Heat Network Zone (HNZ) guidance

2 Part A

The Part A section within the proforma mirrors an Excel summary table provided within the LHEES methodology documentation, with extension to enable completion for the specific tasks covered by Part A. Completion of this section is not contingent on following the LHEES detailed practitioner approach, however, following the overarching requirements of LHEES will create outputs that will enable completion of Part A. This includes documentation of information under the following subsections of the section:

• Zone Information & Opportunity Summary
• Matter 48(1a) - Renewable and Waste Heat Opportunities
• Matter 48(1b,e,f) - Consistent & Considerable Thermal Loads, Supply Targets and Building Assessment Reports
• Matter 48(1c) - Existing Infrastructure
• Matter 48(1d) - Fuel Poverty
• Matter 48(1g) - Other Matters
• Local Development Plan (LDP) Sites
• Constraints
• Is the area considered particularly suitable?
• Part A – Area Map(s)

The subsections are designed to provide summary detail on an area, covering aspects outlined in section 48(1) of the Act alongside aspects considered important to heat network opportunities from an LHEES perspective. Matters 48(1e) and 48(1f) are integrated with 48(1b) to avoid repetition.

The majority of Part A can be directly pasted in from the outputs of the LHEES detailed practitioner approach^[7] or completed using equivalent strategic analysis or feasibility work. If the officer responsible for LHEES is not completing the Heat Network Zoning proforma it is suggested that they are engaged at this stage, to avoid duplication of work. Decisions may have been taken during LHEES development activity, or may be taken at this stage, to alter the boundaries identified as part of the review activity, potentially reducing the scale of an identified area, or combining several identified areas. It is important any further assessment of areas carried out within LHEES (beyond the Stage 4 identification) is factored into consideration here, and also that due consideration is given to the appropriateness of previously identified areas for the purposes of zone designation.

The main addition of Part A, beyond the LHEES approach outputs, is that below each of the subsections listed above there is an "Implications for suitability – notes" box to fill in. This is to summarise how the insights captured from the LHEES (or equivalent) analysis help inform whether an area is particularly suitable. Overviews of the types of factors that could be considered to inform completion, and examples of the kind of notes a local authority may wish to capture, are provided in Section 2.1 to below.

Part A also includes a final section that is not part of the LHEES summary outputs. This summarises the review to consider whether an area is likely to be particularly suitable for construction and operation of a heat network (section 47(1) of the Act). The section also captures (and supports justification of) the associated decision relating to the decision of whether to progress to consider the area for designation and whether the local authority will carry out this process or whether to request for Scottish Ministers to consider designation. Guidance on how to complete this final section of Part A is provided in section 2.9.

To complete Part A, a map of the area should also be provided, this process is detailed in section 2.10.

Once Part A is complete a statement should be published, details are provided in section 2.11.

2.1 Zone Information & Opportunity Summary

Factors that could be considered include:

• High level reference to the location of the area in the local authority.
• The linear heat density in the identified area. The linear heat density (LHD) which is most suitable to consider will vary from area to area. In the LHEES detailed practitioner approach and the First National Assessment of Potential Heat Network Zones^[8] different settings were used.
• A high number of anchor loads, particularly if many of these are identified as public buildings in review. To assist with this the proforma includes quantification of priority anchor loads – these can be demands that would be key to the heat network (for example they are strategically located) or more likely to connect (for example a public sector building).
• The ownership and tenure of key potential connections – these are important factors to the actionability of the opportunity, as control over connection decisions rests with the local authority for their own estate.
• Consideration of the location, for example, in a more rural location an area with lower heat density and fewer anchor loads may be more suitable for heat network development than an equivalent urban opportunity – particularly if local insight indicates the properties in question are off the gas grid (this would depend on the choice of counterfactual option to a heat network when carrying out an economic assessment).
• Rural communities: You may wish to have regard to the following points where a proposed zone includes an area considered to be rural:
  • The trend will be towards smaller buildings with lower heat demand, thus a lower threshold for anchor loads and linear heat density may be more appropriate.
  • There will be greater potential for a heat networks to traverse a nature conservation area (e.g. peat lands) or sites of special scientific interest. Therefore, Nature Scotland should be engaged at an earlier stage.
  • Community groups may need more engagement in order to ensure their buy-in to connection to a heat network.
  • Heat networks may be more expensive to develop in rural areas, thus special consideration should be given to the potential impact on fuel poverty.

Note also the inclusion of a "Buffer radius cap (m)" within the summary table as a screening parameter. This parameter is considered within the LHEES approach, with a default value of 250m, but is not recorded within the LHEES output Summary Table. The buffer radius cap is a useful parameter to note within map representations, as the cap alters the scale of buffering applied to larger demands and therefore is likely to influence the extent of identified areas.

Example text entry:

1. High level of suitability due to a cluster of public sector anchor loads forming the basis of the area, the majority being local authority owned properties.

2. Moderate level of suitability due to relatively low heat density and only two anchor loads. Both anchor loads being public sector and a rural off gas grid location are positive aspects in terms of suitability. This being merely an example, please note that circumstances may change due to market price fluctuations in relative cost of fuels.

3. Low level of suitability despite a high heat density and six anchor loads. Stakeholder engagement carried out in LHEES has highlighted that two of the prospective anchor loads identified do not in reality have a heat demand associated with them and three of the remaining anchor loads would be challenging to connect to a heat network due to current heating systems.

2.2 Matter 48(1a) – Renewable and Waste Heat Opportunities

Factors that could be considered include:

• The scale of heat resource, for example, one of the SEPA Waste Heat Sites is a large energy from waste (EfW) facility with a high waste heat potential. The potential for relatively cheap heat from an EfW, which would otherwise be wasted, could be a strong driver for heat network development in the area.
• Location of the heat resources, for example, there is a waste water treatment works near the area, but it is located far away from the key anchor loads. Greenspace falls next to the main heat demand (which is a public building) making it a good location for an energy centre using a ground source heat pump.
• Understanding resource availability, for example, there is a large factory with a high process heat load, this has been examined before and the company were not able to offer heat to a network.
• Outputs from the Park Power project^[9] in relation to heat network analysis.
• Heat sources that have been identified but are not captured specifically can also be noted, this could include waste heat from mains sewers.
• Waste heat sources close to but outside the area identified. Some heat sources, such as large energy from waste sites, can supply heat in large volumes and at low costs which mean they can be outside the boundary of a review area.
• Existing heat networks in the area – there may be potential for expansion or extension using the same heat source.

Note that the review of potential heat resources is not comprehensive and there may be opportunities that have not been identified within the summary tables. As such, a lack of identified low carbon supply opportunities is unlikely to justify discounting an area.

Example text entry:

1. Although there are a few potential heat sources identified in review, none of these seem likely to be suitable to contribute to a heat network. The SEPA waste site is a recycling plant which is unlikely to have waste heat and the primary substation identified is very small and thus unlikely to be a viable source of waste heat.

2. There is a large substation and waste water treatment works in the western portion of the area. Given the location of key demands also in this area, these could provide a useful source of heat to a potential network. Scottish Water Horizons have already been engaged in LHEES and indicate that there could be potential for heat abstraction. The Distribution Network Operator would need to be engaged to assess viability of the substation as a heat source.

3. There is an energy from waste facility within a kilometre of the area. Heat network development activity using surplus heat from this facility is underway. With significant heat demand on a connecting route, this presents a potential opportunity for interconnection with the heat source in future.

2.3 Matters 48(1b,e,f) – Consistent & Considerable Thermal Loads, Supply Targets and Building Assessment Reports

This considers accurate quantification of demands including those smaller than anchor loads. It also includes a summary of any key insights from building assessment reports (BARs).

Factors that could be considered include:

• Accuracy of demands – are any demands duplicated?, do they seem too low or too high? There is likely to be varied confidence in the demand data used to identify areas.
• The scale of demands – for example, there are a high number of demands between 73 and 250 MWh/yr. A network opportunity with a large number of medium-scale demands rather than a small number of large-scale demands is likely to have greater stakeholder complexity.
• Longevity of demands –for example, one of the key anchor loads is a secondary school which is going to be demolished and relocated away from the area.
• Type of heating system – for example, there are several buildings using LNG as heating fuel rather than natural gas, which may improve the financial viability of a heat network (this would depend on the choice of counterfactual option to a heat network when carrying out an economic assessment). Other considerations of heating system type could include if heating systems are known to be wet^[10], as wet systems are generally easier to connect to a heat network. In relation to heating system type it is suggested to focus on properties/buildings with larger heat demands.
• Changes in heat demand – for example, one of the primary schools in the area is going to have a large extension which will increase the heat demand. As with the heating system type this should focus on properties/buildings with larger heat demands.
• Change in heating system – for example, the boilers in the council HQ are due to be replaced in 2 years. The change could be a trigger point for the heat network and the plant room could potentially be used to host the network energy centre.

Example text entry:

1. The demands of the university campus do not seem to be fully captured; this should be investigated as it may improve the viability of the heat network. The leisure centre close to the NHS site is undergoing scoping for a new heating system. If acted on quickly this could be a key opportunity to act as the initial core of a heat network in the area. BARs have confirmed the demand of two schools also located in close proximity and that their heating systems are suitable for connection to a heat network, increasing overall confidence in the viability of the area for a heat network.

2.4 Matter 48(1c) – Existing Infrastructure

This section considers existing infrastructure in the area that could assist in the development of a heat network in the area, and this consideration could highlight both opportunities and constraints. Key considerations will include:

• Headroom of substations^[11] – for example, there are two substations in the area both of which have a red rating for headroom – which means there is likely to be limited capacity for heat pumps.
• Existing heat networks – for example, there are already two communal systems and one larger heat network in the area.

Example text entry:

1. There is a large privately run heat network currently in the area. Engagement with the operator is required to establish the detail and extent of the network, and also if they are able to integrate into a wider network or expand the current network.

2. There are three communal heat networks operated in flats in the south of the area, which increases the viability of connection of these buildings to a wider network. The flats are predominantly social housing and the system operators have shown interest in connection to a wider heat network that could offer lower carbon heat than the existing gas-fired systems. Substation information indicates that there is headroom available for electrified low carbon solutions.

2.5 Matter 48(1d) – Fuel Poverty

This section is to note the prevalence of fuel poverty rather than assessing if a heat network could act to reduce its prevalence. A method is provided in the LHEES detailed practitioner approach, using Energy Savings Trust's Home Analytics data. Items which could be considered include:

• The number of households, i.e., low to high based on estimated property count (from Home Analytics data).
• How the estimates on fuel poverty reported compare to local insights, and both local authority and national averages. Local insights into fuel poverty are likely to be better than Home Analytics at a zone level.
• Information could also be captured on the level of social housing in the area, lower incomes in these areas are likely to result in a higher risk of fuel poverty. These social housing areas can also be slightly easier to connect on scale to a heat network due the central housing provider (making it a less complex model than involving private owners). Guidance on how to gather tenure information is given in LHEES^[12]

Example text entry:

1. There is a high level of fuel poverty in the zone according to Home Analytics, however, local insights indicate that this is likely to be an overestimation. Local knowledge also indicates that significant fabric improvement works have taken place in the area in recent times, and that most properties have modern, efficient, gas-fired heating systems. Given these factors and the low heat demand density of housing, there may be limited opportunity for a heat network to have a positive impact on fuel poverty in the area.

2. There is a high level of fuel poverty in the area, combined with a high proportion of social housing. This opportunity to connect a higher density of properties is like to improve the economic viability of the heat network and also have the potential to help alleviate fuel poverty in the area.

2.6 Matter 48(1g) – Other Matters

This is a placeholder for any other matters which are included by Scottish Ministers. No other matters have been added to date.

2.7 Local Development Plan (LDP) Sites

LDP sites are key for identifying future demands. Information to consider for inclusion could be:

• The number of LDP sites.
• Site location within or near to the wider potential heat network area.
• The type of development considered for the LDP site^[13] (for example the number of housing units or area for commercial or leisure use or for residential institutions), and implications for demand.
• Development status and upcoming development milestones that could have implications for decisions on heating systems for the sites of interest.
• Whilst this section is labelled for local development plans it can be also be used to capture other key developments, for example Windfall Sites.

Example text entry:

1. There are a high number of LDP sites within or in close proximity of the area. Two key LDP sites are the 1000 residential unit development near the existing leisure centre and the 5000 m² commercial development alongside two blocks of flats with communal heat networks in place. These LDP sites could thus be key to linking the spatially separated demands in the potential heat network area, improving heat network viability.

2.8 Constraints

Key to the constraints section is consideration of these in the context of other elements of the analysis, for example, demands and heat sources. It might be that a constraint presents a significant physical barrier within an area that could justify splitting an area for zoning purposes. These physical barriers could be major transport links like railways, or environmental /ecological constraints such as Sites of Special Scientific Interest (SSSI). Another environmental constraint which could be significant in some areas is the presence of peat, which is likely to cause an increase in costs due to the protection it carries. Various environmental / ecological and historic factors (e.g. archaeological sites and conservation areas) could have a similar impact. Not acting as a hard constraint to preclude development but requiring additional consideration and management to progress.

Guidance is provided in Table 1 regarding which internal stakeholders to engage within the local authority area to inform these constraint considerations.

Example text entry:

1. The waste water treatment works could be challenging and expensive to connect due to being separated from the majority of heat demands by a major railway.

2. The majority of demands are not impacted by constraints. However, a minor river does separate a supermarket and LDP site from the rest of the area. A small footbridge does cross this, which may be suitable to support a heat network pipe.

2.9 Is the Area Particularly Suitable?

Section 47(1) of the Act requires consideration of whether an area is likely to be particularly suitable for the construction and operation of a heat network. Section 47(4) then also requires that, for those areas considered as likely to be particularly suitable, the local authority should proceed to consider (or ask Scottish Ministers to proceed to consider) whether or not the areas should be designated.

A conclusion in relation to section 47(1) should be informed by the other subsections of this guidance (i.e., having regard to the matters mentioned in section 48(1)). Drawing together these elements should give direction, making the decision evidence-based and the process replicable. The outcomes of these decisions then need to be published in accordance with section 47(6).

Some local authorities may be better equipped than others to make a judgement on the suitability of an area for heat networks, depending on the experience of staff. There may be specific circumstances where local authorities feel it is most appropriate to request that Scottish Ministers consider whether to designate. Currently, this route is considered to be the exception rather than the rule.

To finalise Part A of the proforma, the subsection of the proforma entitled "Is the area considered particularly suitable?" should be completed. The "Decision and justification" text box should be completed to provide an overall summary and decision on the area in terms of its particular suitability for the construction and operation of a heat network. Under "Designation pathway", one of three options needs to be selected from a drop-down list:

• Proceed to consider whether to designate the area as a Heat Network Zone in accordance with section 48 of the Act.
• Request that the Scottish Ministers consider whether to designate the area as a Heat Network Zone in accordance with section 49.
• Do not consider for designation.

It is important to use the "Decision and justification" descriptive text box prior to this drop down to justify the option selected.

Example text entry:

• 1. There is a high level of uncertainty over demands in the area and two major public sector buildings are being demolished, so will not function as anchor loads. Another key anchor load operator has completed a BAR and this indicates the building would not be suitable to be served by a heat network, further reducing the number of anchor loads. A potential waste heat source has been identified in the wider area, however, this is separated from the heat demands by a major railway by some distance with no significant demands on the connecting route, limiting its viability for connection. Due to ongoing demolition and lack of connection suitability of key demands, this area is not considered likely to be particularly suitable for the construction and operation of a heat network.
• 2. Although the area is small there are two public sector anchor
  loads and a large residential LDP site which could form the initial core of a heat network. There is also a river nearby and substantial greenspace, creating opportunities for water source and ground source heat pumps. Also, there are no obvious constraints and there are potential private sector connections that would allow for expansion from an initial development phase focused on public anchor loads and new development. Therefore, the area is considered likely to be particularly suitable for the construction and operation of a heat network. Given the key demands in the area are local authority owned, the decision is for the local authority to proceed to consider whether to designate, in accordance with section 48 of the Act.
• 3. The area is very large with over 50 anchor loads identified, many of which are private sector so will be more challenging to engage. The area does have a high heat density but being located in the city centre there are a large number of constraints across the area and much of it is a conservation area. Additionally, there are a number of existing heat networks within the area, as well as several significant development sites. There are no large-scale waste heat sources in the area but there is a river which could provide low carbon heat. Due to the large scale of heat demand, the area is considered likely to be particularly suitable for the construction and operation of a heat network, however, with the high level of complexity, it was decided that further, more detailed assessment work is required in the area to determine an appropriate boundary (or boundaries).

2.10 Part A – Area Map(s)

Alongside Part A, a map of the area considered should be provided if the area is considered likely to be particularly suitable. A tab 'Proforma Area Map(s)' is provided in the Excel HNZ proforma to include a map. If it is considered more suitable, a PDF or alternative format can also be appended. Additionally, a GIS file of the zone boundary should also be provided. For compatibility this should ideally be in ESRI Shapefile^[14] format in a British National Grid^[15] projection.

As a minimum this map should be a redline boundary for the area, with a suitable background map. Additional information could be marked. If the user considers it useful supplementary maps can be included, such as one highlighting waste and renewable heat sources. The LHEES methodology documentation provides detail on how such maps can be produced. Part A is not prescriptive for these additional elements, the key element is clear documentation of the area considered.

When preparing a map or maps, it is important to consider that this will be published as a public facing document, thus attention should be given to ensuring that no information is published that infringe GDPR or is commercially sensitive.

2.11 Part A – Publication of a Statement

Section 47(6) of the Act requires that after each review, the local authority must publish a statement in relation to each area considered as part of the review. The detail to be included in these statements and any requirements around their publication is specified in the Heat Networks (Heat Network Zones and Building Assessment Reports) (Scotland) Regulations 2023.

From the Act, for each area considered as part of the review, the statement will include detail on:

• Whether the local authority considers that the area is likely to particularly suitable for the construction and operation of a heat network, and;
• The reasons for that view.

Additionally, for those areas considered likely to be particularly suitable, the statement will:

• Identify the area by reference to a map, and;
• Give reasons for the decision to proceed in accordance with section 48 or section 49.

The information captured within the proforma is intended to support this activity.