Enel X explores how heat networks can turn existing assets into a source of flexible revenue, without new investment or added complexity.

Heat networks are primed to become a central part of the UK’s heating strategy as it accelerates toward net zero. Space heating in buildings accounts for roughly 17% of UK emissions, and pivoting away from individual gas-based systems will drastically reduce that number.

As such, the market is predicted to grow significantly. Today heat networks account for around 3% of space heating, but based on the UK’s net zero projections, that should increase to 20% of the market by 2050. In Northern Europe, meanwhile, these technologies already account for over half of all demand in some cases.

For heat network developers, this is a clear commercial opportunity: a new and rapidly growing market. However, when building a new network or running one of the UK’s 14,000 networks currently in operation, most developers and operators are overlooking a significant pipeline of additional profit.

Heat networks are an ideal source of flexible energy demand, and as the UK’s grid becomes increasingly volatile – with higher peak demand and more intermittent generation – network operators are increasingly willing to pay for that flexible load.

Flexibility as a route to reduced bills and increased revenue

The primary consumer benefit of heat networks is cheaper, more affordable heat. Through a range of system-level benefits and bulk energy purchasing, bills can be reduced for the end-user.

Energy flexibility, i.e., the ability to turn up or turn down a load, is also a route to cheaper bills. Without changing the services that customers receive, heat network operators can control when their assets draw – or in some systems generate – electricity. This allows them to pull power when electricity is cheap, for example, or curtail their demand when it is more costly. In short, flexibility allows for smarter energy purchasing.

Flexibility markets, however, are also a revenue stream for operators. In an analogous manner to turning up and down when electricity is cheap, heat networks can turn up or down when a flexibility market signal tells them to. These markets, via energy aggregators like Enel X, effectively reward this activity because it provides grid balancing services that are fundamental to the efficient and secure operation of the UK’s grid. For example, if power is peaking, say, because all of the UK’s EVs have plugged in after the commute home from work, markets will reward participants who are capable of temporarily reducing their demand. Heat networks are well-placed to meet these sorts of demand signals, generating a revenue stream from a range of flexibility markets in the process.

What are those markets? Well, depending on the assets and operating profile of the heat network, they can participate in the Capacity Market, NESO balancing services, DSO flexibility, wholesale markets and more. And as long as there’s a degree of inertia in a system, primarily in the form of thermal storage, then participation is simple and doesn’t interfere with service delivery when deployed through the right platform.

Joining a virtual power plant (VPP) for maximum benefits

Heat pumps, electric boilers, CHPs and thermal storage can all take part in flexibility markets. These assets all have the ability to dynamically adjust their load to unlock additional value for heat network operators. In most cases, though, demand-side flexibility doesn’t require new assets. It just requires heat network operators to enrol in a virtual power plant (VPP).

A VPP is a platform that pools a portfolio of flexible assets and coordinates them as a single, tradeable resource. Energy aggregators, like Enel X, operate VPPs. This means heat network operators don’t have to take on the burden of understanding the complex flexibility markets, and the in-house expertise that would require. Instead, the aggregator will manage the process end-to-end, automatically identifying the most valuable services for each asset, optimising participation and maximising revenue.

Being part of a larger VPP also has benefits beyond a single network’s assets. Aggregated alongside hundreds of other assets and networks, participants can meet the minimum size and reliability thresholds that many flexibility markets require, opening up routes to revenue that would be out of reach alone.

What’s next?

For developers, flexibility can be designed in from the start. That means sizing thermal storage, electric boilers and heat pump capacity for market participation as well as peak heat demand. When done well, this can lower capital costs and reduce the grid connection capacity a scheme needs to secure. It can also strengthen the case for funding through schemes like the Green Heat Network Fund.

For networks already running, the process starts with a detailed assessment. A VPP partner such as Enel X will gather an asset inventory, a heat demand profile, grid connection details, and any operational constraints to identify which flexibility markets suit the system best. The priority will always be to maintain consistent supply to end customers, but taking part in the right VPP will maximise the returns across the potential markets.

Enel X’s platform already manages 11 gigawatts of flexible capacity across over 16,000 sites in more than 14 countries. That’s proven scale, now being applied to a fast-growing heat network markets in the UK and Ireland. Ener-Vate and Mersey Heat are among the operators already putting flexibility to work with Enel X; unlocking new income without disrupting the heat their customers rely on.

Whether you’re planning a heat network or running one already, the opportunity is there. Don’t overlook this pipeline to additional profit – get in touch with Enel X’s UK flexibility team to find out where the value sits in your system.

This article appeared in the October 2026 issue of Energy Manager magazine. Subscribe here.