CITYWIDE VISION FOR DISTRICT HEATING IN SCOTLAND

Vattenfall is working with cities, developers, delivery partners, and supply chains to assess the long-term opportunities for large-scale district heating (DH) and transform them into reality. In the UK, we have been focused on London, Edinburgh, and Bristol as core cities to establish heat networks. We are now also setting a similar focus on Glasgow. We envision these heat networks to become integrated energy solutions that maximize value for the client and consumers and build sustainable, profitable heat networks. We have the resources and experience to take on long-term risk, reduce unknowns and establish DH clusters that are intended to expand and grow to connect and decarbonize large areas of cities.

By Paul Steen, Regional Director Scotland and North of England, Vattenfall Heat UK

We are taking tactical approaches to deliver our strategy in these cities at a critically important time when the UK and Scottish governments are progressing with ambitious policies for heat decarbonization and legislating District Heating. In the context of these policy and regulatory changes, our work means that there is an opportunity to significantly impact the future economy, society, and environment across the UK.

There are many valuable experiences based on many years of development in Northern Europe and coming forward over recent years in the UK. These have shown how we can tackle these challenges with oversight and continuous development of strategies or heat plans that define the overarching technical parameters and commercial principles. Sir Norman Foster stated, “Joseph Bazalgette created a sewer system which he originally sized for London’s needs of the time – he then doubled it to anticipate the future beyond. These are the qualities that I admire.” DH could be crucial for decarbonization as the sewer system did for prevalent diseases in the 1800s.

The strategy will be delivered through a series of tactical interventions. These will evolve through the pipeline of projects to provide infrastructure investment programs. Zoning plays a vital role in the tactical approaches used to clarify future heat decarbonization pathways and, for example, in defining concession zones.

The strategy and tactical implementation are bound together by the frameworks and institutions that govern, deliver and operate the systems. Regulation will strengthen and coordinate a framework of multi-stakeholder institutions. 

An example is Midlothian’s Joint Venture (JV) with Vattenfall bringing value into the JV that each public and private sector partner can get. Midlothian Council has the convening power to determine relevant policies such as concession zones, building assets, and an obligation to decarbonize, while Vattenfall brings commercial, delivery, and operational capabilities. The National Planning Framework and Local Planning policy can drive developers to engage with DH at a national level. As significant demand aggregators, local authorities can also develop locally appropriate procurement of organizations capable of delivering the vision. 

We are in a JV with Midlothian Council to deliver heat from the considerable energy from waste-to-energy (WtE) plants in the city’s southeast. Beginning construction next year, we are developing a heat network that will take heat from the WtE plant and supply the Shawfair development, extending into Edinburgh. We have good visibility of 20,000 home equivalents, or HEQ (acquiring existing networks, new connections to retrofit buildings, and recent developments). 

We intend to extend the network into Edinburgh with a vision of connecting widely through the city. Our network will run through some of the poorest areas in Edinburgh, bringing them affordable, high-quality, low-carbon heat and supporting the regeneration of these areas. 

We support the UK and Scottish Governments in setting an ambitious policy and regulatory framework. Critically important in that will be the customer protections and licensing systems that govern how DH network operators Act – Warren Buffen famously reflected that “it takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” February 2021 was a significant milestone for heat networks when the Act was passed. We were, and are, strong supporters of the enabling legislation – the Heat Networks (Scotland) Act – and worked closely with the Scottish government in developing its principles. Regulation will be crucial in establishing the right investment environment for DH. The Act is essentially a piece of enabling or framework legislation. Much of what’s needed to bring it to life will be contained in secondary legislation or supporting regulations – So the hard work in getting it right for DH is far from over:

1. On consumer protection, this needs to be added to the Act for the simple reason that it’s outside the scope of the Scottish Parliament. But we recognize the importance of protecting consumer rights and need to find a way around its absence to establish consumer confidence.
2. On-demand assurance, we can bring DH to customers’ front doors, but we need to make them connect. We need a balance of mandate and incentives to turn customers into heat consumers.
3. The Scottish government is, of course, looking at this and at the prospect of using business rates as a level for commercial buildings. And it’s relatively easy to mandate connection for new build, which leaves the entrenched problem of what we do about existing buildings/retrofit.
4. For statutory undertaker rights and wayleaves, we ask that the kind of automated access to third-party land, to lay pipes, etc., which is already enjoyed by ‘traditional’ utilities, should be extended to DH.
5. Also, finance and funding from the government need to support an area-based approach to DH. Why, for example, would you make a grant available to individual householders to install ASPS when a DH scheme is on its way?
6. Also relevant to mention building regulations – These currently often discriminate against DH or don’t accommodate our specific needs, and we’d like to see that changed.
7. The Act will introduce a welcome new licensing scheme along with permits and concession areas. We’re keen to learn more about how these will work alongside each other, like vital parts of the same puzzle.
8. And, of course, there’s the question of whether we have the right skills in our supply chain to develop district heating at scale.   

We see a role for the government to work with the sector to address this.

To meet the climate targets set by governments, we must decentralize and democratize. That means ambitious decarbonization at scale to create a framework for infrastructure investors to have the confidence to invest in DH.

A more decentralized solution means no longer transferring the system’s operating costs out of the local economy but keeping it more local by buying and trading energy in a local context, using existing resources. 

 We are, however, not proposing complete decentralization but intelligent systems to get better control within communities and local economies.

There is a paradox – in the heat sector because people are currently used to complete control of their heating system via their boilers. Still, they receive their energy through the centralized national gas network. With DH, we are proposing moving to a locally centralized system. However, we see this as decentralizing from the national level and using local heat resources.

At the same time, we propose to democratize. DH will see some disruption and a change in how users interact with their heating system. 

We need strong engagement with communities to participate – as customers and as drivers of economic development and skilled jobs. We need to see society and consumer groups lobbying for these changes because they see the benefits of sustainable decarbonization. We also need more suppliers to create jobs through training, apprenticeships, and growing supply chains.

Whether we are consumers, businesses, or community groups, many more organizations are actively participating and choosing to decide how they generate and consume their energy. Rather than the traditional ‘top-down’ system, controlled by a relatively small number of actors, it moves to a more consumer-led and participatory environment. Renewables are one of the key reasons for that – whether micro-renewables or small, community-scale projects. There is no reason why cooperative community projects cannot become larger city-scale projects where residents and institutions within towns and cities hold a contribution to the investment and consequently control and benefits.