Heat Networks Regulations Advisory Group minutes: December 2023

Attendees and apologies

• Lynne Hunter (Chair) – Scottish Government  
• Callum Aird – Scottish Government  
• Kenneth Broom – Scottish Government  
• Malcolm Rose – Scottish Government    
• Mattew West – Scottish Government  
• Gillian McCallum - Scottish Government
• Graham Wallace – Pinsent Masons  
• Carol Aitken – Vattenfall
• Dominic Hutching – OFGEM
• Shona Fisher – OFGEM
•  John Mitchell – West Dunbartonshire Council
• Frazer Scott – Energy Action Scotland
• Brian Clark – SSE
• Derek Leask – Shetland Heat and Power
• Sarah-Jane McArthur – Brodies
• Charlotte Owen – Hemiko
• Tristan Wolfe – Aberdeen University
• Alistair Hill – Consumer Scotland
•  Jason Halliday – Scottish Government (in place of Kevin Hamilton, Scottish Road Works Commissioner)
•  Ainsleigh Brown – Scottish Government  (in place of Kat Quane, Scottish Government)

Items and actions

The Chair opened the meeting and welcomed all attendees to the first stakeholder meeting to discuss licensing, which is detailed in part 1 of the Heat Networks (Scotland) Act 2021 (HNSA).

All attendees gave a brief introduction of name and organisation. 

An agreement was reached with all attendees for summary of discussions within this meeting, and all subsequent meetings of the group, to be published on Scottish Government (SG) website and made publicly available, following attendee approval. 

Action 1 

Callum Aird(CA)/Lynne Hunter(LH) to issue meeting summary to all attendees for approval with timelines for any amends and approval. 

Timeline

The Chair presented a provisional timeline of activity of further meetings in January and February with dates and times to be agreed nearer the date.  The timeline also detailed the provisional dates for public consultation in Summer 2024, followed by passing regulations by the end of 2024. 

Heat Network Definition

The Chair provided an overview of the definition of heat networks, such as; communal heating and district heat network.  Great Britain (GB) authorisations provides a further definition of supplier and operator. It was also discussed that the consultation on the heat in buildings bill has now launched, and this includes a question on amending the HNSA if necessary. 

GB Authorisation

Representative from the Office of Gas and Electricity Markets (Ofgem) presented an overview of the current proposals for GB authorisations, which has recently been out for consultation.

The group discussed the interaction between GB authorisations, and the licensing authority in Scotland. In particular there was discussion around why there is a need for them both in Scotland. The chair explained that the powers of the license holder could only be awarded by Scottish Ministers, and also explained that there was divergence in climate change targets between Scotland and the rest of the UK. Additionally the definition of fuel poverty differs between Scotland and the rest of the UK.

The group discussed the potential for conditions to be attached to GB authorisations. Ofgem confirmed they are still consulting on this, however any conditions which apply to devolved areas won’t apply in Scotland.

Introduction to Licensing and Powers of Licence Holders

The chair presented an overview of the intention of the licence holder.  The intention is to ensure that market participants are solvent, competent, fit and proper and provide their essential service in line with conditions set by a Licensing Authority.  OFGEM will be the Licensing Authority in Scotland, with one licence per operator (not per network). Licence holders will be granted several rights and powers such as; compulsory acquisition of land, network wayleave right, requirement to remove, replace or repair apparatus, to carry out survey of land and to carry out road works.

Requirement for Licence & Exemptions: 

The chair welcomed discussion on options for consideration for requirements of a licence.  The attendees discussed various options from everyone requiring a licence, only those who needed the powers of the licence holder or for some being exempt and others not.   

The group discussed the need for whichever route we choose with regards to the requirement for a license, we need to ensure it is proportionate and does not provide an unnecessary barrier to the market.

The group discussed what the purpose of a license is, and what it will now achieve given the introduction of the GB authorisation regime. It was suggested that there may be a benefit to mirroring the GB authorisation scheme, where there is an additional step to grant the equivalent rights and powers. If this was the chosen route, the Scottish licensing regime would essentially be an application for the rights an powers. Alternatively, the Scottish licensing regime could be used to conduct due-diligence on heat network operators at the company level.

The group moved on discuss possible exemptions to the Scottish licensing regime. Here it was highlighted how difficult it can be to word exemptions correctly, and often results in unintended consequences. The lack of current good data on Scottish heat networks was discussed along with the potential for the licensing regime to go some way to capturing this.

Close 

The chair thanked everyone for their participation and confirmed a summary of the discussion would be sent shortly for approval.