Chamber and committees

Once again, I would say that we have consulted widely on a range of evidence-based targets. The target that we are setting was widely supported in the consultation. It sets out strong growth in the heat network sector, which we believe not only sends a signal about what we intend to achieve and builds confidence among investors but represents an achievable target that will help to decarbonise Scotland. I genuinely hope that, as we develop policy and the wider heat in buildings approach, members across the chamber will recognise not only the opportunity but the necessity of decarbonising Scotland’s heat.

The heat networks that exist at the moment—some are district networks that serve multiple buildings and others are communal networks that serve multiple customers in a single building—are found in a range of urban and rural settings, including in some island communities. It is clear that there will be a high level of potential in dense urban environments such as Glasgow, but that should in no way inhibit the development of networks in other parts of Scotland where they represent the most suitable approach to decarbonisation. That is why we are asking all local authorities to lead on the development of the LHEES. It would be wrong for central Government to say, “We’re going to decide what is appropriate in each local area.” Local leadership is necessary if we are to achieve this.

As I mentioned in my opening remarks, we already have the heat network support unit and the heat network fund. The unit is providing pre-capital support and the fund is providing capital support.

On the question about when this will happen, it is already happening. Local authorities are producing their LHEES and we completed the first national assessment report some time ago. Local work is being done to develop the LHEES and they are coming in local authority by local authority. I think that they are all expected and due in by the end of the year. Is that correct, James?

A range of discussions have taken place not only with individual potential investors—the Scottish Government has an investor panel that advises it—but through the green heat finance task force. As the committee knows, that has now been meeting for some significant time. Its first report will be due out very soon, alongside the imminent consultation on the heat in buildings proposals more generally. The expectation is that the first phase of that task force report will focus on individual approaches and that the second phase report will look at the more communal, area-based approaches, which might include greater focus on heat networks. A significant amount of work is happening in that area.

Yes. The legislation that was passed in the previous session of the Scottish Parliament to get the work under way was done before we knew that the United Kingdom Energy Act 2023 was coming, so we have taken account of some of the changes that took place in that. The committee will be very pleased to know that there were some areas where the Scottish and UK Governments were able to work together on useful changes to that energy legislation, in particular in dealing with some of the consumer protection issues. However, some other changes require us to perhaps reconsider some aspects of how we approach the implementation of the Scottish heat networks act. For example, in the light of the UK legislative changes, we will consider our approach to permitting and consenting and ensure that we have got the balance right. Over the course of time, there will no doubt be other legislative changes.

A critical thing that we are still awaiting from the UK Government is the rebalancing of electricity and gas prices. Whether the current UK Government makes good on that or whether we have to wait on a successor Government, we know that that is one of the critical issues that will spur not only the viability of decarbonisation of heat but its attractiveness. For example, as we decarbonise existing heat networks, some of them will shift over to using devices such as heat pumps as one of their energy sources. If those are using electricity rather than gas, that is great to decarbonise those existing networks, but the rebalancing of prices will be one of the things that are critical to making that viable and attractive to customers.

As I said, we have been exploring a number of different models for the development and operation. We think that it will be an attractive area for private investment, but we also know that there is a need for the public sector to give leadership, particularly at local level, where local authorities understand both the building stock and the energy resources that they can bring to bear. That is why they are leading on the development of LHEES. As I said, we have looked at a range of models, including direct municipal ownership and joint ventures.

The aspiration is always to work together on issues that sit between devolved and reserved powers. Sometimes we are more successful at achieving that co-operation than at other times. As I mentioned, some of the changes that were recently made to the Energy Act 2016 at Westminster were agreeable, and we made good progress on some of those issues, although not necessarily all of them. We will continue to try to work together.

Of course my preference would be that we are able to make those regulatory changes here in Scotland. We have to work with the situation that we are in as we continue to—as the member knows—make the case for Scotland at some point taking those powers to itself. However, that certainly should not prevent us from rolling out heat networks urgently, because they are one of the most obvious ways to decarbonise Scotland, and particularly urban Scotland.

Yes, and the appointment of the Office of Gas and Electricity Markets as the regulator is one example of that. We need to ensure that there is consumer protection, and the appointment of Ofgem in that capacity will help to achieve that.

That question is relevant to the whole heat in buildings agenda. We know that we need to scale up and skill up. I have been working closely with Graeme Dey on the skills and education side of things. Work on the supply chain delivery plan is also including voices from industry who see the agenda as an opportunity.

I genuinely think that there is huge potential for us to see the heat in buildings agenda as an economic opportunity for Scotland. There is work to be had in decarbonising, and high-quality careers to be had from doing that work, not just between now and 2045 but beyond that, in maintaining and operating those systems.

James Hemphill wants to come in on your previous point.

The act allows us to continue to review the target. I think that it is at least a fair possibility that we will review the target upwards rather than downwards but, if a future Government decides that heat networks have not been the success that I believe that they will be, it would be for it to come back to committee and Parliament and ask to review the target in the other direction. However, I think that there is a stronger likelihood that we will see greater progress. We should be throwing our weight behind the development of heat networks as one of the most effective ways to decarbonise Scotland.