HOW DH NETWORKS RUN NOT-FOR-PROFIT CAN ENSURE A JUST TRANSITION AND DEVELOP A NEW ECONOMIC MODEL IN SCOTLAND 

Over the coming decade, Scotland has to decarbonise heating and make our buildings as efficient as possible to meet our climate change objectives and have any chance of staying with a 2-degree rise in global temperatures. Of course, buildings and the built environment are just one piece of the decarbonisation puzzle we must solve. It’s a huge task – even today, here in the UK, as much as 80% of our homes are still heated by fossil fuels – mainly natural gas. And while we’ve got to wean ourselves off the natural gas for heating, it’s still cheaper when we compare it to the electricity price.

By Duncan Smith, Head of Energy & Sustainability at River Clyde Homes, Scotland

Published in Hot Cool, edition no. 5/2023 | ISSN 0904 9681 |

The cost of electricity – the “net zero” fuel we’ll all need and use to heat our homes over the coming decades is part of the issue – if we are to go down a like-for-like route of replacing heating individually. The current model and the reluctance of the Government to intervene within the system to reform the pricing mechanism – and a regulator that hasn’t been able to protect consumers in the way they should – has seen millions of households in the UK spend upwards of £2,500 last year to heat their homes.

It’s also how we continue to produce energy – centralised and far away from most communities that need and use it. So, what is an alternative model? What model could create an equitable energy price for both the consumer and business? An energy model that could directly address fuel poverty and put money, millions of pounds, back into households’ pockets, eliminating cold and damp homes, improving the health and lives of their occupants, and providing the basis for economic stimulation and skilled employment in local communities. We can develop locally owned heat and power networks with the resources we already have here in Scotland – through wind turbines, solar panels, and water-based heat pumps.

And we can generate heat and power through decentralised energy centres that capture and reuse excess heat from local businesses and industries such as data centres. The Queens Quay project in Clydebank is a great example of the model I would like to see replicated up and down the country. It provides heat to public buildings and homes and will be expanded this year to include the local hospital and six multi-storey towers. And the residents pay around a quarter of the standard electricity price that most of us in the UK are paying today – about 8 p per kWh compared to 34 pence . The project cost around £20 million with the local authority and Scottish Government funding.

However, rather than looking at the cost of the solution, which invariably many organisations will focus on, we need to see the value we can develop with district heating and not-for-profit delivery models. And I’d like decision-makers in local Government to look at the argument differently, from a different angle. I’d like them to look at the opportunity for an economic model that provides affordable heating for residents and stability to local businesses – indeed, supports the new companies we’ll need over the coming decade to solve the wider climate crisis challenge.

A good example of this is vertical farming in urban areas. The current energy system makes it very difficult for heat-hungry companies to survive – regardless of the merit of their output. By providing affordable energy to residential households, businesses, and public buildings, we can develop decentralised, more egalitarian heat and power networks that serve society and commerce rather than the other way around.

By developing heat networks like our Danish colleagues have done, from an ownership perspective, we can end fuel poverty and homes with dampness and mould. We can reduce the burden on the National Health Service, making our citizens healthier and more productive and creating local high-skilled jobs for many of our young people.

In a recent article in Inside Housing, the Scottish Minister for Net Zero Buildings, Patrick Harvie, responded to whether the Government in Scotland is doing enough and willing to support housing providers financially to achieve Net Zero financially. His answer below might surprise some but should be seen as an opportunity.

“Some of these organisations can be anchor organisations for things like heat networks. I think over the course of this decade, for example, we’re going to be seeing a lot more in the way of heat networks going in, where a social landlord is not just a customer but is contributing to running that business and seeing a larger part of our energy system, at a local level, operating in the public interest.”