Heat Networks Regulations Advisory Group minutes: January 2024

Attendees and apologies

• Lynne Hunter, Chair, Scottish Government
• Callum Aird, Scottish Government
• Kenneth Broom, Scottish Government 
• Malcolm Rose, Scottish Government   
• Mattew West, Scottish Government  
• Paul Moseley, Scottish Futures Trust  
• Ken Brady, Energy Saving Trust 
• Antony Akilade, Zero Waste Scotland  
• Jan Reid, Scottish Enterprise  
• Stephen Knight, Heat Trust  

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 the meetings to be published on Scottish Government (SG) website and made publicly available, following attendee approval.

Action 1

Lynne Hunter/Callum Aird (LH/CA) 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 provide 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 authorisations

The chair presented a high-level overview of the current proposals for GB Authorisations which has been detailed in the Office of Gas and Electricity Markets (OFGEM) and the Department of Energy Security and Net Zero (DESNZ) consultation. The consultation has now closed, and the results are being analysed by OFGEM and DESNZ. Scottish Government currently waits on the results of the consultation analysis.

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.

The group raised a query if OFGEM will have separate operating processes for authorisations in Scotland and England/Wales. OFGEM will be responsible for the authorisations for GB and will also be the Licensing Authority for Scotland. The applications process will be the responsibility of OFGEM, and the group will have an opportunity to review and discuss proposals on the application process in a future meeting.

Requirement for licence and 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 balanced and proportionate requirements between large and small network operators, and the need to understand what conditions may be attached to licenses before exemptions could be considered. A consideration also raised for size of network, as it was felt regardless of size there are customers being provided with a service.

Discussion also covered the consideration of the boundary between consumer protection (which is reserved) and fuel poverty (which is devolved) and how this could be introduced and if conditions could be an option. There is also consideration required for differing UK and SG targets. The group will come back together to review any proposals on licence conditions, which the Act requires consideration for things like; minimising greenhouse gas emissions (within the meaning of the Climate Change (Scotland) Act 2009) from the heat network takes account of the just transition principles (within the meaning of section 35C of that act), contributes to meeting the fuel poverty targets and such other matter as the Scottish Ministers may by regulations specify.

Discussion also around self-serving heat networks and how this could be defined, the group felt this was complex given the differing heat networks and their operating structures.

Issue also raised in relation to different metering arrangements within local authorities and whether this could be considered to help resolve and standardise within licensing.

Close

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