During the course of this project a number of issues and questions were raised which were out of the scope of the current work, but would benefit from further consideration by the proposed Expert Commission on district heating.
11.1 Wider Potential for District Heating
This study has examined the potential for district heating using heat from 4 power station sites. This shows the technical and financial potential for these 4 sites. This is a sub set of the overall potential for district heating in Scotland and the results probably represent some of the most challenging cases. In particular the power station sites would have originally been chosen for their proximity to fuel and access to cooling water - not heat loads.
Hence there are many other potential district heating opportunities in Scotland that are not represented in this analysis. These include:
- Small scale district heating schemes. Existing example include the Aberdeen Heat and Power schemes plus new ideas currently being developed as part of the infrastructure of housing developments. There are several examples including, e.g. the Home Farm Biomass Community Heating on Skye and the Hill of Banchory District Heating Scheme in Aberdeenshire.
- The potential for heat recovery from the biomass power station proposals being developed by Forth Energy for Dundee, Grangemouth, Rosyth and Leith.
- The requirement for Energy from Waste schemes to include a heat plan, which encourages the plants to be sited closer to heat loads.
- The opportunities in large urban areas that are not close to the power station sites. The most notable of these is Glasgow - which does not fall into the 30 km catchment area used for the four sites in this study. The Sustainable Glasgow Initiative is currently examining ideas for district heating in several areas of Glasgow. However the current study does not cover Aberdeen, Dundee and other important urban areas that have significant heat loads.
Hence the impact and costs of policies assessed in this study will not represent the impact and costs for all district heating opportunities across Scotland. There are likely to be better opportunities that could deliver carbon savings at lower cost.
11.2 Competing Options for Low Carbon Heat
This study focuses on a single low carbon heat option - heat recovery from power stations. There are many other options, including:
- Heat pumps;
- Solar thermal; and
- Energy efficiency.
Hence the carbon savings identified by this study could be achieved by alternative low carbon heating technologies. This is an important issue to understand as:
- Owners of buildings will want to choose the most cost effective investment.
- Scottish Government will want to maximise carbon savings vs. support offered.
To assess the competing options would require a more specific study of some of the buildings that could be connected to the district heating network and the competing low carbon heating options that are relevant to each building
11.3 Best Practice in Policies for District Heating
This study has highlighted that there are many EU and non EU countries where the district heating provides a significant share of the heating market. The case studies included with this report suggest that there are very different policies that encourage district heating. As it was not the focus of this study to investigate and review all of the different polices that are used in the EU and beyond, an initial search was undertaken for any recent reviews of policy frameworks for district heating in Europe. As well as general internet searches this included search specific web sites including: Euro Heat and Power, District Heating and Cooling plus ( DHC+)Technology Platform, and IEA District Heating and Cooling
This did not find any recent work on this topic. One IEA project will be reporting on "Policies and barriers for District Heating and Cooling outside EU countries". This may be of relevance when the report is published.
Hence a further investigation into best practice in policies for district heating could be of value. Such a review would provide valuable evidence to shape Scotland's approach to district heating. A review should collect details of relevant policies and evidence on their impacts (positive and negative). This should also take into account the policy context that is required for these policies to be successful - as background economic, social and political factors are important.
11.4 Heat Planning Law
A specific example of a key policy area for district heating is planning. The international success of district heating is strongly linked to the supportive planning frameworks in place in other countries. This is apparent from the short review of international cases studies and agrees with AEA's prior experience of working in Europe.
The most progressive of these planning frameworks is the Danish Heat Planning Law. This requires properties in an area served by district heating to connect to that system.
It was not possible to test the potential for this policy as part of this study. An investigation would need to:
- a) Establish the location and areas served by existing and proposed district heating schemes in Scotland.
- b) Determine the technical potential for additional heat sales from these networks.
- c) Assess the technical potential to connect heat loads in the catchment areas of each scheme.
- d) Evaluate the potential energy and carbon benefits of a Heat Law.
- e) Investigate the potential for a Code of Practice
Step a) is already proposed within the Energy Efficiency Action Plan. Steps b), c) and d) are similar to the assessment in this study, but will cover different parts of Scotland.
Step e) is important as there are existing measures in place that would be in tension with a Heat Planning Law. For example the licence conditions for electricity and gas supply have a focus on consumer protection. This enables consumers to switch suppliers with ease. A Heat Planning Law would create a local monopoly on heat supply - which may raise consumer protection issues. A code of practice, detailing how consumers will be protected could be developed and agreed by all the key players. This would provide clarity and manage consumer expectations.
11.5 Heat Mapping
Knowing where heat consumption is located is extremely valuable when local authorities trying to set local planning priorities and project developers are choosing project locations.
Heat mapping has developed rapidly over recent years, from an initial heat map of Scotland  , to local authority level heat maps  . Scottish Government has encouraged all local authorities to develop a heat map.
Because heat maps are a relatively recent development, there is a need to develop and share understanding on how they can be used, their capabilities and limitations.
For example heat use is not a geographical fixture, it changes. So if a key public building closes the heat demand in that location will change and may no longer be a focus for project development. Hence heat maps need to be used in conjunction with other data - on site closures, new development areas etc.
To ensure that best practice is quickly established there is a need to consolidate and share experience to date in heat mapping. This could take the form of guidance or training in areas such as:
- Integration of heat maps with local and strategic plans.
- Consideration with other carbon assessment tools, e.g. the wider impact of spatial planning and carbon emissions.
- Training in the use and interpretation of heat map data.
11.6 District Heating Code of Practice
In the assessment of barriers a number of respondents cited concerns about heat customers being locked in to take heat from district heating. Unlike choosing a gas supplier, there are no options to obtain prices from several district heating providers. At present there are no regulatory bodies that licence or regulate heat supply. Introducing a voluntary code of practice would help increase consumer confidence. A code could deal with key issues over:
- Connection costs.
- Heat metering.
- Payment terms.
- Price increases.
- Disconnection terms.
The code could also consider the opportunity for multiple sources of heat supply - i.e. can a third party supply heat into a network and pay an access toll to supply customers. This is analogous to the third party access rights that are available for independent electricity distribution networks.
There will be examples of existing good practice in Scotland and the UK as well as useful examples from Europe that could help frame the Code of Practice.
11.7 District Heating Regulation
The operation of a district heating network is a natural monopoly. This is not a case for concern, as all energy networks (gas and electricity) are also natural monopolies. However the business model for this type of operation is very different from businesses that operate in competitive marketplaces.
Aspects of a regulated monopoly business model include:
- Regulation of major capital investment programmes.
- Regulation of prices charged for use of the network.
- Licences and standards of performance to protect customers.
These controls could be seen as a burden on the monopoly business. Instead they are the opposite sides of the same coin, as there are benefits as well as burdens:
- A monopoly business will not have competitors
- Sales will be predictable and low risk and the business does not have to invest in significant sales effort.
- The investments made will have predictable returns.
- The corporate business may be structured round high dividend yields rather than growth in market capitalisation.
Because of the low risk nature of a monopoly business they are able to invest in major infrastructure - i.e. gas pipelines, electricity transmission lines etc.
If district heating is to become a major feature of the UK energy system, the model used to raise money for the other energy networks could be applied in this sector. This could be an important route to bring the levels of finance needed - however it will also bring the need for regulation.
11.8 EU Energy Efficiency Action Plans
The European Commission is in the process of introducing a new Directive that is aimed at putting Europe on track to meet the 2020 target of a 20% improvement in energy efficiency.
This new Directive will build on and replace existing Directives for Cogeneration and Energy Services and will merge them into one comprehensive legal instrument. Amongst the measures proposed for the new Directive is:
"Efficiency in energy generation: monitoring of efficiency levels of new energy generation capacities, establishment of national heat and cooling plans as a basis for a sound planning of efficient heating and cooling infrastructures, including recovery of waste heat."
The measures in the proposed Directive could be reflected in a future version of the Energy Efficiency Action Plan for Scotland.
11.9 Integration of District Heating into Existing Policy and Programmes
To date district heating has played a minor role in energy supply in Scotland. For district heating to become a more significant element, it will need to be an option that is in the minds of public and private sector investors and be integrated into existing policy frameworks. Examples of this include:
- Building the potential for district heating into the location of key public sector infrastructure. This includes location of key buildings e.g. new hospitals, secondary schools etc so that they can be anchor heat loads, or be the site of the main heating plant.
- Recognition of district heating as a low or zero carbon heat source, e.g. in the calculation of carbon emissions for compliance with building regulations, the Scottish Housing Quality Standard etc.
- Simplifying the access arrangements for laying district heating pipes under public highways.
- Many customers connect to district heating systems when their current boiler is retired. For the domestic sector the Scottish Government has recently offered an incentive for scrappage of older less efficient boilers. Encouraging district heating will need to be incorporated in a wide range of policy ideas - so connection to a district heating system should be eligible for payment under any future scrappage scheme.
- Developing models for roll out of district heating in the building types that are common in Scotland. For example district heating could play a role in reducing the carbon emissions from tenement flats - where many other energy efficiency measures will be impractical or undesirable ( e.g. external or internal cladding). Issues over the shared ownership of common facilities would need to be addressed.
Individually these measures will have a modest impact. Collectively they would show that district heating is a core part of Scotland's plan to reduce carbon emissions and that all of the practical issues are dealt with in regulatory frameworks. This would represent a step change from the current position, where district heating is seen and treated as an unusual occurrence which the relevant bodies were not able to deal with quickly or with certainty.
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