Global City Futures supported the Department for Energy Security & Net Zero in developing a practical accounting framework for heat networks. The aim was to give policy teams and delivery bodies clearer guidance on how delivery models, public interventions and contractual arrangements should be treated under public sector accounting rules.

Heating challenge

Heat networks are becoming more important in the UK’s low carbon infrastructure, but the accounting treatment of different delivery models was not always clear. Without a consistent approach, classification uncertainty could delay projects, complicate investment decisions and create unintended consequences for the public sector balance sheet.

The Global City Futures approach

We focused on the policy and public-sector dimensions of heat network delivery, turning complex accounting requirements into practical guidance for those designing and overseeing projects. The work was developed collaboratively so that the framework reflected policy intent, emerging regulation and the realities of public sector decision-making.

Key areas of support

  • Interpreting accounting principles for application in central and local government heat network projects
  • Assessing how zoning, funding mechanisms and contractual structures affect projects from a public sector accounting perspective
  • Developing risk-based frameworks to test how different combinations of public intervention may influence balance sheet treatment
  • Designing decision-support tools, including pivot points and qualitative risk ratings, to improve consistency across projects
  • Making sure the framework remained aligned with wider net zero, fairness and public value objectives

The positive impact

Impact

This work supports DESNZ’s wider heat network programme by helping deliver affordable, low-carbon heat at scale without weakening the integrity of public finances.

  • Clarifies the conditions under which heat networks may remain off the public sector balance sheet
  • Gives government departments, local authorities and other public bodies a clearer basis for decision-making
  • Reduces market uncertainty by setting out how funding, zoning powers and contractual arrangements interact
  • Supports faster delivery of low-carbon heat infrastructure by aligning policy ambition with financial governance

We continue to support public sector organisations in structuring heat network projects that are investable, workable and aligned with long-term public value.

Project lead, partners and stakeholders