Heat networks - installation and maintenance licence: consultation

1. Executive Summary

Background

The Heat Networks (Scotland) Act 2021 (“the 2021 Act”) was introduced to help regulate the heat network sector in Scotland. Heat networks will contribute to Scotland’s statutory target of net-zero by 2045 and offer a real alternative fossil fuel heating systems for households, businesses and public bodies across Scotland.

Since the passage of the 2021 Act, the UK Government has introduced new powers under the Energy Act 2023 relating to heat networks. In particular, this includes a requirement for heat network operators to receive ‘authorisation’ from Ofgem. The Scottish Government welcomes this new regulatory regime as it will require heat networks to meet new consumer standards, like those that that already apply to gas and electricity customers. The UK Government and Ofgem introduced the regulatory framework from April 2025 with consumer advocacy and advice services, followed by regulatory rules from January 2026 and enforcement from January 2027.

The Energy Act 2023 has superseded parts of the 2021 Act, and indeed goes further than the Scottish legislation could due to the limitation of our devolved powers, and as a result we have had to consider how we introduce parts of the 2021 Act.

Installation and Maintenance Licence

Part 1 of the 2021 Act created a requirement for a mandatory licensing regime which would regulate all heat network developers and operators in exchange for the ability to gain rights and powers such as carrying out road works, or survey and compulsory purchase of land. As mentioned in the previous section, Part 1 of the 2021 Act has been largely superseded by the Energy Act 2023.

However, there remains a need to provide heat network companies in Scotland with statutory rights and powers similar to those that help gas, electricity and water providers to install, operate and maintain their vital infrastructure more efficiently and cost-effectively. This is also in line with the licensing approach being taken by UK Government in England.

This consultation sets out our proposals for creating an opt in Scottish installation and maintenance licensing regime within the Draft Buildings (Heating and Energy Performance) and Heat Networks (Scotland) Bill (“the draft Heat in Buildings Bill”), which will grant rights and powers for things like roadworks, survey and compulsory purchase to those who choose to apply for a licence. This is intended to replace the mandatory heat networks licence of the 2021 Act.

Purpose of consultation & Next Steps

This consultation includes questions about various aspects of the installation and maintenance licence, such as the scope, the application process, conditions and limitations, and the powers that are available in connection to a licence. There is also some detail around parts of the 2021 Act which we no longer intend to use such as key network assets and the associated transfer scheme.

The purpose of this consultation is to seek your views on our proposals for introducing the installation and maintenance licence using the Heat in Buildings Bill. A draft of the proposed Bill is available here: Heat in buildings: future plans - gov.scot. Its final content will be subject to decisions by future Scottish Ministers, the responses from this consultation and the Parliamentary process.

We look forward to receiving your feedback and views on these proposals. The consultation closes on 5 June 2026.