Ireland’s Heat Bill can increase warmth towards district heating projects

The journey to that model is already underway with the Heat Bill expected to be published at the end of 2026, when it will begin its journey through the Oireachtas into law.

It comes in the wake of 2024’s general scheme, which outlined the need for introducing district heating networks and set the groundwork for how this introduction would be managed.

But the bill needs to provide a clearly defined and stable legal and regulatory environment which encourages innovation, investment and consumer uptake if that opportunity is to become a reality.

Need for the bill

As mentioned previously, the 2024 general scheme established the value of heat network legislation, building on the National Heat Study the previous year.

Heat networks are a proven technology, already in operation at scale in a number of other European markets. The study, produced by the Sustainable Energy Authority of Ireland (SEAI), highlighted how using district heating – which distributes heat from one or more central points of low carbon generation through insulated pipes to homes and industrial/commercial properties connected to the network – could be a significant contributor to Ireland’s decarbonisation plans.

For large towns and cities in Ireland, where there is high demand and a wide mix of heat sources, establishing new heat networks would also reduce demand on oil and gas. Just 8.5% of Ireland’s heat demand was powered through renewable sources in 2024, compared to more than 83% from oil and gas.

With Ireland looking to achieve a climate neutral economy by 2050, transitioning to other heat sources is an important part of that decarbonisation process. Likewise, reducing reliance on imported fossil fuels will be key to helping insulate Ireland from inflated energy prices and provide resilience against wider global shocks.   

However, heat networks are by their nature complex and expensive infrastructure projects, requiring significant up-front investment at great risk to developers. They also involve material delivery risk, often requiring construction work in urban areas which can result in unforeseen costs and material delays.

Likewise, customers need to be given a clear incentive to connect to a heat network rather than keeping with the status quo or installing an electric heat pump, for example. It is essential, therefore, that early adopters of heat networks are rewarded with a quality, reliable service at a fair and stable price.

Without suitable legal and regulatory certainty and infrastructure support, it can be difficult to account for the risks associated with heat network development or demonstrate suitable demand to justify investment. The purpose of the Heat Bill will be to provide sufficient certainty for developers, customers and network operators to unlock investment for the benefit of Ireland.

Bill expectations

The Heat Bill will form the bedrock for enabling heat networks to develop and grow in Ireland, introducing a framework which establishes the core themes necessary for them to flourish, such as regulation, licensing, governance and consumer protection.

Under the terms of the bill, the Commission for Regulation of Utilities (CRU) will take on the central regulatory role, with its existing remit being extended to include heat networks.
The bill proposes the introduction of a licensing regime which would make constructing, operating or supplying energy to a network without appropriate authorisation from the CRU an offence. From a commercial perspective, this is important, as it means the granting of a licence effectively becomes a key project milestone and gating item.

As part of this process, there would be a 24-month transitional phase, which allows early projects to proceed under an interim licence while the long-term licensing conditions and requirements are fully drafted.
Alongside the CRU, a Heat Networks Authority will be established, which will oversee strategic development and produce a national plan to manage a coordinated rollout. Initially, this role will be performed by the Sustainable Energy Authority of Ireland (SEAI) on an interim basis.
Also central to the bill are sensible pricing structures and cementing consumer protection. The CRU will have responsibility to formulate both a customer charter to create baseline standards of performance by operators, and a methodology for regulating pricing. This is critical in balancing affordability for customers while still enabling returns for investors in the technology, and it is vital that the CRU engages with relevant stakeholders to shape this framework.

While the bill will shape the consumer and regulatory aspects of heat network implementation in Ireland, it also looks to support early-stage development with a clutch of new measures, including giving local authorities a broad role across the value chain – enabling them to develop and operate networks, supply heat and provide funding support themselves.

This approach will allow for the public sector to take a leadership role in the preliminary stages of developing heat networks. It will be supplemented by a public sector connection mandate, allowing for early developers to have an anchor demand base during the initial phase of rollout. It also includes provisions for the state authorities to acquire networks 30 years after being licensed, or if a project is being sold or operator is seeking to exit the market.

Finally, projects will be required to meet the EU definition of efficient district heating and cooling networks, ensuring long-term alignment with Irish and European decarbonisation objectives.

Next steps

It remains worth considering that the general scheme is essentially a draft document only and we expect that aspects of it will be liable to change in the first turn of the Heat Bill when published. Some of the key elements will also be implemented through statutory secondary regulation, with the bill itself designed to empower the bodies charged with overseeing the rollout to make key decisions rather than prescribing detailed rulesets.

Heat networks represent an enormous opportunity within Ireland’s energy transition, but that will only be possible if there is a truly bankable commercial model established to enable delivery at scale.

That, in turn, requires a clear and stable legal and regulatory environment, a reliable demand base and coordinated planning, all of which must be key factors in determining the shape of the legislation.

Ireland should look to leverage its fast-follower advantage and make the most of best practice from other jurisdictions where heat networks are already playing a significant role in decarbonising heat use and delivering security of supply benefits, in order to implement a bespoke framework that works for Ireland.

The Heat Bill is not the final piece of Ireland’s energy network puzzle, but it is a critical step in creating the conditions necessary to unlock investment and move from policy to delivery at pace and scale.