Heat networks - installation and maintenance licence: consultation

Ministerial Foreword

Heat networks will play a vital role in delivering on our commitment to decarbonise heat in our homes and buildings by 2045, as set out in Scotland's Climate Change Plan 2026-2040. Heat networks can present unique opportunities to deliver clean heating to dense urban areas where other solutions, like individual air source heat pumps, may be more challenging to install. They are therefore a key strategic part of supporting the wider energy transition, securing a greater energy independence through place-based, low emission heat sources.

Opportunities presented by heat networks include using local, low carbon heat that would otherwise go to waste, from sources as varied as rivers, disused mines, industrial sites or data centres. In other cases heat networks can provide stability to the energy grid by generating heat during periods of low demand, to be stored and used later. They are also major infrastructure projects which can bring jobs and investment to our communities. This is why we are committed to supporting the development of heat networks across Scotland to reduce our reliance on fossil fuels, improve our energy security and ensure we meet our climate targets. This consultation sets out our proposals to support the sector by ensuring it has the statutory rights and powers necessary for its growth and development.

As infrastructure projects heat networks inherently face risk. At present heat network organisations do not have the same rights and powers as other major utilities like gas and electricity, and we know from stakeholders that this means projects are facing real challenges to installation and maintenance of crucial pipework and apparatus. Government action is required to open up development opportunities for the sector, and that is what the proposals in this consultation will do. In the meantime we encourage everyone to work with heat network developers to facilitate their projects in advance of licensing, to support our ambitions for this sector.

The Heat Networks (Scotland) Act 2021 was the first piece of legislation passed in the UK to regulate and help support the growth of the heat network sector. We have already implemented two parts of the 2021 Act. In May 2023, two new public sector duties came into force that mandate building assessment reports on non-domestic public sector buildings and require local authorities to consider designating heat network zones.

The UK Government has since passed the Energy Act 2023, covering some similar aspects and in some cases even superseding parts of the 2021 Act. This has led us to consider how we should proceed with introducing parts of our 2021 Act, to streamline our regulatory framework as far as possible.

The proposals in this consultation are designed to strike the right balance by targeting rights and powers where they are needed without duplicating regulation. We are proposing to introduce an opt in installation and maintenance licence under the Draft Buildings (Heating and Energy Performance) and Heat Networks (Scotland) Bill for the heat network sector in Scotland. This would be introduced in place of the mandatory licensing regime which is detailed in part 1 of the 2021 Act. The proposed opt in licensing regime would grant rights and powers such as carrying out road works, or survey and compulsory purchase of land, which are similar to other utility providers such as gas and electricity. These rights and powers will help improve the pace and scale of heat networks being installed and maintained in Scotland and help contribute to our net zero targets.

I thank you for taking the time to read and respond to this consultation document. Your involvement is a key part of the development of future regulation.

Màiri McAllan MSP

Cabinet Secretary for Housing