Thermal Energy Networks (sometimes abbreviated to TENs or DENs, District Thermal Energy Networks), are gaining steam as a promising alternative to natural gas distribution for customer heating and/or cooling needs. Like all configurations of district energy, TENs distribute heating and/or cooling (hot water and cold water) from a centralized source to connected buildings via underground pipes. Heat and cooling can be generated from a wide variety of sources, including renewable natural gas, biofuel, heat recaptured from industrial processes, data centers, and geothermal wells, and renewable electricity. 

In addition to decarbonization, TENs reduce the need for in-building thermal generation like boilers and cooling towers, minimize customer maintenance costs, and reduce electricity costs related to window AC units and space heaters. 

A number of states have recently passed legislation mandating natural gas (and sometimes electric) utilities to explore decarbonization solutions, often including utility-scale Thermal Energy Networks. As of April 2025, the following states have passed legislation instructing utilities to propose TENs pilot projects:

• Massachusetts
• Minnesota
• New York
• Colorado
• Washington
• Maryland
• California

SPOTLIGHT

New York State

On Tuesday, March 25, 2025, IDEA was pleased to support the New York State Department of Public Service (DPS) for the Technical Conference on Existing Thermal Energy Networks. This Technical Conference was designed to support the state agencies, utilities, and regulatory groups tasked with fulfilling the Utility Thermal Energy Network and Jobs Act. 

View Agenda and Slides 

S.B.1221: Gas corporations: ceasing service: priority neighborhood decarbonization zones.

Enacted 9/25/2024

S.B.1221 introduces a framework for gas corporations in California to transition towards decarbonization, focusing on the establishment of priority neighborhood decarbonization zones. By July 1, 2025, gas corporations are required to submit annual maps to the Public Utilities Commission (PUC) detailing potential gas distribution line replacement projects. By January 1, 2026, the PUC must designate these zones, considering factors such as the presence of disadvantaged communities and the concentration of gas line replacements. A voluntary program will be established by July 1, 2026, to facilitate decarbonization in these zones through up to 30 pilot projects, affecting no more than 1% of each gas corporation's customers. These projects aim to replace gas services with zero-emission alternatives, such as electrification and thermal energy networks, prioritizing benefits to low-income and disadvantaged communities. The PUC will oversee the projects, ensuring cost-effectiveness and setting criteria for gas corporations to recover costs. 

HB24-1370: Reduce Cost of Use of Natural Gas

Enacted 5/22/24

The legislative text introduces measures aimed at reducing the cost of using natural gas infrastructure in Colorado, with a focus on promoting alternative energy services that do not rely on methane, propane, or petroleum-derived gas. The legislation establishes a framework for creating "Gas Planning Pilot Communities," which are local governments served by dual-fuel utilities interested in exploring neighborhood-scale alternative energy projects. These projects aim to decommission or avoid expanding gas distribution systems, thereby reducing future greenhouse gas emissions. The Colorado Energy Office is tasked with identifying potential pilot communities by December 1, 2024, and working with dual-fuel utilities to propose up to five pilot communities by April 30, 2025. The legislation mandates that dual-fuel utilities provide detailed data on planned gas infrastructure projects to these communities to facilitate the evaluation of alternative energy projects. The bill also outlines a process for prioritizing and approving neighborhood-scale projects, with a focus on customer support, cost-effectiveness, and alignment with state greenhouse gas reduction goals. The legislation allows for cost recovery by utilities for developing these projects and encourages the use of non-emitting thermal resources. 

S.B.4: An Act Concerning Energy Affordability, Access and Accountability.

Out of Committee 3/31/2025

S.B.4 outlines a comprehensive act focused on energy affordability, access, and accountability, with significant emphasis on nuclear energy, renewable energy site readiness, and utility-scale renewable thermal energy networks. The act requires the Public Utilities Regulatory Authority (PURA) to establish a program for developing utility-scale renewable thermal energy networks, including pilot projects and a working group to study deployment strategies. 

H.B.5533: An Act Concerning Pilot Programs and Grant Funding for Thermal Energy Networks.

Introduced 1/21/2025

The proposed legislation mandates amendments to the general statutes to introduce two key initiatives aimed at advancing thermal energy networks. Firstly, it requires each gas utility company to create a pilot program dedicated to the development of these networks. This initiative is designed to explore and potentially expand the use of thermal energy as a sustainable energy source. Secondly, the legislation establishes a grant program intended to provide financial support for the development of thermal energy networks. This grant program aims to facilitate the implementation and growth of these networks by offering necessary funding. The bill does not specify any particular funding amounts or deadlines for these initiatives, focusing instead on the structural establishment of the programs.

H.B.3609: Thermal Energy Networks

Out of Committee 3/18/2025

The Thermal Energy Network and Jobs Act aims to reduce greenhouse gas emissions from buildings in Illinois by promoting the development of thermal energy networks. These networks use non-combustible fluids to transfer heat, thereby decarbonizing buildings and supporting the goals of the Climate and Equitable Jobs Act. The Act mandates the Illinois Commerce Commission to authorize utilities to pilot thermal energy networks, removing legal barriers and establishing a regulatory framework. It emphasizes the use of skilled labor, prevailing wage standards, and apprenticeship programs to ensure job creation and economic development. The Act also requires utilities to propose pilot projects, particularly in economically disadvantaged areas, and to report on their progress. The Public Utilities Act is amended to include definitions and provisions for thermal energy networks, and utilities are allowed to recover costs through general rates. The Act takes effect immediately upon becoming law.

H.B.3525: Util-2050 Heat Decarbonization

Introduced 2/7/2025

The legislation enacts significant reforms to the Public Utilities Act and the Energy Transition Act, aiming to transform Illinois' energy landscape by enhancing energy efficiency, reducing emissions, and promoting clean energy jobs. Key provisions include allowing gas utilities to cease service if the Illinois Commerce Commission (ICC) finds adequate substitute services available at reasonable costs. By January 1, 2027, natural gas utilities are required to implement cost-effective energy efficiency measures, with customers responsible for the costs of new gas main and service extensions. The Clean Building Heating Law and the 2050 Heat Decarbonization Standard establish emissions standards for building heating, utilizing tradable clean heat credits and equity considerations to reduce customer emissions. The Statewide Navigator Program is introduced to ensure equitable access to electrification and energy efficiency services, particularly in equity investment eligible communities.

S.B.2258: Thermal Energy Jobs Act

Introduced 2/7/2025

The legislation introduces significant amendments to the Public Utilities Act, focusing on the development and implementation of thermal energy networks in Illinois. The primary objective is to reduce greenhouse gas emissions from buildings by promoting the use of thermal energy networks, which utilize piped noncombustible fluids for heating and cooling, thereby supporting the state's decarbonization goals. The Illinois Commerce Commission is mandated to initiate proceedings within six months to support pilot thermal energy network projects, with utilities serving over 100,000 customers required to propose at least one and no more than three pilot projects within ten months. These projects aim to integrate existing state energy efficiency programs and leverage federal funding opportunities. Utilities are allowed to recover costs associated with these projects through general rates or a Multi-Year Rate Plan. The legislation also mandates that utilities enter into labor peace agreements and adhere to prevailing wage standards, ensuring job creation and retention. Additionally, the Act requires the Commission to adopt rules within four years post-construction to facilitate fair market access and encourage third-party participation. The Act modifies existing statutes by adding new sections defining "thermal energy" and "thermal energy network," and it requires utilities to report quarterly on the status of pilot projects. The legislation emphasizes the importance of using skilled labor and aims to create economic opportunities for local residents, particularly in economically disadvantaged communities.

H.B.0397: Public Utilities – Thermal Energy Network Systems – Authorization and Establishment (Working for Accessible Renewable Maryland Thermal Heat (WARMTH) Act)

Enacted 5/9/2024

H.B0397 mandates certain gas companies to develop and propose pilot thermal energy network systems by specified dates. These proposals must be submitted to the Public Service Commission for approval, which can approve, modify, or reject them. Municipalities, counties, and community organizations can suggest neighborhoods for these pilot systems. The Act outlines requirements for developing and implementing these systems, including funding and cost recovery mechanisms, and mandates coordination with the Maryland Energy Administration and the Department of Housing and Community Development. It also sets employment and wage standards for related projects, promoting local business opportunities, safe and timely project completion, career training, and the use of skilled local labor. The Commission, in consultation with various stakeholders, will decide on the permanency of the pilot systems after their trial periods. Additionally, the Act specifies that at least 80% of customers in the pilot systems must be from low or moderate-income housing and requires gas companies to seek federal funding and ensure compliance with federal regulations. The Act also emphasizes public health benefits, job creation, reliability, affordability, and prioritizes underserved communities. Proposals must include a rate structure ensuring participants do not pay more than non-participants and must be cost-effective for ratepayers. The Maryland Energy Administration will coordinate funding to cover costs for behind-the-meter projects, prioritizing low and moderate-income housing, and ensuring no residential customer pays for connection or appliance replacements. The Act also includes provisions for cost recovery, maintenance, and transfer of ownership for behind-the-meter infrastructure, and mandates the use of qualified contractors and community benefit agreements for project work. The act allows electric, gas, and water companies to own, manage, and recover costs associated with thermal energy network systems, and permits drilling geothermal boreholes in public utility rights-of-way. The Commission may retain independent consultants to assist with evaluations and requirements. 

S.2995: An Act Creating a Next-Generation Roadmap for Massachusetts Climate Policy

Enacted 3/18/2021

The legislation establishes a comprehensive climate policy framework for Massachusetts, aiming to achieve net-zero greenhouse gas emissions by 2050. It sets interim statewide emissions limits for 2025, 2030, 2035, 2040, and 2045, with sector-based sublimits for electric power, transportation, and industrial processes to ensure compliance. The bill mandates the development of detailed roadmap plans, emphasizing public hearings and stakeholder engagement, particularly in communities with significant exposure to air pollutants. 

The bill outlines a thermal energy pilot program aimed at decarbonizing priority neighborhood zones through zero-emission alternatives, including thermal energy networks. The program is limited to 30 pilot projects statewide, affecting no more than 1% of each gas corporation’s customers. Projects with 100% consent from property owners are exempt from this limit. Gas corporations must use nonratepayer funding when available and cannot recover certain costs as capital costs with a rate of return. The commission will review the efficacy of projects by January 1, 2029, with a report due by March 1, 2030. Annual progress reports are also required.

H.F.6: Omnibus commerce, climate, and energy finance bill.

Enacted 6/26/2021

This bill includes key provisions of the Natural Gas Innovation Act, which encouraged natural gas utilities to develop "innovation plans" exploring alternatives to natural gas, including district thermal energy. Gas utilities with more than 800,000 customers are required to include a district energy pilot in their innovation plan.

S.9422: Establishes the "utility thermal energy network and jobs act"

Enacted 7/5/2022

The legislation aims to align New York's energy policies with the Climate Leadership and Community Protection Act (CLCPA) by amending various laws to facilitate a transition from gas to cleaner energy alternatives. The primary objective is to reduce greenhouse gas emissions from buildings, which are a significant source of such emissions in the state. The act introduces the NY Home Energy Affordable Transition (NY HEAT) Act, which seeks to minimize investments in gas infrastructure and redirect funds towards electrification, thermal energy networks, and energy efficiency projects. It mandates the creation of a Statewide Affordable Gas Transition Plan within two years, which will guide the transition of the gas system to support the CLCPA's goals. The legislation also requires the development of utility programs to facilitate neighborhood-scale transitions from gas, ensuring that customers have continued access to reliable energy services. The act repeals certain sections of the public service law related to gas service continuation and the sale of indigenous natural gas. It also amends existing laws to ensure that utility regulations align with climate and equity objectives, and it sets a deadline of December 31, 2026, after which the expansion of gas service territories will be restricted. 

S.4158: Enacts the NY Home Energy Affordable Transition Act; and repeals certain provisions of the public service law relating to gas service and sale

Introduced 2/3/2025

The legislation aims to align New York's energy policies with the Climate Leadership and Community Protection Act (CLCPA) by amending various laws to facilitate a transition from gas to cleaner energy alternatives. The primary objective is to reduce greenhouse gas emissions from buildings, which are a significant source of such emissions in the state. The act introduces the NY Home Energy Affordable Transition (NY HEAT) Act, which seeks to minimize investments in gas infrastructure and redirect funds towards electrification, thermal energy networks, and energy efficiency projects. It mandates the creation of a Statewide Affordable Gas Transition Plan within two years, which will guide the transition of the gas system to support the CLCPA's goals. The legislation also requires the development of utility programs to facilitate neighborhood-scale transitions from gas, ensuring that customers have continued access to reliable energy services. The act repeals certain sections of the public service law related to gas service continuation and the sale of indigenous natural gas. It also amends existing laws to ensure that utility regulations align with climate and equity objectives, and it sets a deadline of December 31, 2026, after which the expansion of gas service territories will be restricted. 

A.4870A: Enacts the NY Home Energy Affordable Transition Act; and repeals certain provisions of the public service law relating to gas service and sale

Introduced 2/6/2025

The legislation aims to align New York's energy policies with the Climate Leadership and Community Protection Act (CLCPA) by amending various laws to facilitate a transition from gas to cleaner energy alternatives. The primary objective is to reduce greenhouse gas emissions from buildings, which are a significant source of such emissions in the state. The act introduces the NY Home Energy Affordable Transition (NY HEAT) Act, which seeks to minimize unnecessary gas infrastructure investments, enhance affordability protections, and ensure utility regulations support the CLCPA's goals. It mandates the development of a Statewide Affordable Gas Transition Plan within two years, which will guide the transition of the utility gas system to align with climate justice and emissions reduction goals. The plan will include targets for transitioning gas infrastructure, criteria for utility programs, and a list of neighborhood gas transition projects. The legislation also repeals sections 66-b and 66-g of the public service law, which previously mandated the continuation of gas service and the sale of indigenous natural gas for electricity generation.

S.B.1143: Directs the Public Utility Commission to establish a pilot program that allows each natural gas company to develop a utility-scale thermal energy network pilot project to provide heating and cooling services to customers.

Introduced 2/27/2025

S.B.1143 mandates the Public Utility Commission (PUC) to establish a pilot program enabling each natural gas company to develop a utility-scale thermal energy network pilot project. These projects aim to provide heating and cooling services while reducing greenhouse gas emissions and improving energy efficiency. Each natural gas company is required to submit a proposal and plan for such a project or provide an explanation for not doing so within 24 months from the effective date of the act. The PUC will evaluate proposals based on criteria such as service to low-income communities, job creation, safety, and environmental benefits. The legislation allows natural gas companies to recover costs from customers for expenses related to these projects. The act will take effect 91 days after the adjournment of the 2025 legislative session and is set to be repealed on January 2, 2036.

H.B.5576: An Act Relating To Public Utilities And Carriers -- Utility Thermal Energy Network And Jobs Act (Establishes Thermal Energy Networks Network Infrastructure By Any Public Utility Company That Provides Electric/Natural Gas Distribution To Maximize Cost-Effective Investments Deemed In The Public Interest By The Public Utilities Commission (Puc).)

Introduced 2/26/2025

The legislation establishes a comprehensive framework for the development and regulation of thermal energy networks, aiming to facilitate the state's transition to a clean energy system while promoting equity and decarbonization. It mandates the Public Utilities Commission (PUC) to initiate proceedings within a year to develop these networks, considering factors such as ownership, market structures, and public interest. The PUC is tasked with creating rules within two years to ensure fair market access, promote worker training, and encourage third-party participation. Public utility companies are required to propose infrastructure plans by September 1, 2027, and every three years thereafter, with a stipulation that 40% of investments benefit environmental justice communities. The legislation also outlines the development of pilot projects, requiring at least three proposals within nine months of the chapter's effective date, focusing on areas with significant environmental benefits. Emphasizing labor standards, the legislation requires labor peace agreements and apprenticeship programs for projects exceeding certain financial thresholds. It modifies existing laws by including thermal energy and networks in the definition of public utilities and public rights-of-way, updating the duties of utilities and carriers to incorporate thermal energy considerations. Specific deadlines are set for the initiation of proceedings, rule promulgation, and infrastructure planning, ensuring a structured approach to achieving its objectives.

H.B. 1514: Encouraging the Deployment of Low Carbon Thermal Energy Networks.

Passed House 3/10/2025

H.B. 1514 aims to advance the deployment of low-carbon thermal energy networks in Washington State by amending existing statutes, including RCW 80.04.010 and RCW 80.28.005, to integrate thermal energy companies into the regulatory framework. It allows electrical and gas companies to own and manage these networks, while defining a "thermal energy company" as an entity providing thermal energy services, distinct from gas and electrical companies. Companies operating or under development before July 1, 2025, are exempt from commission regulation unless they choose to opt-in. However, if a thermal energy system surpasses a specified customer threshold, it must submit to commission regulation within 12 months. The legislation prioritizes gas companies for developing pilot projects and mandates that utilities offer budget billing or equal payment plans to low-income customers, while also requiring reports on disconnections during heat-related alerts. Amendments ensure that rates and services are just, reasonable, and sufficient, prohibiting undue preferences or advantages. The bill also introduces provisions for discounted rates for thermal energy networks that enhance electricity delivery efficiency. It empowers the commission to appoint inspectors for thermal energy meters and mandates the maintenance of facilities for testing meter accuracy. Additionally, the commission is tasked with monitoring the development of interoperability standards for thermal energy networks, with a report due by December 1, 2027. The legislation specifies that it will become null and void if not funded by June 30, 2025, in the omnibus appropriations act, and it does not allocate new funding or financial figures.