Heat network approaches being developed by devolved administrations and UK government

A number of further consultations on the policy approaches for heat networks have been issued in recent weeks: 

  • The Scottish government published its draft Heat Networks Delivery Plan on 15 November, outlining how it will quintuple heat demand provided from heat networks in Scotland by 2030; and 
  • The UK government issued a consultation on proposals outlining the high-level approach for heat network zoning in England. 

In Scotland there are an estimated 1,080 heat networks supplying heat to domestic and non-domestic properties, connecting around 30,000 homes and 3,000 non-domestic premises. The plan outlines how the Scottish government will deliver the target of 6TWh of heat (8% of current heat demand) from heat networks in Scotland by 2030, as required by the Heat Networks (Scotland) Act 2021. The targets, which include a 2.6TWh interim target by 2027, will be extended to 2035 by Scottish Ministers in early 2023, and confirmed by 1 October 2023. The Scottish government are currently seeking views on what should be considered when setting this target, noting that the Opportunity Areas for District Heating in the UK report estimated that by 2050 heat networks may be suitable for providing up to 28% of heat demand in Scotland. 

In regards to the delivery plan, building assessment reports will be required for public sector non-domestic buildings, assessing the suitability for connecting to heat networks. This will support the designation of heat network zones – those areas particularly suitable for heat networks. The Scottish government is currently undertaking a First Nationwide Assessment to identify potential heat network zones across Scotland, with outputs to be published in early 2022. By winter 2022-23 it will also publish Local Heat and Energy Efficiency Strategies to support local authorities in identifying waste or surplus heat. 

The plan proposes to offer permits for the heat network zones, provided to a single competitively appointed bidder, and providing exclusivity to the zone for a number of years, with transfer provision in place should that operator cease to trade. The plan notes that licensing and consents could be introduced to build trust in the market and ensure alignment with local and national objectives respectively. It proposes that licence holders will have to prepare and implement a Heat Network Decarbonisation Plan between one and three years of a licence being granted, with further work to test and develop this approach to be completed in 2022. 

A Building Hierarchy will prioritise the connection of existing buildings based on their key features, while the Scottish government proposes to introduce a new Build Heat Standard requiring new buildings consented from 2025 to install only zero direct emission heat sources and bring forward proposals to extend this into new buildings. There will be further information in 2022 on phased targets and funding to support all publicly owned buildings to meet net zero heating requirements by 2038, while heat networks continue to benefit from non-domestic rates relief – 90% for renewable heat networks to 2024 and 50% relief for all heat networks to 2032 The Scottish Government will also establish a National Public Energy Agency. 

The consultation is open until 13 December 2021. The final version of the plan will be published by 1 April 2022. 

Meanwhile BEIS’s consultation on proposals for heat network zoning in England closed on 19 November. The proposals envisage central and local governments working collaboratively with industry and local stakeholders to identify the most suitable areas for heat network development. The consultation sought views on the broad principles for how heat network zoning should be designed:

  • the methodology to be used for identifying and designating heat network zones, which includes a four stage zoning process; 
  • roles and responsibilities of different parties involved in the zoning process, including central government as a central authority and local government undertaking the role of a heat network zoning coordinator; 
  • requiring certain buildings within zones to connect to a heat network, with an exemption process to avoid sub-optimal outcomes. The present preferred option requires that all new buildings, large public sector buildings, large non-domestic buildings and large residential buildings which already have communal heating, or are undergoing major refurbishment are required to connect; and 
  • further requirements and considerations, such as requirements to provide information to support the identification and designation of heat network zones; whether heat networks in zones should meet a low carbon requirement; approaches for how heat networks are deployed in zones; proposals to ensure that consumers within zones are not adversely affected; and the enforcement, monitoring and reporting regimes under zoning. 

Aspects of the heat network zoning proposals will require primary and secondary legislation and government will seek to introduce these before 2025 to meet its Energy White Paper commitment. A small number of pilot projects will be initiated to support analysis and definition of the lowest cost solution, before being rolling out the zone identification process to 50-60 towns and cities. 

We also await a formal decision on government’s February 2020 Heat networks: building a market framework consultation, which included proposals on who would regulate and the regulatory framework that would apply to the sector. 

Heat networks are only one of a range of different technologies being deployed to support an integrated approach to the decarbonisation of heat by 2050. Cornwall Insight’s Net Zero Transition Academy: Low Carbon Heat supports newcomers to the sector and those new to heat in understanding the key technologies, policies and pathways in delivering a low carbon heat landscape. The next course runs virtually on 18, 19 and 20 January 2022.

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