Heat networks supply heat to homes and buildings from a central source, avoiding the need for individual gas boilers.
Offering an efficient, environmentally friendly way to heat homes and businesses, heat networks will play a key role in achieving our climate change targets. They can also lead to fuel savings, helping to reduce fuel poverty.
Around 1.5% of Scotland’s heat is supplied from heat networks.
Our heat networks delivery plan sets out what we are doing to expand the development of heat networks. This includes funding new projects and introducing rules to regulate the sector. The plan will be reviewed every two years when we will update on progress against our targets.
Funding for heat network projects
We are providing funding to support the roll-out of zero emission heat networks across Scotland.
This includes the £300 million Scotland’s Heat Network Fund.
Heat networks regulation
The regulation of heat networks is devolved to the Scottish Parliament. The Heat Networks (Scotland) Act 2021 introduced powers to regulate the heat networks market in Scotland for the first time.
Other issues such as the regulation of consumer protection – including for pricing, transparency, and quality of service - are reserved, with the UK Parliament retaining the power to make these laws. Existing UK regulations require eligible heat network operators to take a number of actions. These regulations include:
- Heat Network Metering and Billing Regulations
- Energy Bills Discount Scheme Pass-through Requirement (Heat Suppliers) Regulations
The Energy Act 2023 was passed by the UK Parliament in October 2023. This Act includes introductory powers to develop regulatory protections for heat network consumers.
In taking forward the Heat Networks (Scotland) Act 2021, we are working with the sector and local councils to develop the secondary legislation and guidance needed to get an effective regulatory system up and running. We are also working with UK Government so that the legislation we and UK Government develop works as seamlessly as possible for both heat network operators and consumers.
Our secondary legislation is being phased in by 2025.
We are working up detailed proposals for parts of the regulatory regime not yet in force and will consult on these in due course. See below for details.
Heat network zones: in force
Heat network zones are areas particularly suitable for heat network development. The purpose of zones is to attract investment from heat network developers.
Local councils need to identify, consult on, and designate potential heat network zones in their areas. The Scottish Government can also designate some zones.
Heat network zone guidance and proforma for councils have been published.
This should be read (and proforma completed) alongside: The Heat Networks (Heat Network Zones and Building Assessment Reports) (Scotland) Regulations 2023.
We have also published a national assessment outlining the potential for heat networks in Scotland, to help inform the designation process.
Building assessment reports: in force
Owners of non-domestic public sector buildings must produce a building assessment report for each of their buildings to check if they are suitable to connect to a heat network.
This duty may be extended to non-domestic buildings beyond the public sector.
These reports will provide important data for heat network zoning.
Guidance and templates to help building owners produce building assessment reports have been published.
This should be read (and the templates completed) alongside: The Heat Networks (Heat Network Zones and Building Assessment Reports) (Scotland) Regulations 2023.
Heat network permits: not yet in force
Heat network operators may need a permit to build and operate a network in a designated zone. One permit may be issued per zone for a specified number of years. If introduced, this may help to encourage investment, by providing operators with exclusive access to high opportunity areas.
Heat networks licensing: not yet in force
All heat network companies (including existing operators) will need a licence to operate in Scotland. This will help to drive up standards, improving user trust and providing greater certainty to investors.
A licence will give heat network developers certain rights and powers - such as compulsory purchase, road works and surveying rights – to help reduce construction time and costs.
Heat network consents: not yet in force
A consent system will be introduced for heat network developments. Companies will need consent for each individual network they operate.
This will help to make sure that networks are developed in places where they will have the most benefit, and that communities get a say in plans for their areas.
Assets schedule and transfer scheme: not yet in force
This was intended to help to ensure continuity of supply for customers by enabling a smooth transition between operators, if their existing operator stops trading. The UK Government (UKG) has passed its Energy Act 2023, which includes provisions for regulations around step-in and special administration regimes. We will continue to work closely with the UK Government to ensure arrangements are in place to deal with the exit of heat network operators from the market.
Heat network targets
Our heat network targets are set out in the Heat Networks (Scotland) Act 2021. This requires us to ensure the following amounts of thermal energy are supplied through heat networks:
- 2.6 terawatt hours of output by 2027
- 6 terawatt hours of output by 2030
These figures equate to approximately 3% and 8% of current non-electrical heat consumption respectively.
We have also consulted on a potential heat network target for 2035, based on evidence including the First national assessment of potential heat network zones. We published an analysis of responses received and our response in July 2023.
We are working up detailed proposals for parts of the regulatory regime not yet in force and will consult on these in due course.
Bills and legislation
The Heat Networks (Scotland) Act 2021 is accompanied by the following impact assessments:
- equality impact assessment
- fairer Scotland duty assessment
- island communities impact assessment
- business and regulatory impact assessment
- children’s rights and wellbeing impact assessment
The act will be supplemented by secondary legislation, including:
Our heat in buildings strategy sets out our plans for cutting carbon emissions from Scotland’s homes and buildings, as part of our climate change targets. Heat network technology is an important part of this.