A unanimous Scottish Parliament recently passed the Heat Networks (Scotland) Bill – the first legislative framework for district heating in the United Kingdom.
By Jacob Byskov Spangsberg, Energy Counsellor, Embassy of Denmark, London
Mathias Grydehøj Mikkelsen, Advisor, Global Cooperation, Danish Energy Agency
Rune Nielsen, Advisor, Global Cooperation, Danish Energy Agency
The framework aims at expanding the current use of district heating – referred to as heat networks – by a factor of 20 in less than 10 years. Success and experiences from the widespread deployment of district heating in Denmark served as a major source of inspiration for the bill and its amendments.
Great Scottish climate ambitions
Scottish climate policy ambitions are amongst the highest in the world. The aim is to reach 75% reductions in climate emissions by 2030 compared to 1990-levels. By 2017, emission reductions were down to 51%, but two-thirds of this achievement came from reductions within the power sector. To reach the 2030 goal, Scotland, therefore, has a herculean task in front of them, especially when it comes to the heating sector. Heating homes and office spaces currently account for roughly 21% of all emissions, with around 87% of homes heated by coal, gas, and oil.
Ambitions, therefore, include converting more than 1 million homes and an estimated 50,000 non-domestic buildings to using zero or low emission heating systems by 2030. To make this happen, many changes will have to take place in regard to policy drivers and investments – as well as current supply chain skills and capacity.
“Scottish climate policy ambitions are amongst the highest in the world. The aim is to reach 75 percent reductions in climate emissions by 2030”
Legislating for ambitious deployment of district heating
After years of consultation and development, the Heat Networks (Scotland) Bill was unanimously voted through the Scottish Parliament on the 23rd of February 2021. The Bill is a landmark not only for Scottish climate ambitions but also for the United Kingdom as a whole, as it is the first of its kind. However, the central Government in London is also working towards introducing the sector’s legislation in the entire United Kingdom.
The Bill sets in place ambitious targets and some of the regulatory measures needed to meet them. Today, Scottish district and communal networks provide heat for roughly 32,000 homes (1% of Scotland’s total heat consumption). With the new Bill, the aim is to have 650,000 homes connected to district heating by 2030 – roughly a 20-fold increase in less than 10 years. To concretize these ambitions, the Scottish Ministers must ensure that the combined supply of thermal energy from heat networks in Scotland reaches 2.6 TWh by 2027 and 6 TWh by 2030. A huge task that will require significant commitment and expansion of the current supply chain and local government planning capacity.
The Bill in itself, however, only provides the direction and skeleton of the regulatory framework that is to deliver on these promises. Over the coming months and years, so-called secondary legislation is to be developed and implemented. This will be equally important in ensuring the success and possibility of meeting the ambitious targets now passed by parliament.
The Bill and the subsequent process around secondary legislation are not the only elements that play into developing an attractive and ambitious district heating market in Scotland. Financial support will indeed also be needed to help drive deployment. Some schemes are already in operation including a low-rate District Heating Loan Fund, development support through a Low Carbon Infrastructure Transition Programme (LCITP) as well as a few other smaller initiatives.
Furthermore, the Scottish Government has recently released a consultation on a new Heat in Buildings Strategy. According to this document, the total investment required for transforming homes and buildings in Scotland is likely to be more than £33 billion. The current Government also states its intention to invest £1.6 billion of capital funding in heat and energy efficiency over the next parliamentary term (4 years), if re-elected. It is not specified how much of this figure relates to district heating networks. Still, the document does state ambitions to further incentivize anchor load buildings to district heating and financial relief for renewable district heating schemes.
But though much is still to come, the new Bill is widely celebrated by stakeholders and industry as a crucial element of increasing investor confidence in the sector. As an example, the Association for Decentralised Energy (ADE) in the UK welcomed the Bill, saying: “The Heat Networks (Scotland) Bill sets an ambitious precedent for the rest of the UK, and for the future of low carbon heat. While delivering clean energy to thousands of homes across the country, this legislation will also increase decentralized energy systems’ confidence, creating jobs and economic growth..
“1 million homes and 50,000 non-domestic buildings to using zero or low emission heating systems by 2030”
The regulatory framework introduced by the Bill includes:
- a Licensing system to ensure that those developing and operating the infrastructure are suitable to do so – as well as new rights and powers that alleviate challenges for the license holders
- a Consent system to ensure that local factors and assets are considered before approving new developments
- a nation-wide identification of suitable Heat Network Zones requiring close coordination between national and local authorities. Government is furthermore obliged to guide and find sufficient funding for local authorities
- enabling the award of long-term but time-limited Heat Network Zone Permits – an exclusive right given to a single organisation to operate a heat network within a the given Heat Network Zone
- introducing Transfer Schemes to provide a ‘Supplier of Last Resort’ and a means to fairly re-tender Heat Network Zone Permits
- a Heat Networks Delivery Plan and Heat Network Supply Targets that on a continuous basis tasks the Government with monitoring and reacting to the Bill and subsequent policies’ ability to meet set targets
Danish inspiration and support emphasised during parliamentary debates
Danish experiences and support played a significant role in the policy process surrounding the Heat Networks (Scotland) Bill. The results achieved by the Danish approach to planning and regulating for district heating were often quoted as an inspiration for the Bill and various amendments discussed during debates. Before the final vote, The Minister for Energy, Connectivity and the Islands, Paul Wheelhouse, also thanked the Danish Government for its support in giving the Scottish Government the benefit of its experience.
The Danish role in supporting Scottish ambitions within district heating dates back to 2014. In 2017, this cooperation was formalized as government-to-government cooperation on energy policy established at the Danish Embassy in London and the Danish Energy Agency. The Energy Governance Partnership (EGP), as this program is formally called, engages with other ambitious governments around the world on key climate policy areas. In this case, EGP ensures that lessons learned around regulation and development of district heating are made readily available for national and local policymakers.
In the case of supporting the Scottish Bill process, the EGP provided inspiration and evidence from the Danish case through study tours, workshops, participation in working groups, written evidence, and a long-standing close dialogue with the Scottish team behind the Bill. COVID-19, unfortunately, meant that the Scottish parliamentary committee had to cancel a planned study to Denmark to give inspiration on Danish district heating systems. Instead, the committee was provided with written evidence, for which many of the committee members expressed their appreciation.
The cooperation is run from the Danish Embassy in London in close cooperation between the Danish Energy Agency (Ministry of Climate, Energy & Utilities) and the Ministry of Foreign Affairs. Drawing on a team of policy experts at the Embassy and the Energy Agency, the program delivers inspiration and advice on a range of technical and legislative topics within district heating and energy efficiency in buildings.
For further information, please contact: Jacob Byskov Spangsberg, Energy Counsellor, Embassy of Denmark in London, jackri@um.dk
Jacob Byskov Spangsberg
Mathias Grydehøj Mikkelsen
Rune Nielsen
“Ambitious first legislation on district heating” was published in Hot Cool, edition no. 1/2021. You can download the article here:
