Delivering net zero for Scotland's buildings - Heat in Buildings Bill: consultation analysis

6. Connecting to Heat Networks

This chapter presents the analysis of responses to Q14 to Q17, which sought respondents’ views on proposals to develop heat networks. These included connecting new buildings within Heat Network Zones to a heat network, and for buildings with unused heat to provide it to a local heat network.

Chapter Summary

The proposal to give powers to local authorities and Scottish Ministers to connect new buildings to a Heat Network Zone was well supported. However, concerns were expressed around the level of development and long-term viability of heat networks and consumer protection, leading to calls for more information about these proposals and heat networks in general. There was broad support for powers to mandate non-domestic building owners to share information about unused heat and to provide this to a local heat network. However, questions were raised about how effectively this would work in practice and how any additional burden on organisations would be minimised.

Just over three fifths (62%) of respondents who answered Q14 were supportive of the proposal to provide local authorities (and Scottish Ministers) with powers to require buildings within a Heat Network Zone to end their use of polluting heating systems by a given date. Two fifths (41%) strongly supported and one fifths (21%) somewhat supported it. Over a quarter (27%) did not support the proposal, with 25% of individuals expressing strong opposition.

One third of respondents left an open comment in Q14. By far the most prevalent theme, raised by many respondents, of which around two third were organisations, was support for the proposal to require buildings within a Heat Network Zone to end their use of polluting heating systems by a given date. This was raised by most organisation types, but was particularly prevalent among local authorities, energy/heating producer/suppliers and environmental organisations. Reasons given for supporting the proposal included that:

• The more buildings that connected, the cheaper heat would be for consumers.
• It would provide certainty to heat network developers such as providing clarity over the number of potential future customers, thereby reducing risk.
• It still offered choice to consumers as they could chose to install another source of clean heating.
• Heat networks might offer a more convenient and cost-effective solution compared to clean heating systems.
• It aligned with the National Planning Framework 4 (NPF4).

Some agreed with caveats, such as if heat temperature levels can be controlled, if there were no disadvantages and if local authorities were resourced adequately to enforce the proposal. A few also called for buildings with higher heat demand, such as public sector buildings, to be included.

“In general, we are supportive of this approach and see it as an opportunity to drive significant investment and expansion of heat networks in a zone, similar to those models used to drive heat pump market growth in Scandinavia.” - SGN

However, the next most frequently mentioned theme was concerns about the reliability, efficiency and state of development of heat networks, such as potential impacts should a network fail. It was suggested more evidence was needed about their financial and operational viability, potential to support reduced carbon emissions, certainty over delivery dates and legal frameworks. Ensuring the flexibility of heat networks in accommodating varying heat demands, addressing the needs of different building types and users or to operate effectively in different parts of the country was also felt to be necessary.

Concerns were raised by many about the lack of consumer choice, or a monopoly situation emerging, should buildings be mandated to join a heat network. Concerns included that costs for some or all of connection, installation, maintenance, and energy use would be too high, consumers would not be able to switch provider and service standards would suffer. A few individuals related personal negative experiences of being connected to a heat network. Some noted they would be more likely to support the proposal if these concerns could be minimised through regulation or public ownership.

Comments on the advantages and disadvantages of providing these powers to local authorities were made by many respondents. Those opposing the proposal were more likely to be individuals questioning the competence, experience and resources of local authorities to manage and enforce the proposal. Conversely, supporters were more likely to suggest how local authorities could help facilitate the transition, such as setting priorities, supporting privately-owned heat networks, using their powers flexibly to act at different times for different buildings (for instance, requiring larger buildings to end their use of polluting heating first) and supporting homeowners to make informed decisions or enable meaningful community-led energy planning and community ownership.

Several raised issues around the cost-effectiveness of the proposals. Some indicated they could agree with the proposal if it was shown to be cost-effective for all parties, while others argued requiring buildings to end their use of polluting heating systems would encourage more connections to a heat network, driving down costs for consumers. Changeworks disagreed with the proposal to choose to install another clean heating system, noting this would dilute the customer base for heat networks, negatively impacting costs. Nesta called for “economic viability criteria to be established to ensure customer protection and an assessment method to be certain that the increased demand on the heat network can be satisfied”.

More evidence and information were sought by several respondents about how heat networks would work in practice and what they would look like in future. Issues raised included:

• The role of different types and sizes of heat networks, including low temperature networks using shared ground-loops.
• How existing shared heating systems can move away from current models to connect to a district heating network while ensuring a just transition; powers of local authorities, including enforcement and resources for this.
• Ways the proposal would interact with the Heat Networks (Scotland) Act 2021, further guidance about zoning.
• Information about clean heating systems.
• Reassurance that a polluting heating system will not need to be replaced within a grace period after a property purchase within a heat network zone.

Other themes about heat networks were raised by several respondents . These included: highlighting the overarching theme of incentivis ing rather than enforc ing the transition; for consumers to have choice over clean heating systems and whether to join a network ; and calls for more flexibility around timescales to allow technological developments to be used or to exempt homes within a prospective Heat Network Zones from ending their use of polluting heating until such a time the network is ready.

Less commonly mentioned themes mentioned by some included the need for greater public awareness or education on heat networks , the need to avoid using polluting heat sources to generate the heat for networks, potential limits to the feasibility of the proposals in rural, remote and island areas and the need for sufficient advance notice of Heat Network Zones.

Q15 was met with a positive response, with 71% of those answering supporting the proposal to provide powers to local authorities (or Scottish Ministers) that require developers to connect new buildings within Heat Network Zones to a heat network. Over half (51%) expressed strong support. Approximately a fifth (18%) were opposed; individuals were more likely to be opposed than organisations (20% compared with 8%).

Almost one quarter of respondents left an open comment at Q15. Reflecting the closed question results, by far the most prevalent theme was support among many for connecting new buildings to heat networks. Again while support was expressed in comments from a range of organisations, it was more prevalent in responses from local authorities, energy/heating producer/suppliers and environmental organisations. Comments included that this was an ‘unmissable opportunity’, it ‘made sense’ and was ‘logical’ and that it seemed ‘inevitable if the ambitions of heat networks are not to be defeated’. Doing so was felt to provide certainty to developers, increase attractiveness for investors, make the development and installation of heat networks easier and would reduce costs for consumers.

Respondents commonly suggested linking mandatory connection requirements and planning legislation, as well as the need for good insulation in new builds to support reduced heat demand. However, some qualified their support; for instance, that the proposals should only apply for new builds if the infrastructure for a heat network was already in place, and where safeguards and regulations around cost, maintenance and reliability are in place and carefully designed.

"Any planned housing scheme prior to or where ground works are just starting and where there is sufficient volume to make the case for adapting the scheme design to accommodate incorporation into a heat network scheme makes sense to be mandated. Any future housing schemes should have considered connection in the planning application including passive provision for the future availability of a heat network e.g. duct works and/or pipes.” - Individual

The next most common themes in responses to Q15 overlapped considerably with those under Q14. These included concerns about monopolies, pricing matters and uncertainties surrounding heat networks; these themes are all addressed under Q14.

Several respondents at Q15 , most of which were organisations, highlighted perceived pros and cons for developers who might be mandated to ensure new build homes were ‘network ready’. It was argued that if connecting to heat networks made commercial and environmental sense, developers would be incentivised to build such homes, or potentially create their own heat network. However, others cautioned that the availability of a heat network could influence where developers build new houses. For instance, a developer may choose an area with a heat network to benefit from low-cost heat solutions or conversely might avoid an area if there was a risk that a new network might not be ready in time. Other potential issues included the need to work with the network operator during the build phase, to inform and educate potential occupiers about heat networks , to determine options should a network became unviable , and to mitigate against overheating of certain properties. A few organisations argued that developers should be able to determine what clean heating option is most appropriate for their site . A few specific points were raised in relation to connection fees.

“It should be noted that presently individual households are charged a fee for disconnecting from the gas network. Were a volume of properties within a scheme to surrender their gas connections as part of a transition to a heat network, the cost of such an activity would likely need to be met by the developer of the heat network or each individual household within the scheme.” – SGN

A few organisations suggested alternative approaches, generally to enhance flexibility for developers and encourage innovation – for instance, encouraging different types of heating networks, using a networked heat pump solution instead, or allowing temporary installation of boilers in anticipation of a future heat network . The Energy Saving Trust felt that if developers could demonstrate a heat network was not an effective solution, then an alternative clean heating system should be possible.

A range of lesser mentioned themes already noted under Q14 were each reiterated by some in Q15 . In order of prevalence these were comments about the role of local authorities , calls for more information , heat networks not being suitable for all areas of Scotland , and incentivising rather than enforcing the transition.

Approximately two thirds (66%) of those who answered Q16 were supportive of the proposal to require occupiers of non-domestic properties to provide information about unused heat on their premises Almost half (47%) strongly supported the proposal and 19% somewhat supported it. One fifth (19%) were opposed and 11% neutral.

One fifth of respondents commented in response to Q16. Many commented more broadly on the practicalities of buildings sharing unused heat; these comments have been included in the analysis of Q17, with the analysis below focusing on views on providing information about unused heat. While there was support for the proposal at the closed question, those who commented typically qualified their support with a range of additional considerations.

The most prevalent theme in comments was a concern about the expense, bureaucracy and administrative burden of collecting and providing data about unused heat. Local authorities and membership bodies/trade unions were more likely than other organisation types to raise this issue. Comments ranged from brief questions about how much collecting the data would cost occupiers of non-domestic buildings to concerns about the staff, time and resources that would be required. There was a particular concern about the implications for small businesses and the support they might require. Others supported the proposals, assuming there is no extra cost to businesses and that the data collection required is low-cost and easy to administer. Some expressed a concern that the businesses collecting this data would pass any additional costs on to their customers.

“Whilst we recognise that waste heat is an underused resource and can be fed into heat networks with little cost, before we could support this proposal we feel further information would be required on the implications of this request. How would the information be generated or calculated? Who would do this and who would shoulder the cost implications?” - Manufacturers of Equipment for Heat Networks Association (MEHNA)

“We believe any such proposal must be implemented with a view to making it as easy as possible for non-domestic owner occupiers to comply with any requirement for reporting unused heat production. We do fear that the costs potentially required to comply with this proposal may outweigh the potential benefits.” – Scottish Property Federation

Reasons for support was the next most prevalent theme, with two strands of comments evident. Several, including half of all local authority respondents, highlighted the benefits of having data about unused heat, and how this could help design and expand heat networks. Providing information could ensure developers understand the availability of surplus heat and its impact on network viability; a few elaborated the current lack of data is a barrier to the development of heat networks. Another strand, also mentioned by several, was support for more data to identify surplus heat to ensure it is captured and not wasted.

“This is a sensible provision that will help heat planners and heat network developers (the current heat maps do not have accurate data on waste heat). It may also encourage the property owner to think about their own energy efficiency.” – Scottish Enterprise

Specific considerations for data capture were raised by several respondents. Some noted that many businesses have either a limited awareness of their level of responsibility for the heat generated in their buildings, for example units in a shopping centre, or a lack of understanding about how to calculate their unused heat. It was noted that unused heat could be difficult to define, quantify and could vary by time of day depending on how a space is used, or by season. There were therefore calls for greater education, as well as a clear definition of ‘unused heat’. A few called for building owners, as well as occupiers, to have a responsibility to provide information. More specifically, a few called for clear and consistent methodologies to be outlined to ensure any data collected is aligned with any existing data collection requirements, comparable across the country, and compatible with GIS mapping software.

Several respondents raised the overarching theme of the need to incentivise rather than enforce, suggesting the Scottish Government could ask stakeholders to provide information on unused heat, making it beneficial to do so, rather than a requirement.

Privacy concerns were raised by some, either suggesting the proposal could be seen as government intrusion into private businesses or supporting it if privacy is maintained.

Some commented on the need to consider the nature or size of the business or building. Most frequent were calls for the requirement to apply to larger buildings or those producing large amounts of heat, and for smaller businesses to be exempt.

“This needs a pragmatic focus on buildings that are likely to have waste heat, not generically on all non-domestic buildings. It must also capture heat from industrial processes, which may not technically be part of buildings (perhaps that is captured by the term “properties” rather than “buildings”). Perhaps it would be useful to define the terminology and provide a list of unused heat sources and the amount of energy that is considered wasted heat sufficient to add value to the local heat networks.” – Scottish Ecological Design Association

Over two thirds (68%) of respondents who answered Q17 supported the proposal to potentially require buildings with unused heat to provide this to a local heat network. While levels of strong support were equal among individuals and organisations (43%), organisations were more likely to somewhat support than individuals (35% and 24% respectively). Just under a fifth (18%) opposed the proposal, with a greater proportion of individuals opposed than organisations (20% compared to 7%).

Just over one in five respondents commented in response to Q17. While there was support at the closed question, the vast majority of comments either offered qualified support for the proposals or raised issues for further consideration.

The most common theme concerned a range of practical considerations. This was raised by most types of organisation but was particularly prevalent among comments from local authorities. Within this theme, some, mostly individuals, questioned whether the proposals would be technically feasible or whether businesses choose to ‘waste’ heat. However, many expressed the view that this would be a good idea in theory but highlighted the need to make sure it is feasible in reality. For example, a particular concern raised by some was about what happens if a building producing surplus heat either reduces its waste or closes, and what this would mean for the viability of the heat network. A small number questioned whether businesses have the capacity to measure and manage the transfer of surplus heat. Related to these practical issues, some respondents made a variety of calls for additional information. These included: a clearer definition of ‘unused heat’ and ‘waste heat’, for more research into heat networks, and clarification about who might build, manage and regulate heat networks.

“While supporting the principal of this, there are risks. Building owners/operators may not wish to commit to long term contracts for the supply of heat, particularly where there are penalties for removing that as a source… waste heat can be a volatile source, with inconsistent supply and the risk that businesses could chose to relocate operations to areas where they would not be compelled to join networks.” – West Lothian Council

Similarly, many argued that support would depend on the cost-effectiveness of businesses providing unused heat to local heat networks – the second most prevalent theme. There were calls for more information about the cost implications of the proposals, and to ensure that the proposals would not lead to additional costs to the organisations being required to supply unused heat. A small number called for exemptions where providing unused heat is deemed commercially unviable and some made it clear that unused heat should be considered an asset for the heat provider to sell, or that they should be paid for the heat they provided to the network. Conversely, however, a few respondents did note that the proposal could positively impact businesses if selling the unused heat provides them with additional revenue.

“We welcome more detail from the Scottish government on how this would work in practice. For instance, would the owners of buildings, whether domestic or non-domestic, with otherwise unused heat be required to pay for connecting to the heat network? Or would this cost be picked up by the heat network? If there are legal costs associated with the connection, for instance with negotiating wayleaves or securing planning consent, would the heat network be responsible for these costs?” – Thermal Storage UK

The importance of incentivising rather than mandating change was the next most prevalent theme. Respondents raising this theme highlighted that if the technical and economic considerations raised by other respondents benefited all parties then in all likelihood businesses producing unused heat would be encouraged to provide or sell it to their local heat network without the need for legislation compelling them to do so. Respondents argued that there should not be a requirement to provide unused heat; instead doing so should be voluntary and providers should be rewarded or applauded.

Some, mostly organisations, highlighted reasons for their support, often stating that providing unused heat could help support the development, viability and resilience of heat networks. The potential for using unused heat to help reduce energy costs for consumers and reduce fuel poverty was also noted by some, while some others made more general comments that it was a sensible approach to capture excess energy that would otherwise be wasted.

“This seems a sensible and fair proposal: e.g. if there is a server room with a lot of excess heat and there is a local heat network which could use it – it would seem to make heat networks much more viable.” – Quakers in Scotland