Heat Networks Delivery Plan: review report 2024

2 Ambition & targets

2.1 Providing more detail on our ambition

2.1.1 Our broad ambition is for a heat networks sector that:

• delivers affordable clean heat, supporting delivery of emissions reduction, fuel poverty targets and competitive businesses;
• develops local supply chains and attracts new public and private investment; and
• contributes to the development, and operation, of an integrated and resilient energy system.

2.1.2 The work being carried out by local authorities through their LHEES is starting to provide a clearer picture of where heat networks are likely to develop. In particular, in the long term, we envisage that the heat networks industry will develop energy efficient, zero emissions, large-scale district heat networks across major urban areas. We will use our regulatory powers, policy and funding to support this and encourage private investment. The gas-fuelled communal heating schemes in these areas may connect to these large-scale district heating schemes, and those that do not will find alternative ways of getting to zero emissions.

2.1.3 Large urban district heating schemes can more effectively deliver our ambition. They can be more cost effective^[5] and can utilise low cost recovered heat that would otherwise go to waste. This heat can be delivered to large numbers of consumers, potentially lowering costs to customers. Storage systems can also be used to increase reliability and to reducing the cost of heat to consumers and also of the wider energy transition.

2.1.4 There will also be opportunities for heat networks outside of major urban areas – whether this is in industrial clusters, smaller towns or more remote settings. Some of these opportunities will be for low temperature heat networks such as low temperature communal heating or networked heat pumps with shared ground loops.

2.1.5 We have proposed in the Heat in Buildings Bill that buildings within designated heat network zones may have different regulations applied to them. As such we need to ensure heat network zones are robust and incorporate cost effectiveness. We intend to build on the foundations created by local authorities through their LHEES, which set out which areas are particularly suitable for heat networks, by carrying out further analysis to ensure that heat networks are the most cost effective solution compared to other forms of clean heating, for example, installing individual heat pumps. This will be done in partnership with Local Government to ensure continued alignment with local priorities.

2.2 Targets to 2027, 2030 and 2035

2.2.1 The 2021 Act sets targets for the amount of heating and cooling to be supplied by heat networks, requiring this reaches 2.6 Terawatt hours (TWh) by 2027 and 6 TWh by 2030. These figures represent 3.6% and 8.4%, respectively, of current non-electrical heat consumption in Scotland^[6].

2.2.2 In addition to the 2027 and 2030 targets, the 2021 Act requires Scottish Ministers to set a target for 2035. We undertook a public consultation until March 2023, which considered three evidenced based options^[7] for the target in 2035. These options were informed by the First National Assessment of Potential Heat Network Zones, and considered wider advice such as from the Climate Change Committee.

2.2.3 The Heat Networks (Supply Targets) (Scotland) Regulations 2023 came into force on 24 November 2023. This means the combined supply of thermal energy (heating and cooling) supplied by heat networks in Scotland must reach at least 7 TWh by 2035 (7 TWh is equivalent to just under 10% of Scotland’s current non-electrical heat consumption^[8]).

2.2.4 Taking into account some of the responses^[9] received and given the limited data available to us when setting the 2035 target, we set out in our government response to our Heat networks target 2035 consultation that we will review the 2035 and, if appropriate, other heat network targets once more evidence – such as LHEES and what heat network zones are designated by local authorities – is available. The 2021 Act allows Ministers to modify these targets, if appropriate.

2.2.5 To give an approximation of the emissions reduction from achieving the 2035 7 TWh target, we have made some broad assumptions about the rate of deployment of heat networks and the adoption of clean heating technologies providing the heat for them. If 5.7 TWh of the heat supplied was from clean heating technologies and it replaced gas heating technologies, this would equate to greenhouse gas emissions savings of 1.14 MtC02e per year by 2035.

2.2.6 The following chapters set out progress on a number of the actions set out in the 2022 HNDP to meet these targets.