Letter from the Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights to the Convener - 15 November 2021
I am pleased to advise that we have today published – for consultation – our Draft Heat Networks Delivery Plan, setting out our plan to increase the development of heat networks as required by the Heat Networks (Scotland) Act 2021.
Heat networks are used widely across northern Europe and will have an important role to play in reducing emissions from Scotland’s homes and non-domestic buildings. The Heat Networks (Scotland) Act 2021 (the Act) sets targets for the amount of heat to be supplied by heat networks requiring 2.6 Terawatt hours (TWh) of output by 2027 and 6 TWh of output by 2030 – 3% and 8% respectively of current heat supply.
The draft plan is in two parts. Part 1 outlines how the provisions of the Act and other supporting policies will contribute to increasing the use of heat networks. Part 2 seeks early views on aspects of the regulatory framework, including on licensing, consenting and heat network zone permits as well as large scale thermal storage.
Part 1: Draft Heat Networks Delivery Plan
The Act is comprehensive and provides for a flexible regulatory framework which can grow in line with the sector, being adapted over time as required. As such, on day one we do not envisage needing to switch on all provisions and expect the full regulatory regime to take time to establish as the sector grows. However, it remains our intention that a functioning regulatory system is in place, subject to public consultation, by 2024. Once operational it will boost confidence and provide greater certainty for investors and help to secure consumer confidence in heat networks.
We are proposing to phase the development of the regulatory regime as follows:
1. building assessment & zoning – consulting on guidance in 2022;
2. licensing, consenting & permitting – consulting on detailed proposals by Winter 2022/23; and
3. transfer schemes – developing detailed proposals once licensing and consenting are up and running.
To guide development and help develop a pipeline of projects for capital investment over the longer term we have begun our First National Assessment for potential heat network zones and will publish an initial Heat Networks Investment Prospectus during the next financial year. A Heat Networks Pre-Capital Support Unit will support eligible pipeline projects.
Over this parliamentary session we will invest at least £1.8 billion for heat and energy efficiency projects, including £400 million through the successor to the Low Carbon Infrastructure Transition Programme to support the development of large-scale heat infrastructure, including heat networks. We continue to offer non-domestic rates relief for heat networks and are working with the wider energy efficiency and heat sector to ensure the necessary skills are in place.
The delivery plan will be reviewed every 2 years, with reporting on heat output and emissions savings.
Part 2: Heat Networks Regulatory Policy Options
Within Part 2 of the document, we are seeking initial feedback on aspects of the detailed regulatory system, including:
• extending the requirement for building assessment reports to non-domestic buildings which are not owned by the public sector, and whether buildings should be prioritised based on certain attributes;
• how best to ensure proportionality within the licensing system, and whether any heat network projects should be exempt from the requirement to hold a heat network consent;
• how to ensure effective community engagement, to inform the development of guidance;
• what factors should determine the duration of heat network permits, and how the interests of the customer and operators can be effectively balanced; and
• what, if any, measures regulatory or support systems should take to encourage inter-seasonal thermal storage.
In line with our commitment to ensuring that any heat in buildings programmes align with our fuel poverty targets, we will work with the Scottish Fuel Poverty Advisory Panel in the development of this plan.
I look forward to receiving input on these proposals from interested parties, which will be invaluable in helping to finalise the delivery plan ahead of publication by 1 April 2022. Furthermore, I look forward to working with Parliament on the development of the regulations and statutory guidance that will comprise Scotland's new regulatory system for heat networks.