Heat Network Zone (HNZ) guidance

3 Part B

Section 48(1) of the Act requires that a local authority has regard to defined matters in considering whether to designate an area in its area as a Heat Network Zone. If an area has progressed to consideration for designation from the review activity carried out in section 47, regard will have been given to these matters through the review process. In this instance, a review of the information documented is advised with regard to its currency under section 48(1), particularly if there has been a significant time period between review and consideration for designation.

For areas being considered for designation that haven't been identified through the review processes required by section 47, regard must be given to the matters outlined in section 48(1) prior to progressing through the following subsections of section 48. A suggested approach is to complete the Summary Table within Part A of the proforma using information from assessment of the area of interest. The additional analysis outlined in the LHEES approach^[16] could also be used to support completion of this Summary Table.

Part B of the proforma is primarily concerned with section 48(2) of the Act, which states:

"Before deciding whether to designate an area as a heat network zone, a local authority must consult such persons, and in such manner, as the Scottish Ministers may specify by regulations."

Engagement activity is strongly recommended to inform designation decisions and the consultation process. Completion of Part A of the proforma will, alongside other guidance contained in this section, help to inform the identification of persons to engage in Part B. Engagement and consultation will help gain insights into the suitability of the area for designation. A summary of the key suggested steps is provided in Figure 2.

If multiple areas are under consideration for designation, it is suggested engagement could be carried out collectively for these, so a single engagement is carried out where there is potential interest in multiple areas.

Section 3.1 supports identification of area-specific statutory consultees. Section 3.2 provides guidance to support engagement activity and documentation of insights from this process. Section Error! Reference source not found. provides a note on consultation, and guidance to support documentation of key findings from the consultation process.

3.1 Consider area-specific statutory consultees

Table 2 provides details of area-specific statutory consultees, who must be consulted where relevant interests have been identified in an area. Detail is provided within this table across three key elements as set out below.

1. Consultee – the persons (organisations) who should be consulted in specific circumstances.

2. Circumstances for consultation – details of the circumstances for statutory consultation.

3. Suggested prior engagement points – the type of information the consultee could be engaged regarding, ahead of a formal consultation process.

Table 2 Area-specific statutory consultees, including circumstances for consultation and suggested prior engagement points.

Consultee: National Park Authority^[17]

Circumstances for consultation: Only when an area falls within or partially within a National Park boundary.

Suggested prior engagement points: Capture of any key natural/environmental impacts as well as wider strategy in the National Park if applicable.

Consultee: Neighbouring local authority(ies).

Circumstances for consultation: Where there is potential for an area under consideration for designation to extend across a local authority boundary (i.e. where there is collective heat network development potential that extends across local authority boundaries)^[18].

Suggested prior engagement points: There may be various circumstances that could result in potential for an area under consideration for designation to extend across a local authority boundary, and importantly, there may be advantages in consideration of cross-boundary opportunities collectively in terms of designation decisions. Up-front engagement (prior to consultation) regarding cross-boundary opportunities is highly recommended as it could result in changes to proposed boundaries for designation purposes, prior to formal consultation. Engagement is recommended with neighbouring local authorities regarding cross-boundary heat network opportunities in relation to all areas being considered for designation that are close to another local authority boundary. Specific triggers for engagement could include nearby demands and opportunities across the boundary such as: significant anchor loads, existing demand concentrations or potential zones, new development sites, existing heat networks, cross-boundary zones identified in the First National Assessment (FNA)⁸ of Potential Heat Network Zones, a significant low carbon heat source near a boundary e.g. an Energy from Waste site).

3.2 Engagement Process

Alongside the identified statutory consultees for an area, there are other stakeholders who could be considered important to engage with regarding designation proposals. Some key stakeholders (or categories of stakeholders) who could be considered for engagement include:

• Key anchor loads – before engaging with key anchor loads in an area of interest, consideration should be given to the need for additional information (if a recent BAR has been completed already, this may contain sufficient context to understand the potential for connection). It is also important to consider the scale of an area. For large areas there is likely to be too high a number of anchor loads to feasibly engage. A view should be taken as to which stakeholders are most important to engage. This could be based on scale of heat demand or location as well as more detailed information about the building type – there may also be key stakeholders with interests in several buildings within an area of interest, where engagement would be considered important, for example a university, college and/or NHS campus. The LHEES Stage 4 detailed practitioner guidance relating to non-domestic properties could assist with consideration of property type with regard to connection suitability. It should also be noted that domestic loads (which to be an anchor load would likely be a block of flats) should not be precluded from engagement.
• Sources of renewable or waste (or recoverable) heat – relevant stakeholders could include, for example, data centre operators, industrial sites, the British Geological Surveys (who hold information regarding the suitability of mine workings for heat pumps) or Scottish Canals.
• Social housing providers – if there is significant social housing which could be connected to a network, engaging the social housing provider(s) will give useful insight to their suitability for consideration, as well as potentially providing insights into issues such as fuel poverty prevalence.
• Operators of existing heat networks in the area (including communal heat networks and shared ground loop arrays) – understanding of the suitability and willingness to connect to a wider heat network. Information as to the scale of the heat network and existing infrastructure is also useful information to gather.
• Community groups – where relevant groups are already in place they can help with public outreach. Also, if an area is to be designated, early community involvement and buy-in is likely to be key to how it is received and how it progresses. Focused engagement of community groups would help streamline this process.
• Electricity Grid DNO: Primarily consideration of the ability to electrify heat without incurring large infrastructure upgrades. Indication of any waste heat from substations for use in a network or major pipe routing constraints could also be considered.Also, any constrained windfarms in the area which might provide a source of green and more affordable electricity.
• Gas DNO: Consideration of any unused gas infrastructure that could be utilised for thermal storage or the future supply of hydrogen. Also, any possible constraints on installation of heat network infrastructure.
• Scottish Environment Protection Agency: advice onenvironmental constraints in the area, ability of water sources or waste sites or other sites regulated under the Pollution Prevention and Control (Scotland) Regulations 2012 to provide heat.
• Historic Environment Scotland: Highlight any constraints or risks to be aware of in the area, e.g., historic sites that could be a constraint for heat network routing or other infrastructure development.
• Scottish Water Horizons: Indication of scale of waste heat available from assets, ability to site suitable infrastructure to extract heat.
• Nature Scotland: Capture of any key natural/environmental impacts.
• Industry bodies: Groups such as the ADE could be useful to provide advice as to an area's suitability for a heat network.
• Crown Estate Scotland: As well as being large landowners, in some areas, for example, if a marine source heat pump is being explored as a source of low carbon heat, they are a key stakeholder to engage regarding abstraction.
• Organisations that have completed a BAR within the area: It is suggested that those organisations that have completed a BAR with the area under consideration are engaged regarding zone designation considerations, both as a curtesy to those that have taken the time to complete a BAR submission and to keep these stakeholders informed regarding designation considerations.
• Organisations that have produced an Energy Action Plan: Since 2016 regulations have required non-domestic buildings over 1000 square metres to produce an Energy Action Plan at the point of sale or rental.
• Local Enterprise Agency: Insights into wider activity in the area.
• Botanic Gardens: (only when such sites fall in or near an area considered for designation): Consideration of routing and integration/use of existing technology or plant room.
• Local Roads Authority: road network technical considerations, such as ground or traffic conditions, and/or information regarding any forthcoming roadworks within vicinity of the area.

Stakeholders will vary from one area to another and it is advised that an area-specific list of stakeholders to engage is developed. This list could be informed by any area-specific statutory consultees from 3.1, and also by the information compiled in Part A. Within Part B of the accompanying proforma, there is space to document "Key stakeholders to engage" under each of the subsections of the Summary Table. It is suggested these fields are populated to record details of key stakeholder relevant to the area of interest, with this list considered alongside statutory consultees and other identified stakeholders for the engagement process. Contact details may be available from LHEES contact/stakeholder lists, alongside details regarding previous engagement activity carried out as part of LHEES.

The engagement process could have several stages. Initially, it is important to consider how key stakeholders could be engaged. A key basis for engagement will be a clear explanation of the intention behind and implications of zone designation; this should be set out in initial communication and included as a point for stakeholders to respond to or discuss further if unclear. There are three general levels of engagement suggested:

1. Call – this could be the initial form of engagement or as a follow up to an email if a key stakeholder has not responded. This could also be relevant if the consultee has a large quantity of detailed or complex information which is best discussed in a call rather than email.

2. Email – this could be the initial form of engagement, or an option if an attempt to call has been unsuccessful. An email could include a map of the area (which should be produced to complete part A), a short description of the area, and an outline of the information/insights where feedback from the stakeholder would add value.

3. Meeting/workshop – this can be useful to gain insights beyond a call or if feedback is being sought for a large number of areas from one stakeholder. A key benefit of meetings or workshops is being able to discuss summary information and maps, and to interrogate areas of interest in a live environment. Workshops also provide a way to engage multiple stakeholders at once, which can be beneficial if insights from stakeholders are likely to be interrelated.

A suggested structure for documenting engagement with each of the identified stakeholders is detailed in Table 3.

3.2.1 Level of Engagement

The engagement process is intended to inform zone designation decisions, rather than establish the feasibility of a heat network. Although the two are closely related, it is important to consider the difference the level of detail expected as a minimum when undertaking engagement. Examples of the differences between the levels of detail are provided in Table 4. For designation (required by the Act), key insights which could influence decisions should be gathered.

To shift from designation to a detailed feasibility study, in-depth techno-economic analysis will need to be undertaken, this will include detailed pipe routing as well as in-depth engagement with relevant stakeholders. The Act does not require local authorities to complete this level of analysis and engagement for zone designation purposes.

Table 4 Examples of the difference between insights gained in the Part B engagement and those for detailed feasibility studies.

Consultee: Scottish Water Horizons

Part B insights: The waste water treatment plant is suitable for waste heat extraction and there is room on site for necessary plant to extract the heat.

Feasibility Study insights: The waste water treatment works would allow for a constant extraction of 1.2 MW of heat. There is space for required infrastructure next to the main treatment pond (as presented on the attached schematic).

Consultee: Heat network operator

Part B insights: The operator is willing to consider connection into a wider heat network development and is content for the existing connections on their network to be included within the designated zone. Currently 11 buildings are connected, with an annual demand of 3.2 GWh.

Feasibility Study insights: The existing heat network would be suitable to connect to a wider heat network, with space for additional heating equipment in the main plant room (see attached map). Currently the heat network supplies 3.2 GWh/yr of heat to 11 buildings (see attached map for locations of these buildings). The system has 300 kW (electrical) of installed heat pump capacity with 2 MW of gas boilers for peaking and back up. There is a peak heat demand on the heat network of 1.9 MW and a current flow temperature regime of 70-50.

Consultee: Electricity DNO

Part B insights: Although there is limited headroom currently in the area, the primary substation will soon be upgraded creating additional capacity. The substation is small so unlikely to be suitable for heat recovery.

Feasibility Study insights: There is currently no spare headroom on the substation but planned upgrades in June next year will add an additional 5 MVA of capacity. The transformers (both current and planned additional capacity) are oil cooled and thus likely to be suitable for heat recovery. However, the relatively low rating of the substation (currently 12 MVA being upgraded to 20 MVA) means the volume of heat is relatively low (see attached schematics for detailed information).

If a recent feasibility study or engagement through LHEES has been carried out for the area being considered for designation, the findings from this could feed into zone designation considerations. When drawing on recent feasibility work, it is important to consider how recently the information was gathered and how likely it is to still be relevant. If information is not current, it should not be given weight in the designation process.

3.2.2 Completing stakeholder engagement aspect of Part B

The information captured in the engagement process is likely to be extensive, and not all of significance in terms of its potential impact on a designation decision. It is suggested that only key points from the engagement activity that could have a bearing on a designation decision are captured within Part B of the proforma. There is space provided to document key points under "Insights from stakeholders" for each subsection of the summary table. More general points and an overall summary of the engagement process can be captured under the yellow section entitled "Insights from stakeholder engagement - summary". This summary should include any changes to the area following engagement. If changes are made to the area boundary as a result of engagement, a revised area map should be added to the proforma.

Before entering the key insights from stakeholders into Part B of the proforma, engagement information should be reviewed, summarised and censored. This last part is key, as the summary comments contained within the proforma may form part of a published document. As a minimum, the name and details of the individual engaged should not be documented in the proforma for GDPR reasons.

3.3 Consultation process and documentation

It is suggested that information and insights gained through the engagement activity summarised in 3.2 should inform consultation. The Heat Networks (Heat Network Zones and Building Assessment Reports) (Scotland) Regulations 2023 stipulate specific requirements of the consultation process.

When completing Part B of the proforma, it is suggested that key summary notes relevant to the subsections detailed in sections 2.1 to 2.8 are documented based on consultation feedback. As highlighted in section 3.1, there is space in Part B of the proforma to document statutory consultees for the area under consideration. Where these consultees are noted, reference could also be made as to whether they responded to the consultation process.

When documenting the information gathered from the consultation process there is flexibility. Local authorities may wish to document the feedback in relation to specific consultees or to summarise the information from multiple consultees. What is key is that all pertinent implications for the designation decision are captured.

There is a summary section within Part B of the Proforma (underneath "Is the area considered particularly suitable?" in Part A), where a summary of the insights gained from the consultation process should be provided.