Heat Networks (Scotland) Bill: evidence assessment

5 Identification of potential impacts (heat networks)

5.1 Key points

This section outlines at a summary level, the list of all key impacts we have identified over the engagement process. These impacts have been grouped into those applicable to the key stakeholder groups identified across the course of evidence gathering, as outlined above. The underlying evidence, likelihood, scale and direction and additional key factors of these impacts will be assessed in the next section.

5.2 Consumer Impacts

i. Consumer pricing and bills - The potential for changes in the levels of consumer bills. These impacts could arise from moving on heat networks which are priced at a different level to their counterfactual heating source, or potentially from changes in the costs of delivering networks stemming from the incoming regulations or from changes in market structure.

ii. Consumer disruption from installation - The potential for increased one off disruption for consumers stemming from an increase in the number of heat network developments, and the subsequent impacts these can have on local areas.

iii. Consumer service offering - The potential for changes in the services offered to consumers alongside their underlying heat supply (heat network or counterfactual gas boiler). For instance, changes in the availability of tariff types, services and technologies.

iv. Consumer health and wellbeing - Changes in consumer health and wellbeing. Potential for increases in health and wellbeing from policy targeted at reducing fuel poverty, leading to increase in ability to heat homes and for increases in local level air quality from reductions in air damaging heating routes within local areas.

5.3 Local Authority and Government

i. Development costs of a heat networks regulator - The set up and administrative costs which would be required in order to develop any new heat networks regulator to deliver the new regulatory regime. Including;

1) Development and delivery of any licencing regime - Development of licence conditions, licence requirements and management and administration of all licence related areas (application and assessment, guidance development, list management, licence changes and updating).

2) Development and delivery of a heat network consenting process - The costs arising from the regulator (or potentially local authority) reviewing each heat network application for alignment with local and national policy.

3) Delivery of facilitator role - Costs of technical, legal and contractual specialists to oversee the facilitator role held by the heat networks regulator.

5.4 Business impacts

i. Development and operating costs - Potential for increase in development and operational costs for business stemming from specific technical requirements within the licence.

ii. Socio-economic assessments - Costs of developing and submitting project specific socio-economic assessments alongside the application for consent of any new heat network developments.

iii. Licencing process - Costs of application fees for licence within the new heat network licencing scheme, as well as preparation and submission time.

iv. Unintended licence consequences - Potential consequences stemming from the inclusion of a single licence regime covering design through to operation for multi-site operators. With individual licences delivered at organisation level there could be potential for single problem specific sites to risk licence revocation.

v. Market dynamics - The potential for changes in the number and concentration / market power of participants within the market due to higher barriers to entry.

vi. Deployment - Changes in the deployment and number of heat networks which are installed and operated, due to the overarching support provided to heat networks from the wider regulatory package.

vii. Connections - The potential for the regulation to lead to changes in connections for waste heat providers, due to better facilitation and mediation from local authorities with developers and producers of waste heat.

viii. Essential services companies - Potential impacts on other essential services companies such as retail energy suppliers, including decreases in provision of energy (heat) and subsequent revenues for energy suppliers from an increased deployment of households switching to heat networks.

5.5 Wider

i. Carbon Savings - Reductions in carbon emissions from the incremental increase in deployment of heat networks leading to carbon reductions on counterfactual heat sources.

ii. Wider economic and job impacts - Wider economic impacts from policy stemming from increases in deployment of heat networks and potential impacts on the number of jobs.