District heating in Ireland: a market at a turning point
Co-author(s)
Expertise
Date
Our real estate, energy, infrastructure, construction, and planning teams have provided key provisions, considerations and opportunities for the upcoming Heat (Networks and Miscellaneous Provisions) Bill which could transform Ireland’s heating sector.
The Irish Government is taking steps to increase district heating adoption through dedicated primary legislation. On 10 July 2026, Minister for Climate, Energy and the Environment Darragh O’Brien secured Government approval for revisions to the General Scheme of the Heat (Networks and Miscellaneous Provisions) Bill (the “Bill”).
The Government’s press release accompanying the revisions cited research by Codema (Dublin’s Energy Agency) showing that, “collectively, there are enough waste heat and renewable sources (for example, waste heat from data centres or pharmaceutical plants) in Dublin to heat over 1 million homes and that approximately 80% of heat demand in Dublin could be met by district heating by 2050”.
Overview
Ireland’s Heat Network Bill explained: what is it and why does it matter?
Read More
Ireland’s Heat Network Bill explained: what is it and why does it matter?
The Bill will establish a regulatory and legislative framework for heat networks in Ireland, encompassing both district heating (distributing thermal energy from a centralised source to multiple buildings through a network of insulated pipes) and communal heating (a shared system serving multiple units within a single building). The Bill is expected to mandate that buildings owned by State authorities connect to district heating networks “where technically possible and economically cost effective”.
The regulatory framework proposed by the Bill is underpinned by significant government and institutional investment, including a recent allocation of €50-100 million of ICNF (Infrastructure, Climate and Nature Fund) funding, a €5 million pre-construction fund launched in November 2025, €558 million in Budget 2026 for SEAI heat decarbonisation programmes and new European Investment Bank advisory support for district heating in Ireland.
The Government published the General Scheme of the Bill in November 2024 (the “General Scheme”). While the final Bill text is awaited, the General Scheme gives a clear signal of direction. This article sets out the key provisions and their practical implications for real estate stakeholders.
For real estate owners and developers, this legislation has significant implications for transactions, due diligence, building design and long-term asset management. For energy companies and infrastructure investors, it creates a new regulated market, opening opportunities for waste heat monetisation and the development, ownership and operation of heat network infrastructure.
While a small number of district heating schemes are currently operational in Ireland, these remain limited in scale. The Bill, once enacted, is expected to provide the regulatory framework necessary to facilitate the development of district heating networks at scale.
What is district heating?
Read More
What is district heating?
District heating uses a centralised heat source to provide warmth and hot water to buildings, homes and businesses through a network of insulated pipes. Heat, rather than fuel, is delivered to the buildings. Heat sources can include waste heat from industrial processes, data centres, waste-to-energy facilities and bioenergy. It can use one or more heat sources to serve thousands of buildings across a wide geographic area, from individual developments to entire towns and cities.
The Sustainable Energy Authority of Ireland (“SEAI“) estimates that district heating has the potential to supply up to 54% of Ireland’s heating needs, particularly in urban areas, making it a critical tool in Ireland’s built environment decarbonisation strategy. It offers a viable decarbonisation pathway for buildings that may not be suited to deep retrofit, a key consideration for owners of older commercial stock.
What are the key provisions of the General Scheme?
Read More
What are the key provisions of the General Scheme?
| Topic | Commentary |
| Establishment of a Heat Network Authority | The General Scheme establishes a Heat Network Authority (the “HNA”) to centralise the development of heat networks nationally. The HNA will design a process for identifying strategic district heating networks, engage with stakeholders and produce a development plan. Pending the establishment of the HNA, the Sustainable Energy Authority of Ireland (“SEAI”) is designated as the interim Heat Network Authority. |
| Regulatory oversight and licensing regime |
The Commission for Regulation of Utilities (“CRU”) has been designated as the regulator of heat networks. No person may construct, operate or supply a heat network without a heat network licence. During a 24-month transitional phase (being the period from enactment of the legislation during which preliminary regulatory tasks, including the development of enduring licence criteria and a price regulation methodology, are to be completed), “Conditional Licences” will apply while the CRU develops enduring licence criteria. The CRU will be responsible for granting, monitoring, modifying, revoking and enforcing heat network licences, developing price regulation methodologies (see below), approving customer charters, maintaining a vulnerable customer register and providing a dispute resolution service. The CRU will also monitor and promote competition in the heat network sector, investigate improper conduct and exercise a range of enforcement and administrative sanction powers for non-compliance. |
| Price regulation and tariff controls |
The CRU will develop an enduring price regulation methodology through public consultation and publish guidelines on cost allocation for heating and cooling in multi-occupancy buildings. A principles-based approach to price regulation will apply, with the CRU empowered to intervene where necessary to protect consumers and ensure the effective operation of the market. |
| Network Development Plan | The HNA must prepare a five-year ‘District Heat Network Development Plan’, subject to approval by the Minister. The plan will set out strategic objectives for efficient district heating and cooling, including regional heat mapping, existing and planned developments, and forecasts of projected CO₂ reductions. |
| Compliance standards | All district heat networks entering the planning process after commencement must qualify as “Efficient District Heating and Cooling” networks, as defined by reference to the Energy Efficiency Directive (EU) 2023/1791. Existing networks must also meet this standard when undertaking upgrades, where economically and technically feasible. Temporary use of non-renewable energy sources is permitted during planned maintenance or unexpected short-term cessation of heat production. Notably, the General Scheme expressly provides that a licence obtained under Section 254 of the Planning and Development Act 2000 (“PDA”) (which provides a relatively streamlined consent process for placing infrastructure such as cables, pipes or wires on, under, over or along a public road) is not an appropriate licence for the construction of heat networks. The requirement to obtain development consent for the installation of heat networks is therefore expected to remain a separate process. |
| Public Sector Connection Mandate | Buildings owned by State authorities must connect to available efficient district heating and cooling networks “where technically possible and economically cost effective” and where the connection will not contravene other requirements (e.g., protected structures). The HNA will set guiding principles for the economic analysis and assist State authorities in assessing feasibility. State authorities will not be required to await the development of any new public procurement methodologies before undertaking such assessments. |
| Amendment to the MUD Act | The General Scheme proposes an amendment to the Multi-Unit Development Act 2011 (the “MUD Act“) which currently restricts management companies from entering contracts for goods or services exceeding three years. The amendment would extend the permitted contract period to 15 years for heat network purposes. |
| State acquisition powers | The State may acquire “Strategic Efficient District Heating and Cooling Networks” in the public interest, subject to a 30-year moratorium from the granting of the first licence. This restriction is disapplied in cases of early market exit, insolvency or cessation of trading, where the State has primacy in the right to acquire. Acquisition must be based on an independent and fair valuation, with arbitration available. Post-acquisition, licensing, permitting and land access rights transfer to the State, though debt and encumbrances remain with the developer. |
| Local authority powers | Local authorities would be given broad powers to acquire, sell and dispose of heat, operate and maintain heat networks, and enter into contracts and joint arrangements with other local authorities, State bodies or private parties. For developers and energy companies, this creates opportunities for public-private partnerships and collaborative delivery models for heat network infrastructure. |
On 10 July 2026, the Government approved a number of revisions to the General Scheme proposed by the Minister for Climate, Energy and the Environment. The approved revisions include the introduction of a legal basis for Exchequer funding of the CRU’s heat sector regulatory functions, the adoption of a step-in, principles-based approach to price regulation and enhanced consumer protection measures, and the removal of disincentives to investment aimed at encouraging greater private sector involvement in the delivery of district heating projects. These amendments form part of a broader set of revisions approved by Government.
What are the key considerations and implications for real estate developers, owners and investors?
Read More
What are the key considerations and implications for real estate developers, owners and investors?
| Topic | Practical implication |
| Development of district heating linked real estate projects |
The Government commitment and funding pipeline creates a supportive environment for district heating-linked real estate projects. For developers and investors, the five year District Heat Network Development Plan to be prepared by the HNA will be a key reference point for identifying areas where district heating infrastructure is planned or under construction. Investors, developers and real estate owners should consider the implications for current and future projects, from site selection and building design to lease structuring and long-term asset strategy. |
| Efficient District Heating and Cooling: a new compliance standard |
All district heat networks entering the planning process after commencement of the legislation must qualify as “Efficient District Heating and Cooling networks”, a definition linked to the Energy Efficiency Directive. Existing heat networks must also meet this standard when undertaking upgrades, where economically and technically feasible. This is a critical consideration for developers and investors: new and upgraded heat networks must be designed to meet this threshold from the outset. |
| Developers of buildings owned by State authorities |
Developers of buildings owned by State authorities must have regard to the proposed requirement that such buildings must connect to available efficient district heating and cooling networks “where technically possible and economically cost effective” and where the connection would not contravene other requirements (e.g., protected structures). State authorities will not be required to await the development of any new public procurement methodologies before assessing the feasibility of connecting to an available heat network. |
| Improved commercial viability of district heating connections for multi unit developments |
The General Scheme proposes an amendment to the MUD Act 2011, which currently restricts management companies from entering contracts for goods or services exceeding three years. This restriction has been a significant barrier to investment in heat network infrastructure, where longer contract periods are essential to establish returns on investment. The proposed amendment would extend the permitted contract period to 15 years for heat network purposes. For investors in multi-unit residential and mixed-use developments, this change is expected to materially improve the commercial viability of district heating connections and should be factored into acquisition due diligence and asset management planning. |
| Potential to decarbonise older buildings | District heating offers a viable decarbonisation pathway for buildings that may not be suited to deep retrofit, a key consideration for owners of older commercial stock. |
| Considerations for landowners and developers with assets generating waste heat |
Owners of properties generating waste heat (such as from industrial installations, data centres, etc.) structuring Heat Purchase agreements with heat network operators should have regard to matters including:
|
What are the key considerations and implications for energy companies, infrastructure funds and utilities?
Read More
What are the key considerations and implications for energy companies, infrastructure funds and utilities?
| Topic | Practical implication |
| Asset repurposing |
Energy companies with generation assets, particularly those transitioning from fossil fuels may find district heating an attractive diversification route. Infrastructure funds and utilities familiar with regulated asset base models in electricity and gas will recognise familiar commercial structures. |
|
Regulatory exposure |
The Bill interacts with existing energy regulatory regimes including electricity generation licences, waste licences and industrial emissions authorisations. The CRU’s enforcement powers include investigation of improper conduct and major sanctions of up to 10% of turnover (subject to High Court confirmation), mirroring the framework under Part IX of the Electricity Regulation Act 1999 (as amended). Energy companies already subject to CRU regulation should note the parallel compliance burden. |
| Heat purchase agreements and pricing | The regulatory framework contemplated by the Bill may facilitate the development of heat purchase agreements as a route-to-market arrangement for waste heat producers and heat network suppliers. Such agreements would need to allocate risk around heat output variability, particularly where waste heat is a by-product of a primary industrial process. Pricing should be structured with regard to the CRU’s forthcoming price regulation methodology, noting that during the transitional phase, a regulated tariff formula will apply and suppliers will need to submit tariffs to the CRU for approval. |
| Planning and infrastructure |
The obligation under the PDA and / or Planning and Development Act 2024 (as amended) to obtain planning permission for Development (as defined in the PDA) remains unaffected under the General Scheme. Therefore, developers should consider whether a heat network requires development consent on a case by case basis. The interaction between planning permissions, wayleave agreements and existing utility easements will require detailed due diligence. For example, under the General Scheme, where a heat network developer applies to a road authority for consent to carry out road opening works and the authority does not respond within four months, consent is automatically deemed to have been granted, allowing the developer to proceed without express approval (provided it also has any necessary development consent, where applicable). The developer must bear all costs of reinstating the road following completion of the works; however, where the road authority subsequently carries out road improvements that necessitate the relocation of heat network infrastructure, the road authority must bear the reasonable costs of that relocation. These provisions mirror the regime applicable to telecommunications operators under the Communications Regulation Act 2002 – energy companies with existing underground infrastructure should consider the interaction with heat network works in shared corridors. |
| Licensing and compliance |
The CRU licensing regime governs market entry for operators, suppliers and developers. Licence conditions will require identification of a contractual step-in Supplier of Last Resort. A security of supply or supplier failure incident in contravention of the licence will trigger automatic revocation by the CRU and the appointment of the Supplier of Last Resort. A deemed contract will arise between the Supplier of Last Resort and the final customer on terms specified by the CRU. Operators and suppliers are also subject to ongoing data disclosure obligations to both the CRU and the HNA. Notably, the HNA’s data-gathering powers extend beyond heat network participants: the HNA may request data and information from “other heating fuel network operators and heating fuel suppliers“, potentially capturing gas suppliers and other fossil fuel heating providers, with compliance being mandatory. These provisions create additional contingency planning, compliance and reporting obligations for energy companies operating within or adjacent to the heat networks sector. |
| Demand-side and offtake | The mandatory connection obligation on State authority buildings may displace existing heating fuel supply relationships with public bodies. Separately, the extension of the MUD Act contract restriction from three to 15 years creates a longer-term offtake horizon for heat suppliers serving multi-unit developments. |
| State acquisition | The State’s power to acquire “Strategic Efficient District Heating and Cooling Networks” after 30 years, and earlier in cases of insolvency, cessation of trading or early market exit introduces a long-term expropriation risk to be priced into investment decisions and reflected in financing structures. |
| Data centres and waste heat recovery | Article 26 of the Energy Efficiency Directive requires data centres with a total rated energy input exceeding 1 MW to either repurpose waste heat through a district heating network or utilise an alternative waste heat recovery application, unless they can demonstrate that doing so is not technically or economically feasible following a cost-benefit analysis. Once transposed into Irish law, this requirement may increase the strategic importance of district heating infrastructure for data centre developers and operators and create opportunities for heat offtake arrangements with heat network operators. |
What is next?
Read More
What is next?
Work on the Bill is ongoing. Minister for Climate, Energy and the Environment Darragh O’Brien stated in May 2026 that he expected the Bill to be finalised and published shortly.
While the final Bill text may diverge from the General Scheme in material respects, the direction of travel is clear: the Bill, once enacted, will reshape the regulatory landscape for heating in Ireland, creating both compliance obligations and significant commercial opportunities across the real estate, energy, infrastructure and construction sectors.
Real estate owners, developers and investors should now begin assessing the implications for current and future projects, from site selection and building design to lease structuring and long-term asset strategy.
Energy companies and infrastructure investors should assess the supply-side opportunities presented by the new regulatory framework, including waste heat monetisation, heat network development and the emerging licensing regime.
We are continuing to monitor the progress of this Bill.
Our commercial real estate, energy, infrastructure and construction, and planning teams advise across the full spectrum of district heating matters, including development and planning, licensing, contract review, multi-unit development structuring, project finance, and regulatory compliance. To discuss how these developments may affect your portfolio or project, please contact Laura James, Sally Anne Stone, Conor Blennerhassett, Maeve Delargy or your usual contact at Matheson.
Key Contacts
Laura is a partner in Matheson and has over 10 years’ experience in commercial real estate law, advising clients on some of the largest and most complex real estate transactions in the Irish market.
Laura has particular expertise in advising owners and operators of data centres in Ireland and has advised on the acquisition, disposal and letting of such assets over the last 10 years.
“Sally Anne Stone is an absolute star, the most engaging, bright and impressive lawyer in Dublin. Her advice is always on point.”
Real Estate: The European Legal 500
Sally Anne is Head of the Real Estate Department at Matheson.
She is an accomplished and commercially focused lawyer with over 15 years’ experience in acquisitions and disposals across all asset classes; site development; commercial landlord and tenant; real estate investment, commercial real estate aspects of corporate transactions, including the sale and purchase of both private and public companies; and advising owner/occupiers on the acquisition of office, industrial, manufacturing, and technical/data centre premises.
Conor is a partner and head of Matheson’s Infrastructure and Construction team, a sub team of our Energy, Infrastructure and Construction Group.
Conor advises on large-scale infrastructure, construction and energy projects, with specialised experience in contract negotiation, risk allocation, development structuring, financing, transactional matters (including due diligence and transaction document negotiation), corporate law matters and operational advice (including regulatory issues and operational problem solving).
Maeve is a partner in Matheson’s Disputes and Investigations Group, specialising in planning, environmental and safety law.
Maeve has advised on a wide variety planning cases as well as non-litigious planning and environmental matters. She advises clients in relation to the full project lifecycle, anticipating regulatory challenges and aligning legal strategy with project goals.
