimisation Studies, within the applicable budget range. Revenue grants are currently £15,000 to £24,000, including non-recoverable VAT. (Find a Grant)
Total fund available
£107 million across financial years 2023-24 to 2029-30. The programme includes £32 million from the original scheme, £45 million of additional capital funding for 2025-26 to 2027-28, and a further £30 million of capital funding for 2028-29 and 2029-30. (GOV.UK)
Funding intensity
Capital grants: up to, but not including, 50% of eligible project costs. Revenue grants: up to 100% of eligible project costs for Optimisation Studies, within the applicable budget range. Revenue grants are currently £15,000 to £24,000, including non-recoverable VAT. (Find a Grant)
Payment type
Not specified
Eligible expenses
Not specified
Ineligible costs
- Ineligible measures include replacement of primary plant; changes to or replacement of pipework or heat emitters within the tertiary network; and installation of meters or metering equipment where this is required under the Heat Networks Metering and Billing Regulations. (Find a Grant)
Application and risks
Application platform
Expression of Interest followed by an online application through the HNES portal. Talan is the appointed Delivery Partner. (Find a Grant)
Competitiveness
Not scored
Decision timeline
Applications are assessed and scored after the relevant funding round closes. The process includes application assessment and clarification, HNES Investment Committee review, DESNZ internal approvals and notification of successful or unsuccessful applicants. (Find a Grant)
Assessment process
Applications are assessed and scored after the relevant funding round closes. The process includes application assessment and clarification, HNES Investment Committee review, DESNZ internal approvals and notification of successful or unsuccessful applicants. (Find a Grant)
Application sections
Not specified
Application components
- Valid Expression of Interest; online application form; supporting evidence and documentation required under the HNES applicant guidance; evidence relevant to eligibility, project performance and proposed improvement measures. (Find a Grant)
Timeline and partners
Opening date
1 Apr 2025
Project duration
Not specified
Project start
Not specified
Project end
Not specified
Additional guidance
Document research last revised 2026-08-24.
Current Round
Round 13 opened on 17 August 2026 and closes on 9 October 2026. A valid Expression of Interest must be submitted by 25 September 2026 to obtain access to the online application portal. (Find a Grant)
Next Round
Round 14 is expected to open in December 2026 and close in February 2027, subject to budget availability. (Find a Grant)
Key Organisational Requirements
Applicants must be responsible for an existing operational district or communal heat network, must be a legal entity, and must have authority to approve investment decisions and instruct delivery of funded works. Individuals cannot apply. Consultants cannot apply on behalf of clients, although they may assist with applications. (Find a Grant)
Eligible Project Areas
Capital funding can support eligible measures across energy centres/plant rooms, primary and secondary distribution networks, and tertiary networks where the measures directly contribute to HNES objectives. (Find a Grant)
Assessment Priorities
Priority is given to projects supporting a higher proportion of residential "customers in need", including social housing, low-income housing, customers in fuel poverty, extra-care housing, low-income care homes and supported housing. Projects demonstrating particularly poor baseline network performance or significant improvement are also prioritised. (Find a Grant)
Objectives
To reduce carbon emissions by improving heat network efficiency; reduce customer detriment and improve consumer confidence; and help prepare the heat network market for sector regulation and technical standards. (Find a Grant)
Monitoring Requirements
Successful applicants must comply with monthly or quarterly monitoring and reporting requirements. They must also consent to DESNZ publicising the grant value and details of funded activities, including potentially developing a case study after completion. (Find a Grant)
Important Notes
HNES operates through multiple funding rounds. Round 13 is currently open from 17 August to 9 October 2026. Applicants must submit their Expression of Interest by 25 September 2026 to receive access to the online portal. Round 14 is expected in December 2026 to February 2027, subject to budget availability. Final grant claims for funded works must generally be made before the end of the financial year in which funding was allocated, with HNES typically setting an early-March claim deadline. (Find a Grant)
Application deadline in source document
31 March 2030 for the overall scheme. Individual funding rounds have separate closing dates. (Find a Grant)
Official source
Quick facts
- Status
- Open
- Deadline
- 31 Mar 2030
- Funding amount
- Capital grants: up to, but not including, 50% of eligible project costs. Revenue grants: up to 100% of eligible project costs for Optimisation Studies, within the applicable budget range. Revenue grants are currently £15,000 to £24,000, including non-recoverable VAT. (Find a Grant)
- Funding band
- Not specified
- Funding type
- Grant funding, comprising revenue and capital grants
- Payment type
- Not specified
- Audience
- See eligibility requirements
- Industry
- Energy, utilities, district heating, communal heating and heat network management
- Last updated
- 16 Oct 2026
- Published
- Not specified