The decarbonisation of heating and cooling is a challenge facing the built environment, particularly in dense urban areas. Traditional high-temperature district heating networks, while effective in distributing heat, often rely on fossil fuel-based generation and can incur significant distribution losses.
Fifth-generation district heating and cooling (5GDHC) networks offer a fundamentally different approach: lower-temperature, bidirectional, energy-sharing systems that operate at, or near, ambient temperatures. This CPD article explores
the application and potential for these fifth-generation district network systems.
It is estimated1 that more than 3% of UK households are already connected to a district heat network, the majority of which are currently powered by natural gas or combined heat and power (CHP) systems. In 2021, the UK government2 reported that heat networks could economically provide up to 20% of the UK’s domestic heating demand.
Government support has been instrumental in accelerating the adoption of heat networks across the UK. The boxout ‘UK policy and funding support for heat networks’ summarises how national and devolved policy frameworks – along with capital funding schemes, such as the Green Heat Network Fund3 – are helping to scale up deployment of fourth- and fifth-generation systems.
UK policy and funding support for heat networks
Heat networks are a core component of the UK’s strategy to decarbonise heat at scale. The London Plan and the Greater London Authority (GLA) actively promote district energy solutions, with new developments encouraged or required to connect to planned or existing heat networks.10 However, support for low carbon heat is not confined to the capital.
The UK government allocated £320m under the Heat Networks Investment Project (HNIP) to stimulate market growth across England and Wales up to 2021.11
Building on this momentum, the Green Heat Network Fund (GHNF)12 is now the primary capital funding mechanism for new low carbon heat networks in England. It supports projects that use renewable or waste heat, or high-efficiency heat pumps – including those operating at lower distribution temperatures, such as ambient loop or 5GDHC systems.
GHNF funding prioritises schemes that demonstrate robust carbon savings, technical viability and alignment with net zero goals. The fund remains active through to at least the 2027-28 financial year.
Elsewhere in the UK, the devolved nations are also advancing heat network deployment. Scotland’s Heat Networks (Scotland) Act 2021 sets statutory targets of 2.6TWh of network-supplied heat by 2027 and 6TWh by 2030 – equivalent to 3% and 8% of Scotland’s current non-electrical heat demand.13
Northern Ireland is also in the process of developing enabling legislation to support the growth of its heat network sector, including future regulation and investment frameworks.14
Many recent schemes are typically described as fourth-generation district heating (4GDH), characterised by lower distribution temperatures – typically 50-70°C supply, with return temperatures of 20-40°C. This shift enabled integration of low carbon heat sources, such as large-scale heat pumps and solar thermal collectors, while maintaining compatibility with existing building systems.
These networks are commonly referred to as low-temperature systems and are predominantly designed to provide heating only in residential and smaller commercial applications. Heat is typically transferred to end users via heat interface units (HIUs), which house local heat exchangers that separate the district network from internal circuits serving dwellings or individual spaces.
In contrast, 5GDHC networks operate using an ambient loop – a primary distribution circuit that circulates water at, or near, the temperature of the surrounding environment, typically between 10°C and 30°C. These ultra-low temperature networks enable simultaneous heating and cooling across connected buildings through decentralised water-to-water heat pumps, which extract or reject heat as needed.
This arrangement supports bidirectional thermal exchange not only between buildings, but also within buildings, enabling redistribution of thermal energy between zones with different heating and cooling demands. This internal balancing capability enhances system-wide efficiency, reduces external energy input, and supports greater flexibility in meeting diverse
occupant needs.
The size of 5GDHC networks can range from a single multi-unit building or estate to an entire district and, potentially, a whole town.4 Energy inputs to the loop can be highly diverse and might include: geothermal heat from boreholes; waste heat from data centres, local factories, underground transit systems or commercial refrigeration; and solar thermal energy.
Additional sources include abstraction from rivers, lakes or canals using water source heat pumps, and thermal energy captured from wastewater and sewer systems via in-drain heat exchangers. Refrigeration systems in supermarkets and server rooms, or electrical substations, can contribute low-grade heat.
District energy centres may host large-scale heat pumps to maintain loop temperatures and interface with thermal stores, such as borehole fields or large buffer tanks, enabling peak capacity management and time-shifting of loads. For example, waste heat generated during weekday industrial operations can be stored and redistributed across the full week.
In some transitional schemes, biomass or CHP may be used to supplement the system. However, long-term reliance on combustion is typically avoided, as continued use of fossil-based sources can undermine the environmental advantages of low-temperature networks, as noted in
IEA studies.5
Individual buildings – or end-user spaces such as apartments – typically employ decentralised water-to-water heat pumps, such as those discussed in CIBSE Journal CPD module 190 and illustrated in Figure 1, to extract or reject thermal energy, either directly from the ambient primary loop or via a secondary building-level circuit.
A defining feature of 5GDHC is its capacity for bidirectional energy flow. For instance, an office requiring cooling in summer can provide thermal energy to a neighbouring residential block requiring domestic hot water. By dynamically balancing heating and cooling demands within and between buildings, these systems significantly reduce reliance on external energy inputs.
This approach has been implemented at scale in the landmark London redevelopment taking place in Silvertown, where a 5GDHC ambient loop serves multiple plots. A communal building-level ambient loop supplies decentralised in-apartment heat pumps, which provide heating and hot water.
Cooling models will later allow rejected heat from comfort cooling to be redirected to the loop for reuse elsewhere, thereby increasing overall system efficiency and reducing peak load on the central energy centre.
Cooling, in particular, is an area where ambient loops can deliver clear advantages. They enable low-energy, reversible cooling using the same water-to-water heat pump systems employed for heating, often removing the need for rooftop chillers or air-cooled condensers. This reduces noise, frees up roof space and can be especially valuable in high-density developments.
Traditional air conditioning systems typically discharge waste heat to the external environment, exacerbating the urban heat island effect. In contrast, heat rejected during comfort cooling can be returned to the ambient loop and used elsewhere in the network.
The ambient loop functions as a shared thermal reservoir, supporting both heating and cooling cycles. It supplies ambient-temperature water to the condenser side of decentralised heat pumps during cooling operation and, using changeover valves, provides a low-grade heat source to the evaporator during heating. This continuous thermal exchange becomes even more efficient when combined with artificial intelligence (AI)-enabled control systems that forecast weather, occupancy and demand.
These systems can optimise pump speeds, manage thermal storage and fine-tune heat pump operation. Machine learning also supports predictive maintenance, fault detection and real-time optimisation. Digital twins may be employed to simulate network behaviour under varying conditions, and provide valuable data for commissioning and performance management.
At the building level, the primary ambient loop typically connects via a plate heat exchanger to a secondary loop. This allows for hydraulic separation and independent control of pressures, water treatment and flow regimes. In some systems, this interface is housed within prefabricated modular energy hubs that include integrated control systems and decentralised plant.
These compact units simplify installation, reduce onsite complexity, and are particularly valuable where plant space is limited. In an ongoing landmark London redevelopment, such modular hubs enabled rapid deployment and efficient integration with decentralised heat pump systems within each residence.
Within dwellings, compact water-to-water heat pumps are typically used to extract energy from the ambient loop to meet space heating and hot water demands – and, where specified, cooling loads. Thermal energy is stored in an integrated domestic hot-water cylinder, allowing the unit to respond flexibly to varying demand.
These systems, such as the example shown in Figure 2, are commonly installed within utility cupboards. Their ability to deliver simultaneous heating and cooling to different zones within a building further enhances system efficiency.
When paired with modest integrated thermal storage, they also support load shifting and improved responsiveness to time-of-use electricity tariffs.
Because ambient loops operate at near-neutral temperatures – typically between 10°C and 30°C – they enable more effective use of low-grade and waste heat while supporting continuous thermal energy exchange across connected systems. Their relatively small temperature differential with the surrounding environment significantly reduces distribution losses; multiple studies report heat losses as low as 1-3% in well-designed ambient systems, compared with >8% in fourth-generation and significantly more in earlier networks.
This improved thermal efficiency reduces the total energy input required from external sources, outweighing the increased pumping costs, resulting in lower-carbon emissions and enhanced overall system performance.
Ambient systems also enable the use of lower-cost thermoplastic pipework, such as crosslinked polyethylene (PEX) or high-density polyethylene (HDPE). Shared trench installation and reduced capital costs further benefit urban regeneration and new-build schemes. However, careful hydraulic design is still required to manage the higher flowrates needed for small temperature differentials, typically around 5-10K.
Effective design is critical to the success of 5GDHC networks. Loop sizing, pipe routing, pressure-drop management and selection of decentralised plant must be matched to building requirements. Accurate diversity assessments are essential to avoid oversizing the heat network itself. While this topic is partially addressed in CIBSE CP1 (see boxout ‘CP1’) and section 4.4 of the CIBSE Design Guide: Heat Networks,6 there is currently no standardised guidance for distributed hot water storage systems – such as those used with decentralised heat pumps, as illustrated in Figure 2.
CP1
The freely available CIBSE/ADE CP1 Heat Networks: Code of Practice for the UK15 sets out minimum requirements and best practice for network design, commissioning and operation, including discussing diversity factors. Though initially focused on higher-temperature networks, many of its principles remain applicable to lower-temperature systems, with the 2020 update supporting integration of low carbon heat sources. CP1 is currently under review.
At the national level, the UK’s legally binding net zero by 2050 commitment is accelerating the transition to electrified and low carbon heating. Local planning authorities are increasingly mandating connection to low carbon heat networks or requiring developments to be future-proofed. However, regulatory frameworks remain incomplete. Heat network zoning, tariff structures that reflect bidirectional energy exchange, and clear governance models are still evolving.
For example, the UK Department for Energy Security and Net Zero, through Ofgem, is developing the Heat Network Technical Assurance Scheme (HNTAS),7 a quality assurance framework to ensure that heat networks in England and Wales are designed, built, operated and maintained to consistent technical and performance standards. CIBSE is currently revisiting CP1, while at the same time ensuring that it is consistent with HNTAS.8
5GDHC networks are inherently more complex than unidirectional systems. Maintaining hydraulic and thermal balance across diverse and variable loads requires advanced controls and real-time optimisation. While capital costs may be higher owing to decentralised, modular hubs and enhanced system monitoring, 4G networks also require plantrooms and monitoring. In contrast, 5GDHC systems can offer savings through the use of plastic pipework and by eliminating the need for dedicated cooling systems.
Ownership and governance models must adapt to reflect shared energy flows across buildings and users. Transparent billing mechanisms for heat, cooling and energy exchange are essential to encourage efficiency and equity. Maintenance burdens can also be higher, particularly where individual heat pumps and thermal stores serve each dwelling. Compared with simpler HIU-based systems, these require consistent access, standardised components and proactive service strategies to ensure reliability in multi-tenanted buildings.
Whole life cost analysis and life-cycle carbon impact must inform technology selection. Decentralised systems offer control and flexibility.
However, centralised systems, with fewer components and unified servicing contracts, often deliver better economies of scale. Each scheme must weigh these factors against site constraints and energy objectives.
A recent review9 by Yao et al found that 5GDHC systems have strong potential to reduce greenhouse gas emissions through electrification and exploitation of waste heat. They also offer grid-side benefits by supporting thermal storage and load flexibility. However, the mass deployment of decentralised heat pumps can increase pressure on local electricity networks, requiring coordination with grid operators.
Benchmarking of operational performance remains limited, because of a lack of accessible data. Many real-world projects are not captured in academic literature. Initiatives to establish shared data platforms and case-study repositories will be vital in scaling up adoption and spreading best practice.
Looking ahead, ambient loop-based 5GDHC networks offer a scalable and adaptable framework for delivering low carbon heat in urban environments. They integrate well with smart grids, support future energy flexibility, and provide a pathway to decarbonising heat and cooling.
However, realising their potential will require coordinated progress in policy, planning, standards and professional practice. With appropriate regulation, investment and skills development, ambient loops can form a core component of resilient, low carbon cities equipped for the challenges of the 21st century.
© Tim Dwyer 2025.
References:
1 Energy Trends: UK District Heating Statistics, UK BEIS, 2020, bit.ly/CJJA25CPD1 – accessed 20 June 2025.
2 Opportunity areas for district heating networks in the UK, UK Government Department for Business, Energy and Industrial Strategy (BEIS) 2021, bit.ly/CJJA25CPD2 – accessed 20 June 2025.
3 bit.ly/CJJA25CPD3 – accessed 20 June 2025.
4 bit.ly/CJJA25CPD4 – accessed 20 June 2025.
5 IEA Annex TS2 Implementation of Low-Temperature District Heating Systems.
6 CIBSE Design Guide: Heat Networks, CIBSE 2021.
7 bit.ly/CJJA25CPD5 – accessed 22 June 2025.
8 Jones, P et al, Huge changes to regulate UK heat networks – including technical standards, zoning and consumer protection, CIBSE Technical Symposium 2024.
9 Yao, S et al, A state-of-the-art analysis and perspectives on the 4th/5th generation district heating and cooling systems’ Renewable and Sustainable Energy Reviews, Volume 202, September 2024, bit.ly/CJJA25CPD6.
10 Greater London Authority (GLA) (2021) The London Plan 2021: Spatial Development Strategy for Greater London, bit.ly/CJJA25CPD7 – accessed 22 June 2025.
11 Department for Business, Energy and Industrial Strategy (BEIS) (2021) Heat Networks Investment Project (HNIP): Overview, bit.ly/CJJA25CPD8 – accessed 22 June 2025.
12 Department for Energy Security and Net Zero (DESNZ) (2024) Green Heat Network Fund: Guidance Notes, bit.ly/CJJA25CPD9 – accessed 22 June 2025.
13 Scottish Government (2021) Heat Networks (Scotland) Act 2021, bit.ly/CJJA25CPD10 – accessed 22 June 2025.
14 Department for the Economy (Northern Ireland) (2021) Energy Strategy: The Path to Net Zero Energy, bit.ly/CJJA25CPD11 – accessed 22 June 2025.
15 CP1: Heat Networks: Code of Practice for the UK, CIBSE and ADE 2020, free download, bit.ly/CJJA25CPD12.
