Scotland's energy sector - unlocking investment: joint business plan

Annex: Decarbonising Heat

Barriers and actions

Barrier #1: Set Out a Stable And Long-Term Policy Framework for Heat in Buildings

Stakeholders: Scottish Government;

• Regulatory framework for both energy efficiency and zero emissions heating systems to drive change.
• Develop the clear evidence base and analysis of cost effective pathways.
• Implement a robust public engagement strategy to change attitudes and raise awareness.

Barrier #2: Financial Barriers to Creating Commercially Viable Projects

Stakeholders: Scottish Government; UK Government;

• Review of the Non-Domestic Rates application on District Energy Networks (notwithstanding the reductions proposed in the Heat in Buildings Strategy)*.
• Capital support for zero emission heat deployment, including gap funding to support deployment (similar to Heat Networks Investment Project (HNIP)) ahead of the longer term design of market frameworks to support delivery.
• Review barriers and support for wider distribution of PV and Storage solution to support localised networks in order to unlock investment and ensure these technologies are cost effective.
• Develop innovative financing mechanism and consumer protects to help property owners invest in improving their properties.
• Review of barriers to electrification of heat including gap between cost of electricity and gas and the impact of social and environmental levies.

* NDR liabilities are a matter for the independent assessors

Barrier #3: How to Maximise Opportunities in a Place Based Way

Stakeholders: Scottish Government;

• Encouraging Local Authorities to look at solutions on a place based basis, for example through expansion of Area Based Schemes to include heat supply measures as well as energy efficiency.
• Encouragement for Public Sector bodies to move faster on previously identified District Heat Network options.
• Resource support for Local Authorities to develop and deliver LHEES plans.
• Review and integration of policy through development planning, with a focus on delivery.
• Energy Industry to work with Scottish Government and Local Authorities to identify investment opportunities and investible projects, to develop a longer term pipeline.

Barrier #4: Building Standards and Policy To Support New Technology

Stakeholders: Scottish Government; UK Government;

• Reviewing Distribution Charging regime, specifically the impacts of TNUoS and DNUoS charging, that makes small scale local networks economically challenging.
• Review of local planning policy to support implementation.
• Review of new home standards to enable and expedite transition from gas.
• Implement the provisions set out in the Heat Networks (Scotland) Bill to establish a new Heat Networks Regulatory framework in Scotland to increase confidence and begin de-risking investment.

Results

• Decarbonises the single biggest element of energy use in Scotland.
• Establishes and builds out Scottish supply chain.
• Provides apprenticeships and opportunities for skills development.
• Provides reskilling opportunities for existing heating engineers.
• Ensures the benefits of decarbonisation are felt in all parts of the country.
• Delivers low-cost green energy.
• Delivers technological and commercial innovation.

Example projects

• ScottishPower NetZero Ready Homes and Streets.
• Edinburgh City Council Decentralised Energy Systems.
• Glasgow City Council Decentralised Energy Systems.
• North Lanarkshire Council Placemaking.
• Smart Local Energy System Demonstrator.
• Jubilee Hospital Glasgow.