Heat in Buildings: progress report 2023

Heat Networks policy and delivery

Heat Networks policy and legislation

Our Heat Networks Delivery Plan, published in March 2022, will be reviewed by March 2024. The plan outlines how the provisions of the Heat Networks (Scotland) Act (the 2021 Act) sets statutory targets for the amount of heat to be supplied by heat networks – 2.6 Terawatt hours (TWh) of output by 2027 and 6 TWh of output by 2030. The 2021 Act requires Scottish Ministers to set a target for 2035; in September we laid a Scottish Statutory Instrument in Parliament to set this target to at least 7 TWh. We will review the 2035 heat network target and, if appropriate, other heat network targets, once more evidence is available, such as Local Heat and Energy Efficiency Strategies and heat network zones designated by local authorities.

As set out in the last annual report, we remain committed to delivering a regulatory regime for heat networks. The first set of regulations were introduced in May 2023, and require people responsible for public buildings to assess their heat demand and ability to connect to heat networks through Building Assessment Reports (BAR). We also introduced a new duty on local authorities with these regulations to take information from BAR and other sources, including LHEES, to identify and designate areas which are particularly suitable for the development of heat networks. Our intention is to complete the required regulations during 2024 with the aim of coordinating the introduction of new regulations with the UK Government’s timeline for introducing UK-wide regulations on heat networks.

Scotland’s Heat Network Fund (SHNF)

To meet our ambitious statutory targets for heat networks, Scotland needs to see a significant acceleration in their deployment. Although it is expected that heat networks will become financially viable without grant support in the long-term, government support is currently required to facilitate rollout.

Scotland’s Heat Network Fund (SHNF) was launched in February 2022 with a commitment to make £300 million available for investment in zero direct emissions heat networks up to March 2026. This created a clear signal for the market, encouraging organisations to begin project development.

The fund offers long-term support to enable the rollout of new zero emission district heat networks and communal heating systems, as well as the expansion and decarbonisation of existing heat networks across Scotland. Projects that receive support must demonstrate that they align with the objectives of SHNF, showing that they will result in a reduction in carbon emissions, support the eradication of fuel poverty and provide opportunities to grow Scottish skills and supply chains.

SHNF is building on the progress made by the Low Carbon Infrastructure Transition Programme which, although now closed, is providing funding to heat networks currently being built. Across both programmes, there are a total of 10 heat networks under construction which will connect to a total of 4,500 homes, with potential for expansion. These projects are receiving a total of £30 million of grant support.

The SHNF has awarded £1.1 million of grants in the past year. With the pipeline of projects currently in development growing due to the activity of the Heat Network Support Unit, it is expected that annual grant awards will increase substantially over the next few years.

Scotland’s Heat Network Fund Case Studies: Aberdeen, Motherwell and Glasgow communal heat networks:

An efficient and cost-effective way to install zero direct emissions heating is through the use of communal heat networks. In 2023, Scotland’s Heat Network Fund (SHNF) has provided support for the installation of ground source heat pumps in homes where the heat collecting pipework in the ground is shared between homes. Although ground source heat pumps have low running costs due to their high efficiency, the installation of ground loops or boreholes can make the upfront cost high. By spreading this cost across multiple homes and with support from SHNF, this enables the installation of highly efficient communal heat networks that align with net zero and deliver savings for residents. 

In the past year, SHNF has provided £1.1 million of grant funding to install this type of heating system across three housing developments in Aberdeen, Motherwell and Glasgow, providing heat to a total of 131 homes.

Heat Network Support Unit

Launched in September 2022, the Heat Network Support Unit (HNSU) supports the growth of heat networks by addressing key challenges in the pre-capital stages of heat network development and building capacity across the public sector to deliver successful projects.

The HNSU is sponsored by the Scottish Government, with Scottish Futures Trust and Zero Waste Scotland as core partners who provide a range of support services via the HNSU.

Working primarily with public sector organisations, the HNSU identifies and supports prospective heat network projects. It offers advice and grant funding for pre-capital stages of works, for example developing feasibility studies and outlining business cases. The HNSU also builds capacity and expertise across the heat network sector by advising on best practice and standardisation on developing and running successful heat network projects in Scotland.

In its first year, the HNSU has supported the development of 21 district heating projects across Scotland, for example in Edinburgh, Glasgow, Dundee, and the Highland and Islands. The HNSU has also provided advice and expertise to at least 30 organisations across the public, private and social housing sectors, including councils, universities, housing associations and private developers.

The full list and detail of projects supported by the SHNF and HNSU can be found in the Scottish Government’s Quarterly Heat Network Project report, which aims to provide a regular snapshot of the Scottish heat network pipeline and the various opportunities for developers, investors and the wider supply chain.