Heat Networks (Scotland) Bill: evidence assessment

Summary of evidence around the potential impacts of heat network regulation in Scotland.


4 Heat Networks Introduction

4.1 Introductions to heat network regulations

This section provides a brief overview of the incoming heat networks regulations. This includes an overview of the previous work undertaken to develop these proposals, and latest thinking on the proposals themselves.

In January 2017, the Scottish Government held an initial consultation[6] regarding the regulation of heat networks, designed to gather views to help inform further development of the proposals prior to more detailed consultation. Then in November 2017, the Scottish Government launched a second consultation,[7] to further explore views on a potential new regulatory framework for heat networks.

Within these, the Scottish Government outline the potential for a new regulatory framework for heat networks, including:

  • Area-based zoning for heat networks through LHEES;
  • Granting of concessions for heat networks;
  • Licensing of heat networks;
  • Connecting supply of surplus industrial heat.

Subsequently the Scottish Government is looking to review existing legislation and consider what new or amended duties are required to support the sector. This could consider creating new powers and duties to regulate heat networks. The incoming regulations could also look to include and or remove areas of policy which have previously been highlighted.

4.2 Indicative regulatory overview

The proposals for the scope and design of the incoming regulatory changes for heat networks are still in development, and as such the potential regulatory tools included as part of these regulations could change.

However, we have been undertaking work to identify and develop initial views regarding the potential impacts, both positive and negative, for different stakeholder groups that could arise from these interventions. These evidence gathering activities have been based on a set of potential policy tools, which we outline below.

At this stage, we have looked to gather evidence on a range of potential impacts for a specific set of policy interventions, which may or may not come to pass. This evidence will allow a future assessment of these interventions, when the Scottish Government will publish a draft impact assessment on any final proposals. We caution that the regulatory proposals outlined below could come to change.

Table 2: Overview of a potential regulatory regime

Cost driver

Overview

Heat Network Licencing

  • This legislation would make it mandatory for companies developing or operating a heat network in Scotland to have a relevant licence. This licence would grant companies the right to operate a communal heating system or to operate a heat network.
  • This could mean that a single licence can be used to develop, design and operate a heat network. A licence will be granted by an authority if they are satisfied with the applicant's ability to perform properly. The licence conditions would be set by the chosen regulator.
  • Consumer protection will not be included in the licence conditions due to the reservation of this under the Scotland Act 1998.
  • Technical standards could be considered such as building on the Heat Networks Code of Practice developed by CIBSE.

Heat Network Consenting

  • The Scottish Government have proposed to introduce a requirement that companies who want to develop a heat network must apply for consent.

Wayleaves

  • The Scottish Government will introduce necessary wayleaves (a right of way granted by a landowner) to allow the following:
    1. for any purpose with the continuation of activities with authorised consent to keep installed heat network pipework under or over any land.
    2. The licence holder is able to install and keep installed heat network pipework under or over any land as well as have access to land for maintenance, repair, inspection etc.

Facilitation

  • Any regulator will be given the role of intervening on contractual negotiation in situations where suppliers and users of heat reach impasse to facilitate an agreement.
  • Where socio-economically and cost effective the introduction of regulator-led facilitation process would be introduced to encourage consumers to connect to a heat network. Facilitation would bring parties together to discuss excess heat.
  • Scottish Ministers would set guidelines to be taken into account by the facilitator and parties. Facilitation will not be made mandatory on any party.

Contact

Email: James.Hemphill@gov.scot

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