Chamber and committees

The picture is already emerging and it will continue to develop. We have other powers under the 2021 act to continue to improve data collection and we can use them to gain a richer understanding of the heat networks that are in development and in operation.

As I said, we will be consulting on the wider heat in buildings proposals very soon, so the detail will be published in that. It does not affect the setting of the target for heat networks.

In the previous parliamentary session, the committee debated the targets that should be set in the act. The 2030 target was the result of a committee amendment rather than a Government proposal. The view of the Climate Change Committee, as the independent adviser, is that the 2030 target is a stretch target—a bit of an outlier. We are committed to doing everything that we can to meet it. That includes the range of actions that we have set out, including the heat network support unit, the heat network fund and trying to ensure that the heat networks that come forward are investable propositions that are also attractive to non-Government investors.

I have set out the range of actions that we are already taking to meet the initial targets that were set under the act. Today, we are proposing the 2035 target, and the act requires us to set a 2035 target.

The overall investment will come partly from public funds and partly from institutional investors. Unlike decarbonisation through energy efficiency, heat networks generate a revenue stream, which makes them potentially attractive for institutional investors. It is not possible at this point to produce an individual costing for every network that will be built between now and 2035.

That is why local authorities are undertaking their local heat and energy efficiency strategies to identify the most likely sites. Glasgow, for example, has huge potential for heat networks. It probably has significantly more potential than some less densely built parts of the country. However, it will be for the local authority to take forward individual propositions for specific networks.

Thank you very much, convener. I give my sincere apologies for the short delay—that is more than I got from the train announcement as we were held outside Waverley station. I am sorry to have taken a few minutes longer than expected to get here.

I am grateful for the chance to speak to the instrument, which supports our ambition to grow the number and scale of heat networks in Scotland. I know that it is widely recognised that heat networks should and will be an increasingly significant part of our transition from fossil fuels for heating our homes, workplaces and buildings to clean heat.

The Heat Networks (Scotland) Act 2021 requires that we set a target for 2035. As well as the fact that it is a requirement, the target is in and of itself useful. It will send a clear signal to the heat network sector that the Scottish Government and, indeed, future Scottish Governments are committed to the growth of heat networks.

The proposed target of 7 terawatt hours—TWh—is one of the three options that we proposed in our consultation. Each of those options was evidence based and developed using data from the report “First National Assessment of Potential Heat Network Zones”. However, as we set out in the Government’s response to that consultation, the data about the sector that we have is limited at the moment. We have to continue to use the powers that we have in the act to obtain more accurate and reliable information so that we can report on the progress that we are making against all the statutory targets. Recognising that, the Government’s response also committed to keeping that target and other targets under review as further evidence emerges on the potential for heat networks across Scotland—for example, as local authorities produce their local heat and energy efficiency strategies, or LHEES.

Setting that target is just one of the things that we are doing to help to grow the sector. We are taking a range of other concerted actions to meet the targets that have been set and that we are proposing now to allow the heat network sector to flourish. We are resourcing and providing technical support to local authorities to develop their LHEES, which are identifying opportunities across Scotland for heat network development. In February 2022, we launched the heat network support unit, which provides skills, capacity and other resources to local authorities to help them through the pre-capital stages of heat network development. We have also launched Scotland’s heat network fund, which makes £300 million available to large-scale district and communal heating projects across Scotland. In May this year, we also commenced legislation that requires Scottish public buildings to produce building assessment reports as soon as practical.

Collectively, those actions will help us to achieve our proposed target and increase the likelihood that consumers will want to connect into heat networks. Based on the analytics that we have done in combination with the broad support that we received in response to the consultation, I am very happy to be here to move the motion and to ask the committee to agree to set a new target for heat network deployment in Scotland of at least 7TWh by 2035.

I see no reason why we should not be using waste heat from a facility that already exists. Waste heat is a resource that, at the moment, is going to waste.

Separately, quite unconnected to the specific policy of heat network targets, the Government has an approach on incineration that aims to move away from the development of new incinerators. However, the use of any source of waste heat from an existing facility—whether it is energy from a waste plant, a data centre or an industrial site—makes a valuable contribution by putting heat into a heat network.

I am sure that it is a sincere question, but I think that it is one for colleagues whose remit and portfolio is around circular economy and waste management, rather than one that is about the setting of a heat network target.

I would like to see ambition coming from local authorities and, indeed, other bodies such as social landlords, which would see connection to a heat network as something that is in the interests of their tenants as well as their business model. If we do see that level of ambition from public bodies, including local authorities, it will contribute very substantially to meeting the 7TWh target.

As for some of the consumer protection issues that Sarah Boyack quite rightly raises, they are, as we are all aware, reserved, but the recent legislation and the appointment of Ofgem to its role will go a significant way towards addressing them. I very much wish that we were able to legislate for those matters here. As things stand, we are not, and we therefore need to work with the UK Government, which is what we have been doing.

As we have discussed in the evidence session that we have just held, the Scottish Government has consulted widely on a number of options for this target. Not only is it a legal requirement that we set a 2035 target, it sends, I believe, a very positive signal to the industry that we are serious about the development of heat networks.

We could have set a very stretching and much more aspirational target. I think that the target that we have set is more achievable; it still shows an aspiration to grow heat networks significantly in Scotland, but it is achievable. The target is consistent with the advice that we have had from the UK Climate Change Committee and consistent with the position that was widely supported in the consultation.

I will also mention that the business and regulatory impact assessment that has been provided suggests that the cost of meeting the target that was set in the Scottish statutory instrument could be up to £6.2 billion and that it is likely that that cost will be shared between the public support that has been made available and private investment.

Yes, £300 million of public funding.