Publication - Consultation paper

Heat networks delivery plan - draft: consultation

This draft heat network delivery plan sets out how the provisions of the Heat Networks (Scotland) Act 2021, and related policies, will contribute to increased heat networks across Scotland. It also outlines the proposed regulatory regime for the heat networks sector in Scotland.

Heat networks delivery plan - draft: consultation
Chapter 5: Wider policy framework

Chapter 5: Wider policy framework

Waste and surplus heat

As we transition to a net-zero economy it will become increasingly important that we use resources efficiently. This includes maximising the use of surplus or waste heat, which at present goes unused. A recent ClimateXChange study[xvii] identified a waste heat potential of about 1,677 GWh across some 932 sites in Scotland, including from distilleries, wastewater treatment facilities, bakeries and many other sectors.

Surplus or waste heat is rarely fully utilised in Scotland, even though heat recovery can significantly increase the overall energy efficiency and energy recovery of facilities.

Energy from Waste (EfW)[9] facilities are among the largest single sources of surplus or waste heat in Scotland. Currently there are 8 EfW facilities under construction or in operation in Scotland, with a further facility in Westfield, Ballingray in Fife expected to begin construction soon. Since 2014 all EfW facilities have been required to prepare detailed heat and power plans in order to identify opportunities for local use of heat from the facility.

There are examples of surplus or waste heat use at Lerwick, Grangemouth, Shawfair in Midlothian and Torry in Aberdeen. However, significant amounts of heat go unused at some of these and other facilities. A key reason that heat is not recovered is that there are insufficient commercial opportunities to incentivise recovery, in particular the lack of potential heat customers and absence of an adjacent heat network. Equally, there are no legal requirements and limited incentives to recover and use surplus or waste heat.

We will make available to local authorities, by Winter 2022/23, further information on the availability of surplus or waste heat to support the identified of heat network zones and the development of LHEES.

In addition, next year we will engage with stakeholders and as relevant consult on whether there is need for further measures to increase the utilisation of surplus or waste heat.

Skills and supply chain

Unlocking investment in the supply chain must start with clear demand for its products and services. Our investment of at least £1.8 billion for heat and energy efficiency projects over the course of this Parliament, as outlined in the Heat in Buildings Strategy, aims to strengthen demand and support an increase in jobs and skilled workers.

We will work with industry to co-produce a new 'Heat in Buildings Supply Chain Delivery Plan' by Summer 2022 specifically focussed on strengthening the broad supply chains needed to deliver at the pace and scale we need.

Around 60 companies in Scotland are active in the heat networks sector, the majority of whom are civil engineering and construction contractors, most of which are large contractors that offer heat network contractor services as part of a range of construction services[10].

The Climate Emergency Skills Action Plan (CESAP) sets out immediate actions to support the development of skills needed to meet the climate change challenge. Through CESAP we have established a Green Jobs Workforce Academy for existing employees, and those who are facing redundancy, to assess their existing skills and undertake the necessary upskilling and reskilling they need to secure green job opportunities as they emerge.

New skills and supply chains will be needed as we scale up the development of heat networks in Scotland. The Energy Saving Trust (EST) report "Heat Network Skills in Scotland"[11], published in May 2020, identified skills gaps in the heat network supply chain, notably:

  • project management of heat networks, delivery and operation
  • heat network design
  • installation and optimisation of heat networks
  • technical operation and maintenance.

To build on this work, and to better understand potential skills gaps, we have partnered with Scottish Renewables and Skills Development Scotland to undertake a "Heat in Buildings Workforce Assessment Project". This project will help us to better understand the timing of required workforce growth across the heat and energy efficiency sectors, including the heat network industry. This will help us plan how best to support people transitioning into key roles.

It will be important to ensure that the workforce and skills needed to develop, operate and maintain heat networks are available right across Scotland. This will include improving access to the necessary skills and trades in our most remote and island communities, and ensuring local authorities have the necessary skills and expertise to drive development of heat networks.

In addition, in developing technical standards (see Chapter 3), the long-term intention is to develop standards against which certification can take place. This may provide additional opportunities for further qualifications in Scotland.

Non-domestic rates

To help support and encourage investment in green heat networks the Non-Domestic Rates (District Heating Relief and Renewable Energy Generation Relief) (Scotland) Amendment Regulations 2021 introduced a 90% relief from non-domestic rates until 31 March 2024 for new networks run from renewable sources. This is in addition to the existing 50% relief that is in place for all heat networks. This relief is guaranteed to continue until 2032.

These reliefs help to support the business case for new networks by reducing their operational costs.

We will continue to monitor the use of reliefs by heat networks and make adjustments as necessary. We would welcome feedback from individual heat networks on whether they plan to, or currently use, the reliefs for heat networks, or whether alternative reliefs would be welcome.

Concerns about the valuation methodology generally applied to district heat networks has been raised in the past. Valuations are carried out by Scottish assessors who are independent of Scottish Government, based on existing statute and case law. Appeals may be made to independent valuation appeal committees.


Contact

Email: heatnetworks@gov.scot