Heat Networks (Scotland) Bill: evidence assessment

3 Approach

3.1 Overarching approach

This section outlines the approach used to construct the underlying evidence base. This includes an overview of the key routes used to gather information, including an overview of the stakeholder engagement activities undertaken.

This report summarises the set of potential evidence sources which can be used to quantify and assess the potential impacts of these policies. These have been gathered through a wide range of activities conducted with relevant stakeholders, including workshops, interviews and evidence gathering requests, as well as additional supplementary desktop based research.

This report does not constitute a full impact assessment. However the approach to this report where appropriate has been conducted in accordance with assessment principles of the HM Treasury Green Book^[4] and Scottish Government impact assessment guidance.^[5]

When looking to construct the underlying evidence base, we have followed the regulatory principles of proportionality. We have looked to gather the appropriate evidence to reflect the scale and materiality of the impacts.

As appropriate and where sufficient data allows, we have also primarily looked to gather quantifiable evidence to allow a future assessment of these impacts, and where possible provide this evidence on a monetised basis.

As per HM Treasury Green Book guidance, this monetised evidence is based on real terms 2019 prices in GBP. As our analysis of impacts will be based on data in current market prices, we will not need to make any specific adjustment for inflation in our analysis.

Where we have not been able to provide quantifiable or monetised evidence, we have looked to provided qualitative evidence gathered throughout the process to consider the direction, likelihood and scale of any potential impacts. This evidence has been gathered from a range of technical and specialist stakeholders who are likely to be those facing the impacts of any final policy decisions.

In summary this report looks to, in a proportionate, consistent and transparent manner, conduct the preliminary analysis and evidence gathering to inform the construction of any Financial Memorandum and BRIA.

3.2 Sources of evidence

The evidence gathered of the potential impacts of the proposals has been based on primary and secondary research, with the data and information gathered from a number of varied routes and sources, including:

• Data collected from relevant stakeholders through information requests;
• Evidence gathered through a series of meetings and workshops held as part of this evidence gathering project;
• Existing market data held by BEIS and CMA;
• Information collected through the two previous stakeholder consultations as part of LHEES and heat networks regulation;
• Academic literature and international evidence; and
• Other publicly available information.

As outlined above, specifically as part of this evidence gathering process we have conducted a number of primary evidence gathering activities, including workshops and interviews with different key stakeholder groups.

Within our direct engagement with stakeholders, we have sought to keep an open discussion to gather their views on the potential impacts. These engagements looked to:

1) Illustrate how the upcoming impact assessment / policy analysis being planned would be used to assess the potential impacts of the different policy proposals around heat networks regulations.

2) Provide a brief overview of the key areas of regulation of the policy areas considered.

3) Seek open views and discussion on the potential impacts of these policies as they currently stand, from the specialists in attendance.

We note that all views and information gathered as part of this process have been formed based on the current best known view on the format, scope and design of the incoming regulations.

We note that the potential policy proposals as outlined within this document are not finalised and could change, with a consequential impact on the assessment of the costs and benefits of the policy. Our evidence gathering has been conducted between June and October 2019.

3.3 Key stakeholder groups

In total as part of this evidence gathering phase, we have directly interacted with over 45 stakeholders from different groups representing key groups who could potentially be impacted by these new policies. These stakeholders are:

• Domestic heat network and low carbon energy developers;
• Trade and industry bodies;
• Wider business and industry;
• Housing associations;
• Consumer advocacy groups and academics; and
• Government, including local authorities and the Scottish Government.

When presenting evidence and views gathered from stakeholders, we have provided full details of the sources of the evidence relied upon where possible, however we did not attribute any specific comments or views to actual organisations. In addition, we have outlined any assumptions and uncertainties on which this evidence is based.