Publication - Regulation/directive/order

Heat Networks (Scotland) Bill: evidence assessment

Summary of evidence around the potential impacts of heat network regulation in Scotland.

55 page PDF

522.7 kB

55 page PDF

522.7 kB

Heat Networks (Scotland) Bill: evidence assessment
1 Executive summary

55 page PDF

522.7 kB

1 Executive summary

This report provides a summary and consideration of a range of evidence sources around the potential impacts of the proposed heat network regulation in Scotland.

This report considers evidence gathered from both primary sources (including workshops and stakeholder interviews) and research, to consider the potential materiality, likelihood and direction of the potential impacts of these policies.

This report will support development of a later Financial Memorandum and Business and Regulatory Impact Assessment (BRIA) of these policies. Within Table 1, we highlight the high level indicative impacts of the proposed regulations from the Scottish Government on heat networks, including the introduction of licencing and consenting regimes.

We note that much of the analysis within this report is based on policy proposals put forward at the current time, as well as the existing technological and political landscape (2019). Given the fundamental implications stemming from achieving a net-zero society by 2045, we might expect further significant change in regulatory proposals from both the UK and Scottish Government, as well as wider factors, which could cause change to the projections within this report.

Throughout this report we outline a number of cost estimates, particularly for local authority and government. We note that these costs represent the initial expected cost of implementing many of the policy proposals outlined within this report at the current point in time. Where further experience, shared tools and learnings are gathered by relevant parties over time, we expect these estimates to fall.

Table 1: Overview of heat networks regulation impacts





Bill Savings

Consumer bill savings from heat network deployment compared to the counterfactual heat cost (not including energy efficiency changes). Savings vary substantially based on type of scheme household.

0 - 36%
(See 6.1.1)

Consumer Disruption

Consumer disruption from installation of networks.

(See 6.1.2)

Consumer Service

Negative impacts on consumer choice and tariff offerings, such as reductions in the available payment methods for consumes.

(See 6.1.3)

Consumer Health

Lack of evidence to assume link from use of heat networks to better consumer healthcare outcomes.

(See 6.1.4)

Local Authorities and Government

Regulator Set Up

Initial one off costs to set up any new heat networks regulator.

£0.99m - £6.72m
(See 6.2.3)

Licence Application Review

Annual cost to regulator for initial review of licence applications.

£100,000 - £300,000
(See 6.3.3)

Annual Licence Admin

Annual cost to regulator to manage licencing regime.

£0.86m - £2.57m
(See 6.3.3)

Consenting Review

Annual cost to review consents for heat network construction.

£50,000 - £120,000
(See 6.2.4)


Capital / Op cost reduction

Reduction in operational and capital costs from learnings.

(See 6.3.1)

Licence Application

Annual cost of applying for licencing regime.

£1,050 - £3,150
(See 6.3.3)

Socioeconomic Assessment

Cost of running scheme specific socio-economic assessments.

£20,000 - £40,000
(See 6.3.2)

Market Dynamics

No evidenced impact on market dynamics / concentration.

(See 6.3.5)


Potential incremental increase in deployment of heat networks out until 2050, based on current proposals. These increases are in addition to a counterfactual heat supply of 3.4TWh in 2050.

Increase around 3.6 TWh annually.
(Total 7 TWh, See 6.3.6).

Waste Heat Connection

Potential increased connection in waste heat.

(See 6.3.7)

Essential Services Other

Decrease in revenues and heat provision from incumbents.

(See 6.3.8)


Carbon Emissions

Reductions in carbon emissions compared to counterfactual.

0 - 23%
(See 6.4.1)

Air Quality

No evidenced impact on air quality.

(See 6.4.2)


Likely positive impact on net jobs within Scottish regions.

(See 6.4.3)