Heat networks - thermal energy target 2035: consultation

Options Developed and supporting research

15. Table 1 below provides a sequential context of past, current, and future heat network provision, based on data currently available and targets set, to support consideration of the potential 2035 targets. Additional supporting analysis has been carried out as set out in the table notes.

Table 1 notes

• A Source: 2018 Heat Networks Metering and Billing Regulations (HNMBR) notifications. Data is classified as experimental.
• B Source: 2018 HNMBR notifications and Scottish Government funded schemes. Heat network output has been estimated to be 1.4 TWh/annum (around 1.8% of current non-electrical heat demand), which is a 0.22 TWh/annum uplift from the 2018 figure quoted in the Heat Networks Delivery Plan. The uplift is a broad estimate based on Scottish Government funded heat network projects. This figure may be updated as the latest data from HNMBR notifications is quality assured and analysed.
• C Heat Networks (Scotland) Act 2021.
• D Climate Change Committee (CCC) advice to UK Government: "The Sixth Carbon Budget: The UK's pathway to net zero" Dec 2020^[9]. Detailed research was commissioned by the CCC on heat networks in 2015^[10].
• E Source: Scottish Energy Statistics^[11]

16. In order to assist in setting a proposed target, evidence-based options for a potential 2035 target have been developed.

17. The potential targets have been developed principally using data produced as part of the FNA, published in March 2022.

18. The FNA utilises the heat demands and outputs from the Scotland Heat Map, Home Analytics, and Non-Domestic Analytics. The approach and outputs align with the current methodology for the identification of potential zones for heat networks that forms part of the LHEES (Local Heat and Energy Efficiency Strategies) Methodology. The report includes two main scenarios: a higher estimate of potential (Higher Potential – referred to in the FNA as Baseline Criteria) and a lower estimate of potential (Medium Potential – referred to in the FNA as Stringent Criteria). The former (Higher Potential) sets a lower threshold in terms of heat demand, density and distance, whilst the latter (Medium Potential) sets a higher threshold, resulting in fewer potential areas being identified.

19. Table 2 below sets out a summary of three evidence-based options for a potential 2035 target. The FNA datasets (Higher Potential and Medium Potential) that have been used are shown next to each option. The table provides an indication of how these compare to current non-electrical heat demand.

Table 2 notes

A: BEIS: Sub-national total final energy consumption data

20. To determine these potential 2035 target options, a 50% reduction in the number of domestic and non-domestic connections was applied, as it is unrealistic to expect that all buildings identified within a potential zone will connect to a heat network. In the case of non-domestic buildings, 50% may be near the maximum proportion of heat demand that could be expected to connect due to the high proportion of non-domestic buildings on electric heating systems. Also, the FNA was not able to assess what proportion of the heat demand of buildings in potential heat network zones was already connected to heat networks. Other important limitations of the FNA (set out in the technical annex below) suggest that a conservative approach to the assumed connection rate is appropriate.

21. Figure 1, overleaf, provides a view of Options 1 to 3, alongside the context of existing data, estimates of current supply, existing targets, and advice from the Climate Change Committee (CCC) on future ambition (as set out in Table 1).

Figure 1 Notes

• See Table 1 notes for further details on sources of data.
• Figures up to 2035 provide percentage of current non-electrical heat demand supplied by heat networks.
• 2050 figure is a UK figure based on the percentage of future predicted UK heat consumption supplied by heat networks based on CCC advice.

22. Similar to the Heat Networks Delivery Plan, to demonstrate the number of buildings which may need to connect to heat networks under each of the options, four scenarios for the number of domestic and non-domestic building connections have been developed, based on the outputs of the FNA. Three of the four scenarios (Scenarios A-C) are capable of meeting the options for a potential 2035 target.

23. We have committed to regulating to ensure that all buildings across all tenures achieve a good level of energy efficiency by 2035, as set out in Chapter 8 of the Heat in Buildings Strategy. Our modelling has therefore assumed that energy efficiency improvements made between 2030 and 2035 in properties on heat networks will then reduce the energy demand of those networks and thus we will require an increased number of connections between 2030 and 2035 to maintain an overall 6 TWh output from heat networks, as per Option 1.

24. The scenarios (A: High domestic, B: Limited anchors, C: Low domestic, and D: Extreme domestic) are intended to be illustrative only and are not a statement of ambition. Additionally, due to limitations of the FNA and the Scotland Heat Map, sensitivity testing using alternative data has also been carried out. This indicates that the FNA scenarios may underestimate the number of connections needed to meet targets. Further details on the scenarios and sensitivity testing can be found in the technical annex.