Overview
The aim of the Bill is to encourage greater use of heat networks in Scotland. Heat networks are made up of insulated pipes and heat generation systems which make heat. This can be in the form of hot water or steam. This will help reduce emissions from homes and other buildings.
The Bill puts in place rules and regulations on heat networks, including:
- making applications
- identifying exemptions
- granting licenses
- setting up heat network zones
All public sector building owners will need to assess their buildings to check if they're suitable to connect to a heat network.
You can find out more in the Scottish Government's Explanatory Notes document that explains the Bill.
Why the Bill was created
The heat network sector is currently not regulated. This Bill will set up these license and regulation arrangements. The Climate Change (Emissions Reduction Targets) Act 2019, was passed by the Scottish Parliament. One of the big challenges to meeting the targets will be reducing the emissions caused by heating. Heat networks are often:
You can find out more in the Scottish Government's Policy Memorandum document that explains the Bill.
The Heat Networks (Scotland) Bill is currently at Stage 2
Introduced
The Scottish Government sends the Bill and related documents to the Parliament.
Related information from the Scottish Government on the Bill
Why the Bill is being proposed (Policy Memorandum)
Explanation of the Bill (Explanatory Notes)
How much the Bill is likely to cost (Financial Memorandum)
Opinions on whether the Parliament has the power to make the law (Statements on Legislative Competence)
Information on the powers the Bill gives the Scottish Government and others (Delegated Powers Memorandum)
Financial Resolution
Stage 1 - General principles
Committees examine the Bill. Then MSPs vote on whether it should continue to Stage 2.
Committees involved in this Bill
Who examined the Bill
Each Bill is examined by a 'lead committee'. This is the committee that has the subject of the Bill in its remit.
It looks at everything to do with the Bill.
Other committees may look at certain parts of the Bill if it covers subjects they deal with.
Who spoke to the lead committee about the Bill

First meeting transcript
The Convener
Our main item of business this morning is to take evidence on the Heat Networks (Scotland) Bill. I am pleased to welcome our first panel of witnesses. We have Nicola Mahmood, senior business development manager at ENGIE; Eoghan Maguire, director for Scotland and the north with Vattenfall UK; and Claire Mack, chief executive of Scottish Renewables. Good morning, and thank you for giving your time to us today.
Unless anyone on the panel specifically wants to make opening comments, I will move to questions from members. I remind everybody to keep your questions and answers succinct and to give broadcasting staff a few moments to make sure that your microphone is on before you begin to speak.
Alison Harris (Central Scotland) (Con)
Good morning. What involvement did you have in the development of the bill? Are you content with the consultation process and the development of the bill?
Nicola Mahmood (ENGIE)
I sat on the Scottish Government working group, so we have been heavily involved in the development of the bill and we are delighted to see many of the recommendations and much of the feedback that we gave to Government officials reflected in the bill. We broadly welcome the bill and we think that it is a good step forward in helping to put consumer confidence behind heat networks and to help us with the growth of the market.
Eoghan Maguire (Vattenfall UK)
I echo Nicola Mahmood’s sentiments. We were involved in the run-up to the bill and we are happy to see some of the key recommendations coming through. The bill is long overdue and provides a nice framework to allow for wider investment in heat networks as we move towards the decarbonisation of heat. As I am sure members are well aware, with a lot of the issues, the devil is in the detail, but the direction of travel is broadly very positive.
09:45Claire Mack (Scottish Renewables)
We have similar sentiments. We very much welcome the introduction of the Heat Networks (Scotland) Bill. It is very timely, because we can see its strong capability to help us with the green economic recovery that we have been talking about in Scotland. District heat networks are very much a proven and low-regrets solution. With the right policies, they can help to support decarbonisation as well as economic growth.
Alison Harris
Has anything that was considered in the consultation been omitted from the bill? Should anything else be included in the bill?
Claire Mack
We think that, largely, the bill is an excellent foundation to get the infrastructure in place. However, the technology infrastructure perhaps does not have the same consumer demand as its driver that certain other technological roll-outs that we have seen have had. It is different from broadband or even digital television, for example, and it does not have the same consumer demand running behind it. We need to create that demand to make it viable and ensure that we can gain the wider benefits of the heat network roll-out that we are about to see in Scotland.
A few things can be done to make a robust and proportionate licensing regime, including making regulations on obligations to connect; doing work on permitting with local authorities; and strengthening the network assessment process in order to bring forward specific zones in which we can look to develop heat networks.
Eoghan Maguire
On areas in which we think that levels of focus could be increased, and consumer protection in particular, I understand that there are issues around development and powers that might curtail Scottish ambitions to enforce protection levels for the consumer. This is the first pass, but Claire Mack mentioned the obligations to connect and heat network zones. We can look at how those will be enforced and what obligations there would be on local authorities not just to produce studies. If we look at the developments down south, we can see that the Department for Business, Energy and Industrial Strategy heat network policies have resulted in a lot of studies but little action. There is definitely more of a drive from us to be able to see more material obligations on local authorities to push forward with heat network zones where appropriate and suitable.
Nicola Mahmood
We think that the only thing that could strengthen the bill would be considering the potential of a stronger transition period. With the networks that we already have in Scotland—we are currently developing one in Edinburgh—the investment cases have been made based on the current technologies. Currently, the bill does not give protection in respect of the existing investment cases for those specific networks.
We think that the bill is a very strong start, but we would like to see a better definition around the transition from where we are now to the bill and the obligations that that will bring, if that is possible.
Richard Lyle
Good morning, panel. Can you remind the committee what shared group loops are and how extensively they might be used in low-carbon heat networks?
Eoghan Maguire
That is one of those nice technical questions like, “How long is a piece of string?” I will be succinct. The shared ground loop is ultimately a technology relating to the extraction of low-grade heat from the ground. The shared element is that several different individual heat pumps can be applied to that shared ground loop, which allows for various different nuances of heat transfer to be used. It uses a ground-source heat pump to increase the performance of a heat pump, which reduces the cost of the production of that low-carbon heat. There are two ways in which the shared element can work: a communal source can be shared where there is a ground-source heat pump that provides heat for a large number of individual blocks—that would be classed as a shared loop; or there can be ambient temperature loops in a closed-loop system. For example, one building might require cooling, so heat could be transferred to another building that requires heat. It is a case of balancing demand and supply.
Nicola Mahmood
My colleague has made an excellent summary of the technology.
Claire Mack
I will add a wider point around what Eoghan Maguire said. We need to underpin the technology and drive it in the most effective way possible for Scotland; there are lots of different outcomes that we want from that, not only to reduce carbon emissions but to drive inclusive economic growth and drive down fuel poverty in any way possible. The building assessment tools and the information that we gather as we go along this journey are really important to work out how we can aggregate demand in the way that Eoghan just explained and make sure that we can drive a strong partnership between not only industry in an area but domestic heat demand in an area, and to work out whether there are opportunities to attract heat-intensive industries to an area and how they could serve the domestic market through heat transfer and other options of that nature.
The Convener
That sounds sensible.
Richard Lyle
Does the panel have a view on how the definition in the bill could be future proofed to include emerging technologies—for example, sea-source heat pumps and shared group loops, as have been discussed, and on whether the possibility of amendment by regulation is adequate to ensure the flexibility that we may need over the next few years?
Eoghan Maguire
I will take a step back from the question, which focuses on the technologies, and point to heat networks. I will crudely separate them into two different components: the generation side, which I think Richard Lyle refers to, and the heat networks. Richard Lyle is right that it is key that we ensure that those heat networks are future proofed; creating heat networks to be technology agnostic and considering how we can ensure that they are decarbonised, or enable the easiest form of decarbonisation, are ways to do that. We need to look at outcomes rather than inputs; ensuring that the heat generated is measured by its carbon contribution and carbon reduction is one way to do that.
Secondly, there is a technology aspect to that for heat networks; there is a large push for heat networks to decrease their operational temperatures. For the committee’s benefit, a lot of old heat networks used to be run at very high temperatures, which is a facet of the fact that they were running off old combined heat and power plants that were burning coal or gas, so the temperature is a little bit irrelevant. As we move towards low carbon and the next generation of technologies, we can see that the operational temperatures of those networks need to come down. That answers Richard Lyle’s question about how we future proof. If we can ensure that we have a technology agnostic lower temperature network, we can then look at various degrees of how we get the cheapest form of heat generation to use it—sea or ground loop, or river source.
The key driver in that instance—I touch on what Claire Mack said earlier—is that Scotland is fortunate to be blessed with a huge national resource of, for example, wind. We can use that low-carbon energy—green electricity when the wind blows or when the sun shines—to decarbonise the rest of society through heating and transport.
The heat network itself is rudimentary. My engineers give me a lot of grief when I say that it is just plumbing, but it is a simple concept: when the network can store energy as cheaply as it can through hot water, it acts as a key enabler for the modern energy system.
To come back to Richard Lyle’s question, I am reluctant to take a technology-specific approach, but I try to look at the problem as a whole, which comprises electricity, power, transport and the question of where heat networks can enable the energy transition.
Richard Lyle
I have a quick supplementary. Does the panel believe that energy companies and housing developers work together or separately? We could do a lot to develop heating through connecting up energy companies and housing developers. A quick reply is fine—yes or no?
Eoghan Maguire
Crudely, no—at the moment—but there is room for improvement.
Nicola Mahmood
We work quite extensively with housing developers—I grant that it is mainly in Lanarkshire, but we are seeing more of that come through the rest of the country. Developers take a proactive view on heat sources with a view to the decarbonisation requirements. We should absolutely promote and bring forward the development and nurture of those relationships to become closer to developers by helping them design their buildings in a way that gets in the best possible heat technologies.
To go back to the first question, the beauty of heat networks from our perspective is that they are technology agnostic. As Eoghan said, they are a good low-regrets option that allow the generation technology to be swapped out as the existing one comes to the end of its life, and they give us a better opportunity to keep pace with whatever the future developments are. The fact that the bill gives ministers the powers to amend the definitions in the regulations provides a proportionate approach to ensuring that both the regulations and the heat networks keep pace with future emergent technologies.
To go back to Richard Lyle’s supplementary question, our view is that we already do that work and would like to do more of it, as well as developing connections with local authorities and therefore covering social housing as well as private developers.
The Convener
For the avoidance of doubt, when you talk about technology agnostic, you are talking about the heat supply—[Inaudible.]—generation. Does Claire Mack want to add anything?
Claire Mack
No, the point has been covered well. Eoghan Maguire mentioned the requirements on carbon emissions: we need to be really aware of that and keep it at the front of our minds. At the moment, our heat networks will need to compete with fossil fuel gas to be economically viable. We need to ensure a level playing field, and one way of doing that is to measure carbon emissions at the source.
10:00Willie Coffey (Kilmarnock and Irvine Valley) (SNP)
Good morning, everybody. In the panel’s view, what is the public perception of this whole area? I occasionally tell my constituents what I am doing with my time in the Scottish Parliament, and the subject that we are discussing does not register with too many of them as something that they are familiar with or aware of. What do we have to do to raise awareness that heat networks are on the way and that they might be beneficial to people?
Claire Mack
Mr Coffey, you are absolutely correct, in that the decarbonisation of our energy networks has been really successful, but it has been done very much behind closed doors. We are now at a different point, where developments in heat and transport will impact on consumers and households. You are absolutely correct that there is a need to bring people along with us and get them on board.
There has been a lot of recognition in recent times—certainly over the past year or so—of the impacts and risks of climate change. When people ask, “Why are we doing this?” or “Why would we do this?”, that is why. I have already spoken about the need to drive consumer demand, and it is right that you ask that question.
One of the reasons for taking action in this area, and one of the explanations that we need to get out there, is the fact that the future costs of climate change have not yet been calculated and, as with Covid, they will affect everybody. The impacts of climate change will fall in a very similar way to the impacts of Covid—they will fall disproportionately on lower-income households and those in less secure work. The fact that extreme weather events and resilience challenges will impact their ability to work and to travel and the type of housing that they live in means that it is likely that they will suffer more than other people in different areas of society. That is a really strong driver that we need to be clear about.
The other aspect of this is that we are talking about a fantastic opportunity for a fantastic infrastructure project. We need to do it for climate reasons, but we also want to do it for economic reasons. As Eoghan Maguire mentioned, the pumps for heat networks can be manufactured here in Scotland, so we have an existing supply chain, but the huge bulk of the costs of a project and the revenue from a project go into civil engineering works, which we have huge strength in here in Scotland.
When we are thinking about how to modernise our economy and how to get ourselves fit for the future and for a cleaner, healthier, more resilient economy, that is the story that we need to start telling everybody in Scotland to explain why this is necessary and why it is necessary now.
Willie Coffey
Thank you very much for that. Does anybody else want to comment or shall I move on to another question?
The Convener
If you go ahead and ask the next question, people can always add any comments to their answers.
Willie Coffey
I have a really exciting question about regulation. As you know, Ofgem is a UK agency, so the Scottish Government cannot appoint it as the regulator in the bill. Does the panel have any views on that and on whether we should invite Ofgem or someone else to be the regulator? Should the Scottish ministers retain stewardship of regulation in the whole sector? Any views would be welcome.
The Convener
Who wants to lead on that? As there are no volunteers, I will pick on Nicola to start.
Nicola Mahmood
Thank you very much for that question, Mr Coffey. [Laughter.]
We can see that Ofgem has the appropriate skills and expertise to perform that role. We would not say that Ofgem is not an appropriate regulator; it is well versed and skilled. We might consider Ofgem to be the Rolls-Royce of regulation in an emerging market. Perhaps the ability for the Scottish ministers to have a closer eye on how this is progressing in Scotland might be more desirable in the short term.
Claire Mack
I echo what Nicola Mahmood said. Ofgem is absolutely fit for purpose. It would know what to do. However, we need to think more about the wider outcomes that we might want here in Scotland, which could direct us to a different solution. The partnerships that we are talking about will be one of the strongest sets of public-private sector partnerships that we have ever seen in Scotland. For that reason, the role of local authorities is extremely important, which might suggest that we need a different model, in which local authorities can be front and centre as we set the regulation, as we monitor it and as we make sure that it is delivering the outcomes that we want.
One of the key aspects here is the important issue of consumer protection, which I think that Eoghan Maguire mentioned. That is not a devolved power of the Scottish Government; the UK Government is developing regulations in that regard, which could apply to Scotland. However, we could think about whether those regulations should be devolved here, and whether they could be part of a package that would help us to develop a full heat network deal. Such a deal might give us different outcomes, such as social outcomes, along with economic and regulatory outcomes. Those outcomes should be one and the same, but given that we are bringing together a slightly different set of partners, a regulatory system that is more attuned to that could be considered.
Eoghan Maguire
I echo the views of Nicola Mahmood and Claire Mack. The risk of going towards Ofgem is that Ofgem would take a model that is based on electricity and would not necessarily have the skills or experience to apply regulation to district heating. If that were the case, it would need to be upskilled in that area.
The other consideration with any form of regulated business is that you need to balance regulation with strategic innovation. The industry is going through a huge amount of innovation and is going to need to innovate more. As I touched on earlier, you need to ensure that, in integrating heat pumps and heat networks with electricity, time-of-use tariffs and getting better customer protection, you do not get bogged down in the world of old and well-established electricity regulation. In principle, regulation by Ofgem could work, but the detail would need to be fleshed out. As Nicola and Claire said, it might be more prudent early on to keep regulation closer to home.
The Convener
If I can interject, would there be any conflict of interests for the Scottish Government in driving the regulations on what needed doing if it were the regulator? Do customers and organisations need a third party that stands separate from Government, in the way that Ofgem does?
Nicola Mahmood
I can see the benefits of having a third-party organisation. The thing that might need to be considered in that field is the set-up costs for a new regulator, and the on-going running costs. We might not have made it entirely clear how small the heat network industry is. There is probably only a handful of players that operate nationwide; other organisations are much more localised. The cost burden of setting up regulation needs to be considered. We are pleased that the Scottish Government has acknowledged that, in the early stages, those costs might need to be absorbed in other ways. I do not know whether Ofgem or an independent regulator would be needed. What might be needed is a route for appeal or an independent ombudsman.
The Convener
Claire Mack, did you want to add to that?
Claire Mack
No. Nicola Mahmood has covered that perfectly.
Andy Wightman
That conversation was interesting. We are not actually talking about a regulator; we are talking about a licensing authority, and I have a specific question for Eoghan Maguire of Vattenfall on that. Section 11 of the bill deals with the revocation of heat network licences, and it does so without containing any regulation-making powers, so the revocation conditions would be as set in the bill. Section 11 sets that out without specifying any appeal rights.
I note that Vattenfall has sought greater clarity on
“what the circumstances or criteria will be under which a licence may be withdrawn”.
Can you say a bit more about whether you think that that should be included in the bill or covered through licensing? Should there be an appeal right? From the industry’s point of view, what are the kinds of things that end up with companies losing their licences?
Eoghan Maguire
That is a detailed question, and I thank you for it. Where to start?
In broad terms, we think that the licensing measures represent a very good step, and we think that they are needed. One of the reasons why, around eight years ago, Vattenfall was a bit reluctant to come to the wider UK market, and the market in Scotland, was the lack of standards and the potential for the industry to be a bit like the wild west. When we see the upcoming licensing, we know that there will be companies there with a certain level of economic standards and technical standards, as well as consumer protection.
The process of licence revocation could potentially be dealt with through secondary legislation, but I must admit that I am not completely au fait with the ins and outs of the mechanics of the legislation and how it will go through the Parliament.
The question of how firms end up losing their licences is an interesting one. Many of the markets that we operate and run in are regulated, so all the operators—such as ENGIE, ourselves and E.ON—ultimately do business according to regulation and standards. As far as I can see, the only instances in which licences might be lost would be through persistent and continuing negligence of customers and poor performance.
I suppose that it is incumbent on the Scottish Government to be careful about to whom it awards the licences. Any such company should have a sufficient technical, commercial and financial standing so as to be able to deliver on the heat networks, and it should have sufficient experience. That should be a matter for consideration when the licences are awarded.
I am not sure whether I answered your question fully, but I would be happy to take any supplementary questions.
Andy Wightman
Perhaps you could come back to us in writing, but you want more clarity on the circumstances and criteria under which a licence might be withdrawn.
Eoghan Maguire
Yes.
Andy Wightman
Should that be included in the bill, with the criteria being set out as a, b, c, d and e, for instance, or should it be left to regulations, which would make the process more flexible?
Eoghan Maguire
I think that it could probably be done through secondary legislation. I do not have an exact answer for you on that—I do not know where that should sit in the bill—but having clarity on the instances in which revocation would occur would certainly be welcome.
Andy Wightman
That is clear—thank you. I move on to part 2, which concerns the consenting process. The bill stipulates that ministers will provide consents. That is unusual, because consent is planning consent, in a sense, which is usually undertaken by planning authorities. I would like to hear the panel’s views on whether it is appropriate for ministers to award those consents. Should that be done by planning authorities? Should they deal with smaller schemes, with ministers dealing with larger ones, as in the case of, for example, renewable electricity?
Claire Mack
What you suggest would seem to be a very sensible way to do things. As you say, it is unusual for us, in the consenting process, to take a different approach on how we would do planning. We need to recognise that we are discussing a new technology and it needs strong power and drive behind it. It represents a full, wholesale technological change.
I wonder whether it is appropriate, in the circumstances and for bigger projects, to drive the strong message to industry that this work is linked into the Scottish Government’s wider remit, with climate change as a really strong driver for networks to get out there in the early days, as we start to build demand, aggregation and the localised energy networks that Eoghan Maguire talked about.
However, regardless of that, as I said earlier, the strength of the public and private sector partnership will be really important. Local authorities are central to that, so I cannot see them not being part of the development process, if not necessarily at the consenting stage.
10:15Nicola Mahmood
From our perspective, the important part is the recognition of who is an appropriate and fit-and-proper person in relation to licensing and what is an appropriate scheme in relation to consenting. We think that the provisions on the transition and consenting for existing schemes could be strengthened, because they are slightly unclear to us. The fact that there is no right of appeal means that investments could be made in schemes that do not receive consent. That would leave them inoperable and would leave customers stranded without heat, cooling and power. That issue needs to be clarified in the bill.
Eoghan Maguire
I will supplement what Nicola Mahmood and Claire Mack have said. It is unusual, but we think that some of the larger-build developments that are strategically important to national infrastructure should potentially be with the Scottish Government. The concern is that expertise in local authorities on district heating will vary widely. Similarly to the position with Ofgem, if responsibility is devolved to local authorities, there will be an expectation that the people who make the decisions will have experience of district heating.
Andy Wightman
On the point about local authorities having experience of district heating, I note that local authorities act as planning authorities for a range of developments of which they have no direct experience. My question is more focused on the fact that a district heating system has much more of an impact on local residents and businesses, space, house design and so on than offshore renewables have, which affect nobody in the vicinity. Ministers consent to such developments, but my question is whether planning authorities should be eliminated from consideration of quite detailed and complex schemes that will affect a lot of people in the local area. However, those answers were useful, so I thank the witnesses.
The Convener
I will pick up on some of the detail. If the bill does not specify the framework or the timescale for a heat network licence, and if technical standards are not referred to or detailed in the bill, there will be an open season in terms of the Scottish Government consenting to things being built. As Andy Wightman said, there will be an impact on communities in which schemes are built.
Would there be a greater degree of safety if the bill included more specification of the frameworks and timescales for the building of heat networks and the technical standards to which they should be built, or would that restrict the development of heat networks as time goes on? As a starting point, I throw that question to Eoghan Maguire.
Eoghan Maguire
In short, I think that a lot of what you raise could be addressed through secondary legislation. I do not have strong views on that, so I am happy to hand over to Nicola Mahmood or Claire Mack.
Claire Mack
I tend to agree with Eoghan Maguire. Given that this is an evolving situation and we are developing new business models and new local economic models to make the developments work, I agree that secondary legislation would be quite valuable in enabling flexibility, as Mr Wightman identified. That is the benefit of using secondary legislation rather than putting things in the bill.
Zone permits is an area that we could strengthen. Local authorities could be required to state whether they intend to issue zone permits, which would offer a level of certainty on the timeline. There might be enabling legislation to create a heat network and get people to connect, but if you cannot get the local zone permit, that will increase the risk to anybody coming in. The bill could be strengthened to require local authorities to state clearly whether they intend to issue zone permits. If they do not, they should explain why and publish, alongside the zone assessment plan, their plan for commercialising the opportunities and taking things forward.
Colin Beattie (Midlothian North and Musselburgh) (SNP)
This question might be for Claire Mack. How long, on average, might it take to recover the capital costs from a heat network, which is the point at which a transfer competition could take place?
Claire Mack
My colleagues might be better placed to answer that, as they have experience of that abroad, having rolled out such schemes in Europe.
The trajectory that we are going to have to take is clear. As you have identified, we will start off with a set of capital funding that is perhaps subsidised through some sort of public-private partnership, in order to move the project forward. However, there are lots of inclusive growth opportunities in the year for various entities to become involved as electricity services companies and to use that role as a revenue-generation proposition. That includes entities—such as local authorities—that have the right skills and can grow the necessary expertise. There are huge opportunities in that regard.
These are long-term capital and revenue projects, but they will be around for a long time. They are future-proofed solutions, which is what is great about them. One reason why operators in the industry feel so strongly about being technology agnostic is that that approach retains flexibility in heat networks, which means that they will retain their value as assets and will not become tied to a fossil fuel lock-in or an additional risk that we might start to see in future because of legislation that comes forward. For example, at the moment, we are unclear about how we might tackle climate change globally. Programmes around carbon emissions taxation and so on could very much alter the business models of some of the things that are being put in place if we do not set them up in the right way.
Colin Beattie
So you are saying that you do not know.
Claire Mack
I am saying that my colleagues who have experience of developing those networks would be able to give you a more detailed answer.
The Convener
Let us put the question to Eoghan Maguire, as Vattenfall has experience of setting up heat networks.
Eoghan Maguire
The recovery of the capital costs will take double-digit years. We are not getting single-year payback. We are investing in a long-term asset, and the flipside of those long-term investment time horizons is that we end up investing over, say, 40 years.
As Claire Mack said, some of the assets that are in place have been around for a long time. For example, some of the heat networks in Berlin have been around for 80 years—they have been through two world wars and the rise and fall of the Berlin wall. We are talking about long-term assets with a long-term payback.
Vattenfall is happy to invest in those assets at lower returns if we can manage the risk. A key area that the bill is trying to address is regulation, standards and quality in order to manage the risk that allows Vattenfall to invest in an infrastructure asset over a long period. One of our projects is the Millerhill district heating network in Midlothian, which will be in place for a long time, growing over 30 or 40 years in order to enable economic development. That is what heat networks do—they are an enabling technology that enables businesses and buildings to be built with low carbon at their heart.
In short, capital recovery takes a long time. The flipside is that it can take roughly 18 years for some payback. However, we can make those long-term investments if we can manage risk over that period.
Nicola Mahmood
Most of our contracts for development of heat networks are for between 20 and 40 years. As Eoghan Maguire said, it can take up to 20 years to get payback of the capital that has been invested, and there is on-going investment in the infrastructure as well.
Our view is that we should start small with a core number of buildings and look to build out from there. As we do so, it will help to bring down the length of time that repayment takes, so we can speed up the recovery of our capital investment. However, these are long-term investments that have significant on-going capital expenditure investment points in order to maintain them properly and keep them operating effectively. I think that what we are saying is that it is quite an expensive business.
Colin Beattie
I will flip to a different question. In response to Andy Wightman, the witnesses talked about local authorities and so on. Should local authorities be under a statutory duty to carry out the assessment and designation of heat network zones? What value is there in having ministers do that on their behalf? I am happy for anybody to respond to that.
Claire Mack
On ministers doing that work on behalf of councils, I go back to Eoghan Maguire’s point that we are talking about very large, critical, national infrastructure-type projects and the benefit of the weighting of resourcing. We are very aware that heat networks at scale are perhaps not something that local authorities have had to tackle in the past. That is not to say that local authorities will not ultimately grow and deliver those skills, but the need to maintain the pace, given the level of projects that we are looking at, is probably why the resource is set at ministerial level.
Colin Beattie
Okay. Are the timescales in section 38 of the bill adequate? Section 38 states that a heat network zone review must be carried out “as soon as practicable”, and at least every five years.
Nicola Mahmood
Every five years is a good start. I do not think that the review would require to be any more frequent than that after the first has been concluded. Even in the current circumstances, it can take a year to two years to agree on and sign new connections. It is unlikely that there would be significant change over a period of five years, so I would say that that is a satisfactory timescale.
Eoghan Maguire
I agree with Nicola Mahmood on the five-year timeframe, as these projects do not move at rocket pace. As I said, the pace is not quite glacial, but it is slow, so the five-year period is sufficient.
The Convener
Are you happy, Colin?
Colin Beattie
Yes, thank you.
10:30Alex Rowley
I go back to the role of local authorities. Part 5 places a duty on public sector building owners to assess the viability of connecting the building to a network zone and reporting to the local authority. Why does the duty apply only to public sector buildings and not to all non-domestic buildings? Would there be more potential if we were looking at all non-domestic properties in an area?
Nicola Mahmood
Public sector buildings are a good start. They often provide excellent anchor loads to build the district energy network around. We always envisaged that the heat network zones would be developed with a degree of partnership with local authorities; that was how the working group saw it rolling out. Therefore, it makes a lot of sense that public sector buildings would have a duty to assess their ability to be a catalyst for a heat network. It also makes sense to widen that out to other commercial buildings, but there is perhaps a view that that could take longer and might not give us the catalyst that is required to move forward more quickly with the initial schemes.
Claire Mack
We have identified that there is a need to improve the quality and use of information that is gathered from non-domestic buildings and to align that reporting requirement with the heat network zone assessment process so that we can try to develop them in tandem. Although the public sector provides an excellent opportunity for that anchor load because it takes very long-term views that sit on some of the same timelines as the larger heat network projects, it would also be helpful to demand aggregation and move to a place in which we get better-quality information about the non-domestic market and its viability. That is very important.
Alex Rowley
I am in Fife. I do not know whether any of the witnesses have come across the district heating system that takes gases from the Wellwood refuse dump and pumps them into the Carnegie leisure centre, the high-rise flats and a range of other places. That is a good example of a successful local authority district heating scheme.
In its evidence, Scottish Renewables states:
“It is important to recognise that local authority capacity to develop and operate heat networks is constrained at present and it will be vitally important that they are given additional resources and support from The Scottish Government to deliver the activities required of them”.
That rings alarm bells for most people, because we increasingly see new legislation being passed that puts more requirements on local authorities without giving them the resources or support.
In the current economic environment, and given that local authorities are being cut to the bone and are struggling to provide mainstream services, can we be confident that they will have the resources and capacity to do this? Witnesses keep talking about the benefits of a public-private partnership, but what would the private part of that bring? Are we expecting the taxpayer to pay the money out and the private sector to take the rewards, as so often happens in the renewables sector?
The Convener
That is a big question. I will go to Eoghan Maguire first and then to Claire Mack.
Eoghan Maguire
It is a big question, which I will unpick as it involves several areas. We think that local authorities’ resources have been cut back to the bone. If more obligations cascade down to local authorities, their capabilities and resources will need to be considered.
With regard to the deployment of heat networks and where the benefits do, or do not, flow to, a good example is Midlothian Council, which we are working with in a joint venture partnership to deliver a heat network across Midlothian from its Millerhill energy-from-waste plant. The benefits are twofold: it is a joint venture equity investment, so we and the council are investing the same amount of money; and our expertise from the continent brings in risk reduction. Knowing how to do that is a big thing. It is not a question of risk transfer—we are sharing risks, and our role is to manage and reduce them. We bring that experience—for business development, and the design and engineering—to build and manage those contracts in order to deploy the network. Ultimately, the investment is between us and the local authority, hand in hand.
That point goes back to Andy Wightman’s question. Heat networks are very different from an offshore wind farm. They are in the community and are the lifeblood of a community. The pipes go right into the heart and soul of people’s homes, so the concept is fundamentally different. We are aware of that, and without proper local engagement with people, local authorities and all the local stakeholders, it will not be successful.
On the question whether investment and profit flow just to private companies and risk remains with public authorities, I do not think that that is the case in any manner, shape or form. The incorporation of those partnerships with local authorities reduces risk, brings capital investment and offers the benefit that local authorities also invest with the same risk and reward as the partnership, so it is a true partnership in that sense.
Claire Mack
There is very wide engagement by the renewables sector on socioeconomic benefits—including in relation to community benefit and local supply chain use—which needs to be pointed out.
The UK Government has launched a £320 million capital fund for heat networks in England and Wales, through its heat networks investment programme, which seeks to leverage investment of more than £1 billion from the private sector over the next five years. That is one area where there is a return—the programme signals that this is a good opportunity and that the private sector can come in to work with it and bring its money.
As Eoghan Maguire mentioned, the investments are long term, so the revenue streams are not huge. Other infrastructure investments could be made that would potentially give more return over a shorter period of time, but they would not deliver the same certainty as this type of investment. For the public sector, there are wider potential outcomes. I have mentioned that a heat network can be a springboard for other economic growth opportunities. If you decide that you want to draw in the kind of industry that is very heat intensive, heat transfer between buildings, which we have just talked about, is a very attractive option.
Having the strength of the public sector in the partnership allows it to bring the outcomes that it wants, too. We are very aware that clear outcomes are sought for such issues as fuel poverty, and we can see the potential for wider economic growth that would springboard from a heat network.
Alex Rowley
I say to the sector that people in Scotland are increasingly starting to question the renewables sector because the jobs that were promised are not coming. The renewables sector should wake up to the fact that the public will not be on board when they see jobs going to every country but Scotland. The Fife offshore wind farms are a perfect example of that.
I expect that most local authorities will now have data on the energy performance certificates of their buildings. Is it likely that this process will rely on existing data in the EPCs? If so, what are the strengths and weaknesses of that? That is my final question, convener.
The Convener
Who wants to lead? Do not all volunteer at once. Nicola Mahmood, I will go to you to start.
Nicola Mahmood
To be honest, I do not have a view on that. The EPC data is useful and helpful, although sometimes it is not quite as complete as we would want it to be to enable us to make an assessment of heat demand. However, it is a good starting place.
The Convener
Does anyone have anything to add?
Claire Mack
I have a wider point about EPCs. In and of themselves, heat networks are fantastic at doing what they do, but one thing that will go hand in hand with the roll-out of heat networks is serious and significant uptake of energy efficiency measures. That is always the first port of call in any project of the size or shape that we are discussing, because the best kilowatt hour is the unused kilowatt hour. Making sure that our buildings are as energy efficient as possible is important, and having a certification system that reflects that and which rewards it in any way that it can is also important.
Gordon MacDonald (Edinburgh Pentlands) (SNP)
I have questions about part 6 of the bill, which is on the powers of licence holders. Eoghan Maguire, you stated in your written evidence that
“it is difficult to see how the envisaged powers will help in securing connection to anchor loads”.
What reasonable changes to the bill are required to improve the viability of any new heat network scheme? Is it just an obligation to connect, as Claire Mack has mentioned?
Eoghan Maguire
Very simply put, we feel strongly that the obligation to connect would be of benefit for heat networks.
It is important to make a separation between new builds and existing buildings. New builds could be addressed through an obligation to connect in the planning process. There would be an obligation to connect or otherwise, with that “otherwise” being when a heat source that is both cheaper and lower carbon can be found. That would be the standard for not connecting, but the de facto assumption would be that new builds would connect to the heat network.
In relation to existing buildings, we think that the obligation to connect needs to be strengthened. We have touched on anchor loads and how that derisks investment, which allows for longer-term capital investment as well. The obligation to connect for existing buildings is currently not as strong in the bill as we would like it to be, although there is an acceptance that public buildings will, or should be, connected. One reason why we want to see that obligation to connect is that it allows for a bigger view to be taken of the whole heat network, which enables people to invest ahead of need, in different areas at different times. It also enables us to decarbonise.
We have touched on the issue of the public versus the private sector. The obligation on new builds would be the equivalent of the obligation on the public sector to connect, without there being too strong a mandate for retrofits to connect, just as there is not for the private sector. That allows for a balance of connecting between new builds and retrofits.
One of our networks is in Amsterdam. When it started more than 20 years ago, 85 per cent of the projects were new builds—that was through a planning obligation—and 15 per cent of them were retrofits. Today the balance is about 50:50. The planning obligation is still in place, and we see that the obligation to connect is tightening in relation to existing buildings. For example, as boilers come to the end of their life cycles, buildings connect to the heat network. The obligation to do that is increasing, because there is a carbon tax, too, so people see connecting as beneficial.
An obligation is not a question of stating “thou must connect”; it should be a case of considering how we factor in the costs of delivering gas and ensuring a level playing field. That is something that should be addressed in secondary legislation.
10:45Gordon MacDonald
What changes need to be made to wayleave rights so that connections can be made?
Eoghan Maguire
As it stands, the bill has strong advocacy for wayleave access and rights, so we are happy with that. The bill gives heat network operators similar obligations and powers to the ones that water or electrical utilities have. That is a positive step.
Gordon MacDonald
My understanding is that heat networks are long-term investments—over 20 to 40 years. You suggested that an obligation to connect would derisk investments. Are you in danger of creating localised monopolies? What needs to be in place to ensure that pricing will continue to be competitive in the long term and that consumers will be provided with a minimum level of service?
Eoghan Maguire
I am happy to take that question; Nicola Mahmood will probably have a view, too.
Yes, there is a risk of creating monopolies. We advocate that there should always be a level of regulation to manage that. We are used to operating in Amsterdam, for example, which is a good example in relation to consumer protection on pricing. A price cap is put in place.
We try to ensure that there is an obligation to try to connect but not necessarily an obligation in relation to volume or pricing. Again, I think that the obligation in relation to service and standards will come through the consumer regulatory aspects, to ensure standards on pricing and service that are sufficient to protect the consumer. That is absolutely needed, too.
I suppose that the discussion is always about there being an obligation to connect or otherwise—by which I mean, in essence, that if there is another viable solution that the consumer can put in, which is lower carbon and cheaper, they should be able to try to do that.
I am happy to give Nicola Mahmood space to come in on this; I am sure that she has a view.
Nicola Mahmood
This is part of the beauty of having to hold a licence to operate. A licence might be removed if the heat price is not competitive or there is a failure to deliver the expected standard of service.
It is worth remembering that heat networks are not a regulated industry just now, but there are heat networks throughout the country—not just ours; there are other providers. Thousands of domestic customers as well as commercial buildings are connected to networks. We have contractual standards of service in place that cover all the commercial buildings, and we register all our heat networks that have domestic residences connected to them with the Heat Trust. That is a voluntary approach; we have chosen to do that because we feel that it is the right thing to do.
It is absolutely right that there will be monopolies, given the nature of how the investment is made and how the connections are made. That is partly why we welcome the bill: it should give confidence that appropriate standards are in place and that fit and proper people are operating heat networks. In some way, that should take the sting out of the tail of a network being a monopoly.
Gordon MacDonald
My final question is about provision for compensation. In evidence to the committee, a local authority expressed concern about compulsory purchase powers and the impact on green space, biodiverse areas and forestry that might need to be removed to make way for new district heating networks. Concern was also expressed about the impact on archaeological sites, scheduled monuments and listed buildings. Are there safeguards that would force developers to remediate in such areas?
The Convener
Is that question directed to someone, Gordon?
Gordon MacDonald
It is directed to whoever is willing to answer.
Claire Mack
One of the beauties of the planning system that we already have in Scotland is that it is very robust. All the developers who have Scottish Renewables membership are aware of their requirement for a social licence to operate, as well as a regulated one. Whether on sites of special scientific interest, in forestry or in biodiversity, wider environmental considerations have always been part of projects. They are also part of the thinking when budgets are put together, in how developers make reparations and in how they work with—and not against—the environment they are working in.
As an industry, we do not want to be part of the problem, and we are very aware of our needs and responsibilities.
Nicola Mahmood
I want to point out that heat networks operate best in dense urban environments. Therefore, they are generally probably more of a pain to bus lanes and traffic than to green spaces. However, Claire Mack has covered the issue perfectly: from the perspective of reputation, we would absolutely want to avoid those types of issue.
Dean Lockhart (Mid Scotland and Fife) (Con)
I would like to ask the panel about what projections are available for the heat networks in Scotland for meeting heat demand. There are some estimates that heat networks might supply 6 to 7 per cent of heat by 2025. Are there projections available for what that percentage could look like in the longer term, over a 30-year period, by 2050?
Claire Mack
I do not have projections for percentages up until 2050. However, our commitment in Scotland is to reach net zero by 2045, and heat is a huge part of that.
We will have to apply different treatments to different areas in Scotland. As Nicola Mahmood said, heat networks work best in dense urban areas. We are used to working in those environments because of other roll-outs that we have done in which density of population has been a key variable to whether things have moved fast or slow; I am thinking about mobile networks. There will be different treatments and solutions in different areas. Heat networks will not be the entirety of what we will do: we will also look to other low-carbon heat solutions.
Some 55 per cent of Scotland’s energy demand is for heat. We have 113 existing heat networks that supply the equivalent of 1 per cent of Scotland’s total heat demand. The reason why there are so many networks, and why that quantum looks so unusual, is that the networks are relatively small because they have been built around the constraints. That is exactly what this bill is trying to unlock, and that is what is so good about it. It will unlock the constraints and allow us to get more bang for our buck.
Scottish Renewables did some research that has identified 46 potential heat networks across all of Scotland’s cities and towns. Another great aspect of heat networks is that they are very targetable to places where we might want to see development happening.
What is interesting about heat as a whole is that we can apply an industry—[Inaudible.]. There is that capability because we have manufacturing here, and because the bulk of the work is in civil engineering. That means it has a different supply chain profile to other renewables, which is one reason why it has such strong potential from a green economic recovery perspective.
Our research suggested that the 46 heat networks that we have already identified could provide 8 per cent of Scotland’s heat by 2030. That is a very rapid expansion and also a rapid decrease in carbon emissions. For 2030 and beyond, I am not sure. Perhaps Nicola Mahmood and Eoghan Maguire have projections from their companies that might be valuable here.
Eoghan Maguire
Thank you for the question. As a short response, how far we get ultimately depends on what stimulus the bill provides to give a framework and confidence for investment in the heat networks. Crudely, heat networks are the cheapest and best-value way to deliver low carbon heat in densely populated and urban areas, and we think that they could provide up to 20 per cent of low-carbon heat by the late 2040s. As I said, the change does not happen overnight. It builds up slowly, but you need to start making the investment decisions now and grow from there.
Dean Lockhart
Thank you for those helpful answers. I understand that projections are always subject to variability, but the targeted nature of the projects gives us hope that those projections have some degree of accuracy.
I would like to ask briefly about the just transition impact of the development of heat networks. Are there estimates of how many jobs could be created and of how many might be lost in traditional heating areas? What other impacts on the wider economy might we see from that just transition?
Claire Mack
The energy transition needs to be a just transition. That is absolutely clear, and people need to be at the heart of it. That has never been more at the forefront of our minds in renewables than it is right now, because of the difficulties that the oil and gas sector is experiencing and the potential for us to create further pipelines in that offshore space.
Renewable heat will still require maintenance. There will be the opportunity for people who currently work in heating to get a dual set of skills. They can work on both the electrical and the gas side while we make the transition and then change fully to the electrical side as we move into that majority-of-low-carbon space.
As a trade association, we would certainly advocate for the management of that transition. In the past, we have seen energy transitions that have not been managed, and we know the catastrophic effects of that. We now have an opportunity to manage the transition and perhaps to think about a renewable transition training fund to help people who are currently working in heating to pick up the dual set of skills that I talked about.
Lessons from continental Europe tell us that ahead of decarbonising heat we will need to switch our homes away from gas, and we will also need advanced insulation. The energy efficiency programme that I was talking about has a lot of near-term jobs in it. It can be kicked off relatively quickly and create jobs in the nearer term.
There is also an opportunity to transition our tradespeople to become all-round energy advisers—to widen their role and add higher-skilled opportunities such as working with homeowners to optimise their energy systems in order to reduce bills and micromanage their energy use, perhaps using solar power to charge electric vehicles and then using the vehicles to power heat networks. That is a really exciting prospect for the future, which will need to be supported.
Nicola Mahmood
The heat networks industry council has put proposals to the UK Government in the past few weeks that suggest that there could be 20,000 to 35,000 new jobs in the sector by 2050. I do not have the breakdown of how that would play through into Scotland, but presumably it would be proportional to the number of heat networks that we are able to develop here. Given that we are ahead of the curve in terms of the regulation and stimulus for heat networks, we hope that more of those jobs would appear here in the shorter term.
The Convener
Andy Wightman has a short extra question.
11:00Andy Wightman
It is on permits. The committee has to give Parliament a recommendation on whether we agree with the general principles of the bill, but it is still not clear to me how the permit system will operate.
As I read it in the bill, there is no explicit requirement for a permit holder to have a licence, or for consent to be in place, and yet those are grounds for a permit to be revoked. Can a permit be awarded, for example, to a person other than a licence holder who has sought consent over an area? What would happen there?
You all have experience of implementation. Is the model in which there is a licence holder, a consent process and a permit that operates in zones a novel one, or does it replicate systems that operate elsewhere? If it does, there are presumably no problems, but I am still a little unclear as to how the permit system will operate. Can anybody help me by illuminating that area?
The Convener
Who is an expert on how permit systems operate? Do not all volunteer at once.
I will start with Eoghan Maguire, and then work my way around all of you.
Eoghan Maguire
In short, I am no expert on permits, but I am happy to submit supplementary evidence to the committee if you wish on how systems operate in different countries—for example, in Sweden, Germany and the Netherlands.
Given some of the points that Andy Wightman raised earlier, there seems to be a slight disjoint with regard to clarity on permitting versus the situation with licensee awards. We perhaps need to form a better view on that in order to understand a little more what the issue is there.
The Convener
You can come back to us on that, or we can write to you. Does Claire Mack have any clear views on permits?
Claire Mack
That is one of the areas in which we think that there is scope for clarification and strengthening. Licences and permits need to work in tandem, as having the infrastructure in place and a licence to operate it without the permit part would introduce a potential barrier. The reasons for that, and the situations and circumstances around it, need to be clear.
We felt that, if local authorities decided not to issue those permits, it would mean that the network would not go ahead. It would need to be stated clearly why the specific circumstances meant that that was the case, because the process would be quite far down the road at that point. There is potential for further clarification and strengthening of that aspect of the bill.
Andy Wightman
Just to be clear, it is the Scottish ministers, not local authorities, who award permits.
The Convener
That is clearly an area that we need to get our heads around to ensure that we understand it, so that whatever ends up in the bill—if it is approved at stage 1—will make the situation clear and will not create a black hole or a gap that might raise problems down the line. Does Nicola Mahmood want to add anything?
Nicola Mahmood
Our understanding from the discussions was that those things should be aligned, but I recognise that the wording in the bill does not convey the intent. Such a system does not exist anywhere else in the United Kingdom, and there are always challenges in forging a new path.
The Convener
Absolutely. It may be that we need to revisit the wording to ensure that the intent is clear and that there is no lack of transparency in the way that the provisions are presented. Is Andy Wightman content with that for now?
Andy Wightman
Yes, but it is an area that we need to explore further.
The Convener
Absolutely.
Thank you, everybody—I have no other bids for questions. I am aware that we are quite time constrained this morning, and that we may well have other questions in the light of some of the conversations that we have had. We can potentially get back in touch with the panel with any further questions.
In the meantime, I thank the witnesses for their time today; the session has been a useful start to our inquiry into heat networks. We will now take a short break.
11:05 Meeting suspended.11:10 On resuming—
The Convener
We continue to take evidence on the bill. I am pleased to welcome Michael King, who is director of Aberdeen Heat and Power. Unfortunately, Colin Reid is not with us, due to illness; Michael, I am afraid that you are on your own. As a panel of one, you will have plenty of opportunity to give us your thoughts on heat networks and the bill.
Alison Harris
Good morning, Mr King. I want to ask about projections for heat networks in Scotland over the next 30 years. What contribution can heat networks make to achieving net zero greenhouse gas emissions and tackling fuel poverty?
Michael King (Aberdeen Heat and Power)
Good morning, and thank you for your question. Earlier in the year, in March, the Scottish Government published a policy memorandum on the bill, in which it suggested that, in the absence of legislation, heat networks could grow to deliver about 4 per cent of delivered heat by 2050. It was suggested that with minimal intervention the proportion could grow to about 8 per cent and with stronger intervention, particularly by using waste heat and renewables, it could reach 12 per cent.
Aberdeen Heat and Power has a fairly secure forward pipeline of about 1,000 connections over the next three years, which will grow our network by approximately 30 per cent. I emphasise that that is the confirmed, secure pipeline; the likelihood is that the approach will snowball.
Alison Harris
In terms of financial investment, are there any investments—sorry, are there any estimates of what can be achieved?
Michael King
Will you clarify the question? What do you mean by “investments”?
Alison Harris
Just any financial investment. I am looking to find out whether there is any investment as we look to the next 30 years. Are there any figures in relation to that?
Michael King
I believe that there are, but I do not necessarily have them. The opportunity is there and there is a great deal of interest from investors in the sector. The problem has been how to address the risk. Indeed, that is one of the purposes of the bill.
Alison Harris
Yes, and in the context of a just transition, I am thinking about the impact of the development of heat networks. Could jobs be created? How many job losses are there likely to be among traditional heating professionals? Do you have thoughts or comments on that?
Michael King
I think that, in the earlier part of your meeting, Nicola Mahmood commented on an estimate from the heat networks industry council, which—if I recall—was in the region of 73,000 jobs.
There is a snowball effect. In Aberdeen, we created five jobs directly ourselves, but there is also a supply chain of local plumbers, for example, who are installing systems in people’s homes. More jobs are created outside the industry.
Alison Harris
Thank you. I appreciate your response.
Richard Lyle
Aberdeen Heat and Power is a shining example of what can be done. I have always believed that we can do more with heat networks, with developers and house builders promoting the approach.
We all know that a heat network is either a district heating network or a communal heating system. Could the definitions in the bill, and the bill as a whole, be future proofed to cover technologies that will emerge over the years?
11:15Michael King
Eoghan Maguire said this morning that heat networks are an infrastructure that is agnostic to the heat source. Consequently, they facilitate the development of new technologies. For example, the development of hydrogen is proposed to decarbonise heat, but the Committee on Climate Change has suggested that hydrogen will not be widely available until 2035. That would leave us only 10 years to hit the target that the Scottish Government has set, but if we expand the use of heat networks, it would be much easier to retrofit hydrogen plant into centralised plant rooms on heat networks than to visit each building. As a consequence, that would facilitate the advance of the new technology.
Richard Lyle
Is the possibility of amendment by regulation adequate to ensure that we have the flexibility that we need?
Michael King
The definition as it stands is adequate. Other witnesses have referred to the issue of temperature, and the general move to lower-temperature systems throughout the heat network industry in Europe and North America would help in respect of connecting technologies such as heat pumps into the system. That will happen anyway, so I am not sure that it is necessary to define it in the bill.
Richard Lyle
Thank you very much for your answers to my questions.
Willie Coffey
Good morning. I will ask about your views on regulation. Nicola Mahmood, who was on the previous panel, said that the heat networks industry is not regulated. If you feel that there should be regulation, who might provide it? Ofgem is a UK body.
Michael King
It was said elsewhere that heat networks are a natural local monopoly, and monopolies need to have regulation to balance things out. The industry is unregulated at the moment, which can lead to instances of abuse. The industry is trying to address that through the creation of the Heat Trust, but that is voluntary and only goes so far.
The Department for Business, Energy and Industrial Strategy has proposed that Ofgem should become the regulator, which has tensions with what is proposed in the bill. First, consumer protection is a reserved matter, so that would need to be addressed through engagement between the Scottish and Westminster Governments. Secondly, the Westminster Government is taking a slightly different approach, so having the Scottish Government as the regulator is probably prudent. Nevertheless, as matters advance, it will be necessary for the two Governments to liaise closely.
The last point is about the pace at which those matters are moving. Although the Department for Business, Energy and Industrial Strategy has indicated that Ofgem will be the regulator, I understand that that is not likely to happen for another three or four years, due to the pace of change. What is proposed under the Heat Networks (Scotland) Bill will be much more rapid. Consequently, in the absence of regulation from Ofgem, it is appropriate for the Scottish Government to take on that responsibility.
Andy Wightman
Aberdeen Heat and Power is operating a heat network just now. If the bill is passed, are you clear that you will have to apply for a licence and comply with the bill’s laws, even though your organisation is already in existence? Is that your understanding?
Michael King
Yes, that is my understanding.
In respect of obtaining the required licence, permits or consents, our concern is that there will be a regulatory burden on us. We are a not-for-profit organisation. We aim to be a very lean machine, so we do not have large reserves. Our objective is the alleviation of fuel poverty. Any additional cost of such requirements will be passed through to end users, which we want to avoid as much as possible.
Andy Wightman
You mention that issue specifically in relation to your organisation as an existing provider, and there are issues with how existing providers can fast-track becoming licence holders, given—[Inaudible.]—schemes already have the consents. As a not-for-profit organisation that is focused on fuel poverty, do you think that that poses questions about the bill and the players that may or may not be able to come into the market and focus, as you do, on social ends?
Michael King
That is a very good question. I have raised concerns elsewhere about how the cost burden that I referred to earlier might impact not on existing networks but on new networks that are community based and serving small villages in rural areas. That is a concern.
Andy Wightman
I note that the bill contains provisions that allow regulations on the issue to be made, which could exempt or partially exempt certain organisations from the full rigour of the licensing regimes. However, that is not spelled out in the bill.
I will ask a bit more about the fuel poverty dimensions of the bill. The need for heat networks is being driven by a need to decarbonise heat and provide more affordable and reliable heat sources for people. What role can heat networks have in the alleviation of fuel poverty more generally across Scotland?
Michael King
Thank you for picking up on that point. I beg your pardon, but I did not pick up the second part of your previous question, which was about fuel poverty. It is a concern to us that it does not appear in the bill. The bill mentions decarbonisation but not fuel poverty. In order to lock in future Administrations, we think that it would be helpful if a reference to fuel poverty appeared in the bill.
In respect of your second question about how the bill can help to address fuel poverty, in the main, the focus has been against a benchmark of current fuels, such as fossil gas or electricity. However, studies by consultancies such as Element Energy and Fortec found that most pathways to the decarbonisation of heat will result in an increase in the cost of heat for the end consumer. The one exception to that is heat networks associated with waste heat, energy from waste plants and suchlike, where the cost is equivalent to business as usual, if not negative. Out of all of the technologies, that is probably the best one for addressing fuel poverty.
Andy Wightman
How many years has your scheme existed for?
Michael King
We were established in 2002 via Aberdeen City Council to address fuel poverty in the council’s high-rise blocks, of which it has 59. We have treated more than 50 of those. Starting from nothing, we now have 15km of pipe networks, approximately 7MW of combined heat and power capacity, 30MW of thermal capacity, five plant rooms, five employees and a turnover of £4.4 million. We hope that we are making progress.
Andy Wightman
So your company is wholly owned by Aberdeen City Council.
Michael King
No. We are a company limited by guarantee and, as such, we have a membership structure. There are five members, of which Aberdeen City Council is one. It is a minority owner of the company.
Andy Wightman
Presumably you needed planning consent to do a lot of the physical works that you have done. Is that correct?
Michael King
That question came up in the previous session. I think that there is a distinction, because heat networks are below ground, and that aspect does not require planning consent. However, the plant rooms, which of course are above ground, do require planning consent. I think that all the issues that you raised in the previous question would need to be addressed, in respect of environmental protection. I understand that the Scottish Environment Protection Agency is a recognised consultee for that, so hopefully that would address those issues. As a plant room is within the community, it is right that that should be addressed by the local planning authority to ensure that it beds into the local community.
Andy Wightman
Just to be clear, part 2 of the bill is about heat network consents. As it stands, it is the Scottish ministers who make decisions about heat network consents, which carry with them, as I understand it, a deemed planning consent. Would it be your view that, certainly for some schemes, if not all—you can maybe clarify that—those consents should be awarded by planning authorities rather than by ministers?
Michael King
No. With respect, I think that you have misunderstood me. The heat network is the bit that is below the ground, and that would be covered by the consent. It may be that no plant rooms are required because the heat is being drawn from some other source. For example, Aberdeen City Council, in association with the county council and Moray, is constructing an energy-from-waste plant, which we anticipate we would take a connection from. In that instance, we would not need to have planning permission to connect to that. That is a wholly different matter. It is only if the plant room was in our ownership that we would have to pursue consent. In that instance, it is probably most appropriate to go to the local planning authority.
Andy Wightman
Thank you. That is a useful clarification.
11:30Colin Beattie
On average, how long might it take to recover the capital costs of a heat network, so as to allow a transfer competition to take place?
Michael King
That is a good question, and I do not want to seem to be trying to avoid it but, often, the payback varies from project to project. There is no standard in that respect. It is about the size of the load, the number of buildings that are connected, the capital that is required to install the plant room and to connect the buildings to it, and how long the revenues from those loads will take to recover that capital.
In the main, it is not a short-term payback. At a minimum, it is around seven to eight years; at a maximum, it can be over 20 to 30 years.
Colin Beattie
Previous witnesses gave timescales that varied widely, from 18 to 40 years. From a planning point of view, if one is investing capital, that creates a lot of uncertainty as to when one will get it back.
Michael King
I absolutely agree. One of the purposes of the bill is to increase investor confidence, so that investors have some certainty about recouping that investment.
Colin Beattie
Yes; it is a very patient investment.
What do you think of the strengths—[Interruption.] Sorry?
Michael King
I beg your pardon. Please continue.
Colin Beattie
I was going to develop another question; if you have something to add, please do so.
Michael King
In many places, at the outset, the principal investor has been the public sector, either directly, as local authorities, or through grant programmes at national level—and now through the energy company obligation. We have benefited from free capital, if you like, from those. That has enabled us to move forward.
Colin Beattie
In reality, will 40-year capital investment come from the private sector?
Michael King
What will probably happen—in the general way that things happen in the UK—is that, at first, these things will be public sector led, or at least public sector influenced, through the development, construction and early operational phase. Once the project has been de-risked, the public sector will have the opportunity to refinance it. At that point, there will be appetite from institutional investors, such as pension funds, to come in, because it will fit their risk profile and give them the sort of stable, albeit low returns that they typically find helpful in their portfolio.
Colin Beattie
You used the term “de-risk”. Will you define that?
Michael King
Once all the costs and revenues have been stabilised and people understand what their costs are likely to be and what revenues are coming in—they have two or three years of understanding what those might be—at that point, a project could be refinanced.
Colin Beattie
What are the strengths and weaknesses of a transfer system, as set out in the bill, and how should a company be protected?
Michael King
We are concerned about that. Under the licensing regime, if a company or organisation is no longer considered to be fit and proper, its assets will need to be transferred to another company so as to provide security of supply to the end consumer—there will need to be a supplier of last resort. We do not quite understand that. Those assets actually belong to us as a company. Is it proposed that they would simply be taken away from us, or would we be compensated for them? How will that work? We do not know.
Colin Beattie
Assuming that we have reached the end of the period during which there is a concern about the stability of the revenue and the capital costs, surely whoever takes that over is in effect buying a source of revenue, which—[Inaudible.]
Michael King
That is the basis of refinancing, yes. There is no suggestion, however, that that will be paid for.
Colin Beattie
Would the public sector hand the assets across for free?
Michael King
One would need to address that.
Colin Beattie
I am assuming that the public sector will get a return, particularly as the repayment period goes through. Let us say that it is 40 years: at some point in that period, a surplus will be triggered, and either that surplus will be reinvested into the company or it will come back into the public sector in some way.
Michael King
Yes. Pardon me; we are talking about different issues. I think that you are correct on that point, but I wanted to say that more clarity is needed in cases where a licence is withdrawn.
Colin Beattie
Okay. We note the fact that you feel that. I am trying to explore how the actual transition will take place at the point at which the private company moves in. I am assuming that there will be a transfer of some value to the public sector.
Michael King
That would depend on whether the asset was being sold in its entirety. It might be that the public sector would sell only a percentage of the equity, which would be bought by a private investor, such as a pension fund, as I suggested. The management would remain the same, but the ownership structure would change.
Colin Beattie
So, the actual management of the company would not change; there would simply be a background change of ownership.
Michael King
Yes.
Colin Beattie
We do not know yet whether the public sector would hire someone from the private sector in order to run the business for it.
Michael King
That is a possibility. All sorts of options are open to the public sector.
Colin Beattie
My concern is to ensure that the public sector gets value for money in investing in those assets, and then in transferring them, in whole or in part, to the private sector.
Michael King
If the public sector invested in the asset, it could take the option to retain 100 per cent ownership, in which case it would get the revenue. It could decide that it wished to exit from it, in part by selling a share of the equity, or it could exit entirely by selling 100 per cent of the equity.
There is a great example in the city of Toronto, where the city council, in association with its pension fund, developed a heat network, taking heat out of Lake Ontario and cooling it. They developed the network downtown and then sold the whole lot to Brookfield Asset Management. In the process, the city council made a $300 million profit. There is the opportunity for the public sector to benefit from the approach.
Colin Beattie
Thank you.
The Convener
An issue that has come up is whether the licensee should be a person or a legal entity. The bill seems to suggest that it should be a named individual—a fit and proper person, as in the approach to alcohol licensing. Should the approach be extended or changed to make the licensee the legal entity, that is, a limited company or an organisation, rather than an individual so that, as individuals come and go, it is the company that has the licence to operate?
Michael King
Thank you for the question. I suppose that the approach is similar to the licensing of pubs; it is the individual landlord whose name is above the entrance but it is the company that provides the service. Our concern is that people in companies change; we wondered whether there would be a cost associated with reassigning a licence to a new individual.
The Convener
For alcohol licensing, an exam goes with the process, to show that someone is a fit and proper person. The applicant has to tick boxes in a mini-exam, to show that they know what is required and so on. We perhaps need to explore that issue.
Michael King
Yes. That would be helpful.
Alex Rowley
You talked about fuel poverty in response to questions from Andy Wightman. Should more be done to ensure that fuel poverty is considered when heat network zones are designated and permits are issued?
Michael King
As I understand it, that will be dealt with in the secondary legislation. In particular, in relation to the issuing of licences and consents, an applicant will have to demonstrate that they are a fit and proper person and come forward with a proposal and business plan that seeks to build a heat network over the whole area, while providing some form of price benefit for the end consumers. As that is not actually in the bill, I think that the bill should contain a reference to fuel poverty, which would hook seamlessly into the secondary legislation.
Alex Rowley
There will be the opportunity to lodge amendments to the bill, and your proposal is worth taking on board.
Michael King
In our submission, we suggested a particular point in the bill at which such a reference could be included.
Alex Rowley
Thank you. I asked the previous panel about requirements in relation to publicly owned buildings. I talked about the scheme in Fife that I know well, which links a community asset, the Carnegie leisure centre, with high-rise flats. Will you give us a feel for your scheme and how it works? Do you have an anchor building?
11:45Michael King
Our approach is to have a framework agreement with a city council that gives us exclusivity to build a combined heat and power plant in its buildings. It was initially focused on the high-rise estates that I mentioned, but it also includes administrative offices and schools.
The high-rise blocks tended to be in clusters, so we could develop a heat network island that was financially sustainable and viable serving just that island. The housing estates became our anchor loads, which we connected together and then picked up other buildings along the way. A lot were public sector but now, because new connections to the gas network will be banned from 2024, we are getting inquiries from private developers about how to connect to our networks.
Alex Rowley
You are saying that there is a potential opportunity, and we should not restrict the network to just publicly owned buildings. Section 38 of the bill says that each local authority must
“carry out a review to consider whether one or more areas in its area has the potential to be designated as a heat network zone”
and that that should be done “as soon as practicable” after section 38 comes into force, and at least every five years after that. Is that adequate?
Michael King
Yes, it is. A difficulty of rolling out heat networks in towns and cities across Scotland is that there has been no statutory duty. Aberdeen Heat and Power provides an example for lots of towns and cities, but not many have followed it. In the main, that is because, from a strategic point of view at the top of a local authority, it is not a statutory requirement, so why should the authority do it? Making it a statutory requirement would encourage authorities to focus on that area and I hope that they will understand the opportunities that it will bring to address climate change, fuel poverty and urban regeneration.
Alex Rowley
From what you have said, I am reaching the view that local authorities are absolutely key to the issue. To deliver heat networks, the local authorities must be totally on board and driving them. Do you agree? My second question is about where the expertise exists; some authorities have not driven renewables forward not for a lack of will but because they do not have the expertise. Where does that expertise sit?
Michael King
You are right. Commentators throughout the world have recognised that municipalities and local authorities are key to the development of heat networks. They have the vision for the whole of their area rather than just the edge of a development site. They are the planning authority and have the ability to shape the town in terms of the mix of use, the size of anchor loads and this, that and the next thing. The local authorities own a great many buildings that can be put into the mix to provide an anchor load and underpin a network financially and technically, and they tend to be at the centre of a web of relationships with people in their locality.
Local authorities are key, but the issue about competence and skill is a problem. People refer to heat networks as a new technology but it is not; it is very mature in other parts of Europe but not in Scotland. As a consequence, there is a lack of expertise here, particularly in the local authority sector. The bill has addressed that issue; if the local authority does not have the competence to develop heat networks, the Scottish Government can step forward and take over that responsibility. We would want to ensure that the Scottish Government had the requisite skills to be able to deliver that on behalf of the local community.
Gordon MacDonald
To continue on the theme of buildings—Alex Rowley is big on that—part 5 of the bill places a duty on public sector building owners to undertake an assessment of the viability of connecting their buildings to a heat network. Are energy performance certificates sufficient to assess actual performance as well as whether a building is suitable for connection?
Michael King
It is key that we are able to understand demand for heat in a building, not only in absolute terms, but in terms of the shape of demand—in other words, what demand is over the course of a day or a year. Owners of large buildings with EPCs will have derived the data that they need to generate that information from the current typical heat source, which is gas. Simply reviewing their gas bill would provide owners with the information that they would need to make an assessment of connecting their building to a heat network.
Gordon MacDonald
You have already mentioned that no new gas connections will be allowed from 2024 and that you are beginning to get inquiries from privately owned commercial properties. Have any of those inquiries come from customers who are already connected to your network? What length of contract would need to be entered into? What are the additional benefits that customers would get from Aberdeen Heat and Power?
Michael King
I will address your last question first. Aberdeen Heat and Power has been in existence for 18 years. Over that period of time, we have developed the competencies to be able to provide a good, reliable and secure service, which would be the attraction for potential customers. At the moment, no private developers are connected to the system, but we are in conversation with them. The responsibility for interacting with the end consumer is a very challenging area. In the main, my company would prefer to be able to sell bulk heat, and that it would be for the end consumer to establish a vehicle to manage the heat network on their development.
Gordon MacDonald
The bill places a duty only on public sector building owners. Should all private building owners have to carry out an assessment to encourage them to think about connecting to heat networks?
Michael King
The public sector is a good place to start, but I anticipate that the requirement would need to be rolled out to other major buildings as well.
Gordon MacDonald
Are any public buildings outwith the scope of the bill? Back in the 1980s and 90s, a lot of councils outsourced their services to arm’s-length external organisations. For instance, in Edinburgh, Edinburgh Leisure runs all the sports facilities. Would those buildings be included in the definition of publicly owned buildings?
Michael King
I guess so, because it is the management that has been outsourced, not the ownership. I presume that such buildings would still qualify as public sector buildings.
For all the reasons that I mentioned, and because of the public sector’s aims and objectives, the public sector can take a long-term view, so the likelihood is that these spine mains or putative projects will develop on the back of a public sector load. It makes sense that such projects would be extended to large commercial buildings—using the EPC definition of “large”. That would bring into place a heat network in most of Scotland’s towns and cities, to the point that when fossil gas was withdrawn, other, much smaller buildings would have the opportunity to connect to a heat network and get low or zero-carbon heat from that at a reasonable price. If we do not build up the networks now, those smaller buildings, including residential buildings—homes—would not have that opportunity. It is about building a platform now.
Dean Lockhart
In practical terms, is the bill likely to encourage your organisation to invest more in heat networks? If so, can you explain why?
Michael King
A barrier remains that I think has been referred to this morning, which is the obligation to connect. The wayleave right, as outlined in the policy memorandum to the bill that was published by the Scottish Government in March, indicates that it would be possible to build a heat network up to an anchor-load building. However, you would not be able to oblige that building to connect.
One argument is that while that extension was happening, a contractual negotiation could take place between the heat network operator and the anchor-load building owner. The fact that the pipework network was coming up to that point would facilitate that discussion.
Secondly, there could be a change of ownership. A new owner may want a low-carbon source of heat, which would then be available to them, because it had been built up to their doorstep.
Thirdly, there could be a change of boiler. If the current heating equipment expired, that would be an opportunity.
The difficulty with that is that I do not think that people—including Aberdeen Heat and Power—would invest money in such an open-ended scenario. If you or I were to take £100 out of our building society to invest in a project, we would need greater certainty—in this case, that the building was going to connect and provide the revenue stream to repay the capital investment that we had made.
Dean Lockhart
That is very useful.
I have a follow-up question. In the earlier evidence session, we heard about a fairly significant increase in provision from heat networks to meet heat demand. Are those projections optimistic, or are they realistic?
12:00Michael King
I think that they are realistic, but I would refine that. The figure that is quoted in the Scottish Government’s financial memorandum, which is based on Scottish Government research, suggests that provision could be 12 per cent of delivered heat by 2050 across the country as a whole. Because heat networks tend to be an urban technology, the percentage is likely to be higher in towns and cities.
Dean Lockhart
Is there anything that policy can do to help with the wider distribution of heat networks, or is it largely driven by the economics of the investment?
Michael King
Overall, that is largely driven by the economics, which is, in turn, driven by the density of buildings in a particular area, the mix of buildings, the presence of an anchor load, the presence of sources of waste heat, such as from energy-from-waste plants and power stations, ambient heat from rivers and the sea, and heat from the land through ground source heat pumps. All those things should be captured in the latent heat energy storage proposal for producing a heat network zone. You would have to encapsulate them all to define the heat network zone, and as the process begins to derisk the proposition, it makes it much more attractive for the investor, whether public or private.
I would like to follow up on one more point about the obligation to connect. There is a resistance among certain building owners because of competition law and other such things, so a softer option would be for the bill to include an obligation on those building owners to explain why they cannot connect to a network. That could force them to engage in contractual negotiations with the heat network operator to justify their position.
Dean Lockhart
That is understood. That is valuable feedback; I appreciate it.
The Convener
Richard Lyle just has one more quick question to ask.
Richard Lyle
I am just trying to unmute my microphone.
The Convener
You are unmuted.
Richard Lyle
I am sorry; I was trying to unmute myself.
We have failed to exploit various opportunities to use waste because of environmental concerns. If we had more drive and determination, we could change that. Do you agree—yes or no?
Michael King
Are you referring to waste?
Richard Lyle
Yes. I will not bore you with the detail but there was a proposal for a waste-to-heat plant in my constituency and my constituents were against it. However, other cities and towns, and other countries, have waste-to-heat plants. Have we failed to tackle environmental concerns?
Michael King
I am afraid that I have to duck that question because I am a heat network person, not a waste management person. The decisions lie further upstream and are down to people who know about such matters. However, if we decide to go down the energy-from-waste route—and I believe that that is SEPA policy nowadays—that should be done as efficiently as possible, including through the provision of a heat offtake, if not immediately then within a certain amount of time, which I understand to be about five years. That would create the opportunity for a heat network operator to come in, capture the heat and distribute it to the local community. However, the decision on waste is not ours to make.
Richard Lyle
Yes, you mentioned that. Thank you very much.
Michael King
You are welcome.
The Convener
We are coming to the end of the session. We have asked a lot of questions and covered a fair bit of ground. Is anything missing from the bill that you would like to be in it?
Michael King
I think that I have covered that. First, we really want a reference to fuel poverty in the bill. Secondly, as I mentioned to Dean Lockhart, there is the issue about the obligation to connect.
The Convener
It is just those two aspects that you really want to be included in the bill.
Michael King
Yes.
The Convener
Okay. In that case, and given the time, I thank you for your time. It has been really helpful to speak to someone who has delivered and is running a heat network. We will decide what recommendations to include in our report to Parliament, but your evidence, both written and oral, has been helpful.
That completes our public session. I thank anyone who is watching, and I thank broadcasting for supporting the transmission of the meeting.
12:07 Meeting continued in private until 13:13.23 June 2020

23 June 2020

1 September 2020

8 September 2020

29 September 2020

6 October 2020
What is secondary legislation?
Secondary legislation is sometimes called 'subordinate' or 'delegated' legislation. It can be used to:
- bring a section or sections of a law that’s already been passed, into force
- give details of how a law will be applied
- make changes to the law without a new Act having to be passed
An Act is a Bill that’s been approved by Parliament and given Royal Assent (formally approved).
Debate on the Bill
A debate for MSPs to discuss what the Bill aims to do and how it'll do it.

Stage 1 debate on the Bill transcript
The Deputy Presiding Officer (Linda Fabiani)
The next item of business is a debate on motion S5M-23564, in the name of Paul Wheelhouse, on stage 1 of the Heat Networks (Scotland) Bill.
15:55The Minister for Energy, Connectivity and the Islands (Paul Wheelhouse)
I am delighted to open the debate on the bill and that we have reached this point in the process. I thank the Economy, Energy and Fair Work Committee for its careful scrutiny of the bill and I welcome its recommendation to approve the general principles of the bill. I am also grateful to the organisations and individuals who have given evidence, the convener and members of the Delegated Powers and Law Reform Committee, and the heat networks regulations working group, which was a strong source of support to us in preparing the bill.
Before I talk about the bill itself, it would be beneficial I were to briefly set out what a heat network is, how it differs from the heating systems that we are more familiar with in Scotland and the benefits that it can bring. Put simply, a heat network is a distribution system of insulated pipes that carry hot water or steam from a central source and deliver it to homes and businesses. Heat networks are best deployed in denser, more built-up areas where there is more concentrated demand for heat, but they can also work well in rural contexts. The technology is well known across Europe, predominantly—but not exclusively—in large cities such as Copenhagen, where it supplies heat to 98 per cent of buildings.
Heat networks are generally more efficient than individual gas boilers and, in the right circumstances, can deliver fuel savings, helping to lower bills and tackle fuel poverty. The heat can come from a wide range of renewable and low-carbon sources, including large-scale heat pumps in our rivers or even waste heat recovered from industrial processes such as whisky distillation. There are also health and safety benefits, as there is no need for any combustion to take place inside the building, thereby avoiding fire and carbon monoxide poisoning risks.
As heat networks are long-lived assets, they can create long-term local jobs in maintenance and administration. When deployed in suitable areas, heat networks have many benefits, the most important of which might be their capacity to remove the emissions that are caused by heating our buildings, and to reduce bills and so help to tackle fuel poverty. The Committee on Climate Change, along with other key actors in sector, has advised us that there is real scope for making greater use of renewable and low-carbon heat networks.
Given the opportunity that the technology presents, the overall aim of the bill is to accelerate development of heat networks in Scotland and so drive down emissions and tackle fuel poverty. The bill seeks to do that by creating a new licensing regime to ensure that operators are solvent, fit and proper, while also driving up standards across the sector. The bill introduces new processes for consenting, zoning and permitting to ensure that new networks are developed where they will have the most benefit; that they are tailored to the needs of an area; and that they can provide greater certainty to developers and investors to attract investment. We are levelling the playing field with other utilities by creating new rights for heat network developers and operators, which will help to reduce the costs and risks associated with construction. Finally, the bill puts in place arrangements to protect network users by enabling a transfer of operational rights to occur to ensure continued supply.
The bill and its provisions have been developed following extensive consultation with stakeholders and communities, including our island communities, and are based on advice and recommendations from an expert working group of stakeholders. The Economy, Energy and Fair Work Committee has made helpful recommendations throughout its report and I have responded to the committee in what I trust is an equally helpful manner.
The bill is lengthy and complex, so I will concentrate on covering four important areas that are addressed in the committee’s stage 1 report: consumer protection, fuel poverty, community engagement and the division of responsibilities between local and national Government.
I will also listen carefully to the points made by members in the debate today on all areas of the bill. If the bill progresses to stage 2, I will write to members of all parties so that I can hear the views of Parliament in further detail. As I have said from the outset, I want the process to be collaborative so that we produce a piece of legislation of which we can all be proud. I am confident that we can and will do that.
The committee has highlighted the challenges relating to consumer protection, which, as members are aware, is not currently within the competence of the Scottish Parliament. I very much welcome the committee’s scrutiny of the issue, and I reassure members that we will not enable the mass deployment of such schemes without commensurate protection for homes and businesses.
Earlier this year, the United Kingdom Government signalled its intention to legislate in order to introduce a set of consumer standards for the sector, which will apply across Great Britain. That is very welcome. I continue to work closely with my UK counterparts to ensure that the proposals are fit for Scotland.
I have written to Kwasi Kwarteng MP, who is Minister of State for Business, Energy and Clean Growth, to seek new powers for the Scottish ministers to determine which body oversees the consumer standards in Scotland. That would ensure that that body, whether it is the Office of Gas and Electricity Markets or another organisation, is one and the same as the licensing authority that is created by the bill. In that way, we will achieve coherent regulation in Scotland while harmonising standards for businesses and consumers across the borders.
Graham Simpson (Central Scotland) (Con)
Does the minister think that Ofgem would be the appropriate body?
Paul Wheelhouse
We are very supportive of Ofgem providing the role. Obviously, it is not within our gift to appoint a body that is constituted under a UK statute. We are seeking to work with UK ministers to get the powers so that the Scottish Parliament is able to appoint Ofgem to that role. We have had early discussions with Ofgem, and we believe that it is supportive of performing the role.
I had hoped to have a response by today, in time for the debate, but I do not, for which I apologise. I am waiting for Mr Kwarteng’s response, but I do not read anything into that—it is perhaps just a bandwidth issue. We will continue to keep the committee and Parliament updated as we progress. Meanwhile, I hope that members agree that the bill will improve the current situation by regulating the market for the first time and enabling conditions of licence and consent to be placed on operators and on individual sites.
I turn to the important issue of fuel poverty, which has rightly been raised in the committee’s report. Heat networks have an important role to play in helping to eradicate fuel poverty. The business and regulatory impact assessment that accompanies the bill notes that heat networks can provide average fuel savings of 17 per cent for households and, in the right circumstances, savings of up to 36 per cent.
I recognise that the bill does not make explicit reference to fuel poverty, but I assure members that contributing to the eradication of fuel poverty has been an absolute priority for the Scottish Government as we have developed the bill. To put that beyond all doubt, I propose to lodge amendments at stage 2 to parts 1, 2 and 3 of the bill to ensure that consideration of fuel poverty is embedded explicitly throughout the bill. My officials and I are liaising with the chair of the Scottish fuel poverty partnership forum and with Energy Action Scotland to inform those amendments. Should the bill pass, I will continue to work with fuel poverty stakeholders to ensure that the regulatory framework, as it is further developed and implemented, helps to tackle fuel poverty.
The committee has recommended that the bill include stronger provision for community engagement. I have reflected on that, and I recognise that the bill could be strengthened to ensure that the views and needs of local communities are accounted for. To ensure that local views are considered from the inception of a potential project, I will lodge an amendment at stage 2 that will require developers to provide real evidence of their engagement with local communities alongside their application for a heat network consent. As we develop subsequent regulations in that area, it will be important for us to draw on the expertise and insight of communities and organisations such as Citizens Advice Scotland, and I commit to working with them as we progress work in that area.
I note the committee’s recommendation for the balance of powers between the Scottish ministers and local government to be modified over time. As introduced, the bill makes the Scottish ministers responsible for approving new heat network developments through the consenting system. I want to be clear that that will not undermine the role of local authorities. Rather, the intention is to ensure proportionality by not requiring local authorities to take on that function at this time, while the heat network sector is still developing and when such systems will not have equal distribution across the country. The intention is also to make use of the Scottish Government’s existing capacity within the energy consents unit, which already performs a similar function in approving new renewable generation and electricity transmission projects. That will enable us to realise economies of scale and to proceed as quickly as possible in approving new schemes, in view of the global climate emergency.
The committee’s recommendation on that issue is very sensible and practical. I agree that local authorities should be empowered as far as possible, particularly in the case of heat networks, which are local assets by their nature. I will therefore lodge a Government amendment at stage 2 to enable responsibility for the award of heat network consents to be transferred to local authorities in future. However, the amendment will also allow local authorities to choose to leave the responsibility with the Scottish ministers, if that suits their circumstances.
Of course, the bill is only one part of our work to tackle fuel poverty and reduce emissions from Scotland’s homes and buildings. We have the most ambitious and comprehensive fuel poverty legislation and retrofit programmes in the UK, and we are committed to investing £1.6 billion during the next parliamentary session to expand and accelerate our heat and energy efficiency programmes as part of a green recovery.
We have already launched a £50 million green recovery low-carbon infrastructure transition programme call, and we will invest £25 million in heat networks as part of the Clyde mission. This year, we are also providing funding of £20 million to social landlords so that they can improve their properties by making them warmer and greener. Last month, in addition to opening a £4 million renewable heat cashback scheme for small and medium-sized enterprises, I announced a new £4.5 million cashback incentive to help people install renewable and energy efficiency measures in their homes.
We will shortly publish a consultation on our 2024 standard for new buildings, requiring them to use only zero-emission heat. That will open up a new market opportunity for the renewable heating sector, and will be an important step forward in encouraging the connection of new buildings to heat networks.
We will also shortly publish our heat in buildings strategy for Scotland, which will set out a vision for the roll-out of energy efficiency and heat decarbonisation in Scotland. The strategy will set out an ambitious set of new actions that will accelerate the decarbonisation of our building stock, including new commitments to support the deployment of heat networks. I encourage all members to consider that important document closely when it is published.
I hope that I have demonstrated to colleagues that the Heat Networks (Scotland) Bill will play a crucial role in our package of programmes as we take steps to ensure that Scotland’s buildings are warmer, greener and more efficient. The bill is an important step in supporting the deployment of heat networks at the scale that is needed to help us reach our net zero carbon targets. The bill will provide confidence for consumers, investors and the supply chain, creating a sustainable market for district heating, and I commend it to Parliament.
I move,
That the Parliament agrees to the general principles of the Heat Networks (Scotland) Bill.
16:07Gordon Lindhurst (Lothian) (Con)
Heat networks are hardly a new idea. The first modern district heating system was pioneered in a town in the state of New York in 1877. Birdsill Holly, a friend of Thomas Edison, observed the abundance of thermal energy in urban areas, and he realised that heat from industrial processes could be piped into homes to meet public demand. Waste not, want not. A triumph of the free market, we might say, but this is a committee report and I could not possibly comment.
The Scottish Government has presented us with a doorstop of a bill. It extends to 85 sections and 42 pages. I am pleased to say that our stage 1 report is two pages shorter. In the words of Horace,
“Whatever advice you give, be brief.”
It is, however, pleasing that the minister has heeded so much of our advice. It is fair to say we are not overly familiar with the words
“The Scottish Government accepts the Committee’s recommendation”,
but credit where credit is due: that phrase appears in almost double figures in Mr Wheelhouse’s written response to us. He and his officials are to be commended for taking such a constructive approach.
The bill is a technical bill with substantial delegated powers. In broad terms, it seeks to regulate the supply of thermal energy via heat networks. It has a single purpose, but that single purpose covers a plethora of policy areas, including energy efficiency, renewables, land rights, planning, and climate change.
I want to focus on a handful of matters that we highlighted in our scrutiny. The first and most fundamental matter, which also featured in our energy inquiry, is public engagement. The Committee on Climate Change has advised the Scottish Government to prioritise behaviour change. Our committee agrees. We also want the Scottish Government to take the lead by example to facilitate new social norms.
We want to address the disconnect between public support for carbon reduction and a lack of awareness of the role of heat, and to ensure community buy-in, consumer confidence and what we might term social licence.
Citizens Advice Scotland saw the intentions of the Bill as “admirable” but said that
“it could go further to guarantee good outcomes for consumers.”
CAS cited the experience of one community in north-west Glasgow, an area where more than 90 households had their heat turned off after falling into arrears. The provider had put up its price but had failed to appreciate the vulnerability of those customers. That is why we need a clearer commitment to local input in the growth and development of heat networks, which I think the minister recognises. That must be at the heart of the bill and central to its ethos.
We welcome the minister saying that developers should provide a community engagement report and the indication that he will lodge an amendment to stipulate that in the bill. Again, we credit him with taking a positive stance. He has agreed that provisions on fuel poverty, which a number of witnesses wanted, should be included in the bill.
The Nordic experience, notably in Denmark and Norway, is an acknowledged influence on the bill. In other circumstances, we would have liked to see the results of that experience for ourselves, but coronavirus prevented that. We were grateful, however, to the Danish energy agency for providing us with a written submission in the absence of an opportunity to make a site visit. The Danes described heat networks as a “low-regret investment” that is “agnostic to the heat source” and is adaptable to technological developments in areas such as waste heat and hydrogen.
Municipalities in Denmark oversee the consent process for heat networks and, together with consumer co-operatives, own most of the networks. The balance of power between the national and the local is certainly not like that in the bill. We feel that it would be desirable if that could be modified over time and, yet again, the minister has accepted our recommendation. He recognises that local authorities should be “empowered as far as possible” where they are willing and able. He accepts that heat networks are essentially “local assets” and he says that he will seek to amend the bill to enable the future transfer of consents to councils.
I might offer the minister even more compliments, but I am already in excess of my quota, so I will move on to a question. What is on the wallpaper today? I am told that that is what a Dane asks when they want to know what is on the agenda. On what is left of my wallpaper, I will cover a robust critique of some of the bill’s drafting.
We heard detailed evidence in relation to wayleaves, legal definitions, and the creation of real rights. Professor Roddy Paisley specialises in land law and he impressed even Andy Wightman. We will no doubt hear Andy’s comments shortly.
Professor Paisley made observations on various aspects of the bill. Here are just a few. He said that it is
“somewhat oddly drafted and lacks clarity.”
and also that
“I think it will be overly sanguine to expect the builder’s shovel to conform in every or even most situations with the lawyer’s pen.”
He described the bill as
“a half-baked import … In Scotland we can do better than this.”
and lastly said:
“It would not be a good idea to model what you propose to do in the bill on what is already in legislation, drafted by the Westminster Parliament”.—[Official Report, Economy, Energy and Fair Work Committee, 1 September 2020; c7.]
That was an interesting contribution and one that we felt ought to be stress tested with another academic. We then presented both sets of views to the Scottish Government. Did the minister respond in a defensive or a derisory way? I am almost dismayed to say that he did not. He described the views as “valuable”. He believes it “crucial” to consider the transparency of wayleave rights and he says that he will seek to amend the bill to address such issues.
Heat networks are hardly a new idea, but a minister who listens is an innovation. We recommend that the general principles of the bill be agreed to.
16:14Alexander Burnett (Aberdeenshire West) (Con)
It is welcome to finally be here deliberating legislation to advance heat networks in Scotland, although I feel that it has been a long time coming; so long, in fact, that I had to check when the subject was first raised in the Parliament, and the honour falls to Sarah Boyack for raising it back in 2003.
For my own part, and to declare an interest, I started building heat networks back in 2007. I am a firm believer that all members should bring real-life experience into the Parliament, but I guess that I might be in the minority who has literally been in the trenches of district heating. Unfortunately, I do not believe that the minister and his team have built a heat network, which is perhaps reflected in some parts of the bill, which I will come to later.
However, the principle of the bill is to encourage greater use of heat networks, which is welcome. I hope that when the bill is passed, it will encourage the development of heat networks. So far, Scotland’s performance has been woeful in hitting only half of its target of heat produced by renewables. However, we welcome the elements in the bill addressing consumer protection and the wish of both the committee and the minister to use Ofgem, which is seen as the Rolls-Royce of regulation in an emerging market. We also have no issue with the many technical definitions in the bill.
There are, however, a number of concerns about the bill, which fall into two clear parts. The first is existing schemes, of which there is no mention. As an aside, I find it extremely concerning that the exact quantum of schemes and consumers is not known, with figures given of 800 schemes and possibly 20,000 consumers. However, in a written answer to Tom Arthur on 29 October, the minister said that that figure was nearly 30,000. That seems a large discrepancy and a large number to be overlooked by any bill.
The minister said that existing schemes will be covered by proposed UK legislation, but there is a concern about whether they will be covered in the same way as this bill will cover them and what happens until that UK legislation is passed. Furthermore, many schemes are continuing to expand, so I would be grateful if the minister could make it clear whether any expansion of an existing scheme will require a licence and, further to that, how any existing part of the scheme not covered by the bill will then interact with the part of the scheme that will now be covered by the UK legislation. There is a vague assurance from the minister that the bill will not have a disproportionate impact on existing schemes, but clarity on those points would be most welcome.
On new schemes, I will focus on two areas that demonstrate a lack of knowledge of the sector. The first is the identity of the supplier of last resort, which the Scottish Government views as a key outcome of the bill. The suggestion is that, as part of a licensing requirement, an operator would have a third party obligated to take over and ensure continuous operation of the scheme. That is a welcome consumer protection, but we must look at how that would work in practice.
The third-party supplier of last resort, who one assumes would already be a licence holder and therefore a competitor to the existing operator, would have to take on an obligation to step in and take over a scheme in the event of insolvency or another failure of supply. Leaving aside the effects of insolvency and creditors’ claims on a network’s assets, that third party’s obligation is a financial risk that would sit on its balance sheet and would therefore require the constant due diligence of a competitor’s financial and physical performance.
Aside from commercial confidentiality, the cost of that could be prohibitive or, worse, could be passed on to consumers, with negative consequences for fuel poverty. Again, I would be grateful if the minister could give clarity on the detail of that aspect. Is he saying that the Scottish Government will always be the supplier of last resort?
The second aspect requiring further explanation is around heat zones. There are physical and practical components of a heat network that complicate that element. As a brief explanation, the generating building, fuel store and emerging pipework sizes must all be calculated and sized accordingly at the outset of a project. Although some additional capacity can be added and distributed, it is not nearly as straightforward as expanding an electrical or gas network, which much of the bill appears to be based on.
A heat network’s available capacity, and even the location of that capacity around the network, is not straightforward and subject to change with every new connection. The idea that new buildings in a designated area can simply connect is, I am sad to say, fantasy. One new building might well have a different heat load to another, requiring physical differences in both the pipe size and the hydraulic interface unit, or heat exchanger, which will mean financial differences, too. That all means varying connection charges.
Paul Wheelhouse
Will the member take an invention?
Alexander Burnett
If I can have the time back, certainly.
Paul Wheelhouse
The member rightly identifies that we need an accurate understanding of what the heat load and the demand load would be, building by building. Does he appreciate that, as a first step, we are looking at using public sector buildings in order to produce building assessment reports to inform local heat and energy efficiency strategies and give accurate data. I hope that we will, for anchor loads—at least for public buildings—be able to give investors’ confidence that there is sufficient demand to justify the investment.
Alexander Burnett
I welcome that reply. I also note for the record that I welcome the minister’s offer in previous conversations to be as constructive as possible on the bill.
The minister mentioned existing loads. Those are subject to change, an issue that I will touch on now. There can be varying connection charges, which might not be known at the outset. However, building users might also change, with different heat demands, leading to obvious implications for the operator. A shed with a micro-distillery has a very different heat profile than if its use was to change to storage only. The same could apply to the public sector buildings that the minister just mentioned—their uses might change over time.
All that leads to issues over the connecting and charging obligations for the operator and the potential consumer, which do not appear to have been given any meaningful consideration.
A significant issue is how local authorities will resource their new heat zoning obligations, with funding needed for the specialist skills that are required. I know that other colleagues will speak about that. For my part, I hope that we are not going down the Government’s familiar route of devolving responsibility without the matching resource.
Other submissions raise the point that the bill is based on single entity and operator schemes, whereas multi-operator schemes are quite normal, so clarity is also required on licence-holding requirements. Similar questions were raised about the revocation or refusal of a licence, the transfer of assets’ process, the valuation and compensation mechanisms and, most worryingly, the lack of an appeals system.
I hope that the minister will significantly improve his knowledge of how heat network systems are built and do everything in his power to ensure that his legacy is not the death knell to consumers and developers of heating networks.
Despite the many reservations about the bill, it must become one that will increase heat networks and protect consumers. The bill must be welcomed and we will support it at decision time.
16:22Claudia Beamish (South Scotland) (Lab)
I thank Paul Wheelhouse for introducing the Heat Networks (Scotland) Bill. I welcome the bill as an opportunity to address concerns around the sector and as a move towards decarbonising heat. It is also an opportunity to lift thousands of families out of fuel poverty.
I will leave the committee members who are speaking today to outline the recommendations, which we support, during this important stage 1 debate.
I am pleased to open the debate for Scottish Labour. We will support the bill at stage 1, but we believe that it has so much more potential. We face a climate emergency, and heat from buildings accounts for a quarter of Scotland’s climate emissions, yet none of the statistics around renewable heat in Scotland seem to match the urgency for action. So far, the progress in this area has been far too slow. The target of 11 per cent seems quite measly given our understanding of the climate change emergency, and the fact that it has been missed is disappointing.
Heat networks can and must be part of the transition to a net zero society, but the estimates are of only between 7 and 17 per cent of Scotland’s heat demand being met from renewable networks, which is not enough. That will not drive the large-scale changes that are needed to tackle the climate crisis. We need ambitious targets for a green recovery.
It is notable that, in its recommendations, the committee invites the Government
“to reflect on whether its ambitions for the impact of the Bill are on a level with those it has already set out for tackling climate change and pursuing a green recovery.”
That needs further attention, and consideration must be given to the recommendation of WWF Scotland that targets and a clear delivery plan should be included in the bill and not just in guidance.
There is certainly consensus that heat networks are a way forward as part of a mixed renewable energy solution. However, if the sector is to be a success, a number of factors must come together. I will be listening carefully to discussion of those in the debate.
The bill presents an opportunity to drive up consumer confidence, and we know that low confidence is a significant barrier to developers and uptake. A regulated sector with robust licensing, service standards and consumer protection would improve confidence among developers and investors, who are reluctant to take risks without measures that create licence holders with statutory powers similar to those of other utility providers. In its report, the committee has asked to see
“a clearer commitment to consumer protection”,
which is a view that is supported by Ombudsman Services.
I ask that consideration be given to including in the bill provision for what should happen in a situation when a customer enters into a heat network without the ability to switch suppliers. I hope that the minister and the committee will address that issue as the bill progresses. Having more information about service, customer engagement, minimum standards and price, as well as other information such as licence conditions, in the main body of the bill would be a way of ensuring such protection.
Further, as other members have said, having a co-ordinated approach by local government and the Scottish Government will be necessary. In its report “Renewable Heat in Scotland, 2011”, the Energy Saving Trust acknowledged that clarifying the role of local authorities should be a priority. Although the bill does consider the role of local authorities, there is a lack of reference to community engagement, so that aspect must be given greater priority. Again, the committee has recognised that.
Advice and funding will also be critical to ensuring that councils have the capacity and knowledge to develop municipal, community or co-operative not-for-profit heat network companies. I welcome hearing the minister’s commitments on those areas. Consideration must also be given to achieving a just transition and to ensuring that skills and knowledge are in place to respond to the challenge and expand the sector. Those include the skills to develop technology, install it and maintain it.
Given the benefits that heat networks could bring in reducing domestic fuel costs, it is a relief that the minister has today agreed that provisions to address fuel poverty will be included in the bill.
In Drammen, Norway, district heating via a heat pump delivers the city’s collective heating needs, using fjords as a resource. Some 50 per cent of the system is owned by a commercial energy company and the remainder is owned by a municipal company. Indeed, in many European countries there have long been district heat networks, which are embedded in their cultures with no concerns about a lack of individual control, because people work together on such schemes. We must recognise that, as we develop networks here in Scotland, there must be support and clear information for our communities. It is encouraging for the development of our manufacturing base in relation to heat networks that it was a Scottish company, Star Renewable Energy—which I know the minister and other members have visited—that made the Drammen system possible.
There is much to be positive about in the bill. If the gaps are addressed, it will enable us to grasp fully the local, national and global benefits that heat networks offer.
The Deputy Presiding Officer (Christine Grahame)
I call Andy Wightman to open the debate on behalf of the Scottish Greens. You have up to five minutes, Mr Wightman.
16:28Andy Wightman (Lothian) (Green)
Scottish Greens welcome the bill. I thank the committee’s clerks and all those who gave evidence. As the convener did in his opening remarks, I thank the minister for his constructive engagement and positive response to the committee’s stage 1 report.
As we know, Scotland is a northern country in which it is wet and cold for much of the year. We have a persistent problem with fuel poverty, but we also need to keep warm. Some years ago, I was lucky enough to visit the Soviet Union on a number of occasions. One year, I was skiing in Siberia when I encountered interesting and quite substantial heat networks with vast pipes snaking across cities and leaks of warm air condensing in huge clouds in the streets. The homes of Soviet citizens were warm, even in the most hostile climate on earth. That is not unusual. Many—indeed, most—European countries, and certainly all the northern ones, have long embraced heat networks, and developing the policy behind the bill has involved drawing on the experience of a number of such countries. The bill is therefore a welcome one, and it represents an important step towards addressing Scotland’s energy needs.
We know how little time we have in which to address the climate crisis, and making our heating systems more efficient and climate friendly is one of the key challenges that faces us, together with transport and land use.
The committee has identified a large list of areas where improvements could be made. Again, I thank Mr Wheelhouse for his constructive response to the committee’s recommendations, and I will reflect on a few of them. First, it has been suggested that the function of tackling fuel poverty should be in the bill as an objective and criterion for the regulatory process and the awarding of consents. I welcome the Government’s agreement on that and look forward to debating the formulation of words to achieve that.
Secondly—and this is the Scottish Green Party’s principal concern—the bill centralises power with Scottish Government ministers. Much of the evidence from the Scottish Government in relation to the bill drew heavily on the Danish model of heat networks. As the convener mentioned in his opening remarks, the Danish energy agency provided useful written evidence to the committee, which I have here. It indicates that, under the key elements of heat networks, municipalities—local authorities—have
“mandated responsible authority for heat planning and approval of heat projects.”
The document goes on to say:
“The pipe network for distribution and transmission of heat is owned predominantly by municipalities”
—two thirds of it—
“while consumer-owned cooperatives own most of the”
remainder.
An important feature of the Danish heat network system is the concept of the
“‘not-for-profit’ requirement. This has been part of heat networks regulation since heat planning became a municipal responsibility. The not-for-profit requirement stipulates that heat network companies can only charge the consumers a price equal to the actual or ‘necessary costs’ of producing and transporting the heat—profit is deemed an unnecessary cost.”
Although the private sector no doubt played a useful role in New York, the Danish evidence shows that municipal enterprise can play an equally productive role in heating our homes. I am pleased that the Government has agreed to amend the bill to allow for the future transfer of regulatory functions to local authorities, but I believe that it should go further.
In the Local Government and Communities Committee yesterday, cabinet secretary Aileen Campbell said:
“We are committed to local decision making”—[Official Report, Local Government and Communities Committee, 2 December 2020; c 2.]
In my view, the bill should presume that local government should be the competent authority as the default, unless it decides not to be. In such scenarios, local authorities may decide that they wish the Scottish Government to perform the relevant functions on their behalf, or they may decide to share services and expertise with neighbouring local authorities, as they do now.
Public engagement has also been mentioned in relation to what will be a dramatic change in infrastructure and how we heat our homes. In the absence of a formal role for communities and local authorities regarding planning and consent, a robust plan for engaging with and taking feedback from relevant individuals is important. Again, I welcome the Government’s response on that.
The committee heard significant evidence on the legal aspects and drafting of the section on wayleaves. The convener mentioned a few of those. Professor Paisley told us that section 60 needs “wholesale redrafting”, and that references to the words “owner” and “occupier” are “English inspired nonsense”. I should say that it is very good when witnesses appear before committees and tell us exactly what they think. [Laughter.]
As the convener said, the committee is very interested in and keen to see that evidence being tested properly, and we did that by inviting Scott Wortley, who was the committee’s adviser on the drafting of the Title Conditions (Scotland) Act 2003. Professor Paisley said that that was one of the Scottish Parliament’s finest legislative achievements.
Finally, we touched on the issues of building regulations and the green recovery, among other matters. However, I will leave it there. I confirm that the Scottish Green Party will support the bill at stage 1.
16:33Liam McArthur (Orkney Islands) (LD)
I hope that the Deputy Presiding Officer might grant Andy Wightman a closing remark, so that he can explain why he was on special manoeuvres, skiing in Siberia. [Laughter.]
Like others, I thank the Economy, Energy and Fair Work Committee for its work on the bill, as well as those who provided evidence. In the light of the comments by Andy Wightman and the convener, I, too, thank Paul Wheelhouse for his characteristically constructive engagement with the committee on the matter.
I was delighted that committee members managed to visit Orkney as part of their evidence gathering. That is always to be encouraged, and I am sure that it helped to inform the recommendations in the stage 1 report. Indeed, the islands that I represent have shown themselves to be pioneering in the generation and use of energy in ways that cut emissions and lead us towards net zero. Of course, achieving that in relation to heat, as in transport, remains one of the biggest challenges that we face. That is why the bill, which the Scottish Liberal Democrats strongly support, is crucial, and it is why the point that Claudia Beamish made about adequate resourcing of the provisions in the bill was well made.
The Orkney example also illustrates the tension in the bill between national oversight and local delivery. I accept that the consent process needs to ensure that we have the right projects in the right places and that we have a proper balance between environmental objectives and efforts to reduce fuel poverty. However, communities and local authorities must have a formal role in the planning and consenting of schemes, because, without that, public buy-in becomes difficult and, as CAS and others have pointed out, decisions could be taken that either ignore or override the interests of local residents, some of whom might be vulnerable.
Given the higher levels of fuel poverty in our island and rural areas, the bill’s provisions demand rigorous island and rural proofing. As various witnesses made clear to the committee, we need to avoid overly bureaucratic regulation, but we also need to ensure that customers across Scotland have access to the same low prices for energy.
Denmark has made a success of a decentralised process, and, as members have observed, there is no reason why Scotland cannot and should not do the same. I therefore welcome the minister’s assurances about transferring consenting power to local councils that wish to have it and about requiring meaningful engagement by developers with local communities. I was struck by Andy Wightman’s position in relation to a presumption. That approach has been taken to planning for aquaculture development, so there is a precedent.
On the theme of island proofing, I ask the minister to investigate why Shetland Heat Energy and Power’s treatment on rates appears to be at odds with the treatment of projects elsewhere in Scotland. That might not fall into his ministerial responsibility, but, even if it does not, I am sure that my colleague Beatrice Wishart, as well as Shetland Heat Energy and Power, would welcome some clarification on that.
The bill makes sensible proposals on definitions and licensing. I echo the points about the benefits of having a consistent approach across the UK, which would point to Ofgem being the obvious choice as a licensing authority. However, on the question of conditions, I think that we can be bolder in the bill, and that can be done under the guise of consumer advice, which is devolved to the Parliament. I see no reason why the bill should not include more detail on licence conditions such as information about service, price, customer engagement and minimum standards. More importantly, CAS, Energy Action Scotland and the ombudsman also see no reason why that should not be the case.
During the passage of the Climate Change (Scotland) Act 2009, Scottish Liberal Democrats worked with others to deliver important amendments prioritising action on heat networks. We believe that setting stretching targets in the bill is again the right approach and the best way of achieving those ambitions, as WWF and others have argued. I look forward to working with the committee and the minister and his officials to make the necessary improvements at stage 2.
I confirm, once again, that Scottish Liberal Democrats will be happy to vote in support of the bill at decision time this evening.
The Deputy Presiding Officer
We come to the open debate.
16:37John Mason (Glasgow Shettleston) (SNP)
We face a number of challenges around heat. They include the need to decarbonise heat and the fuel poverty that many of our constituents face. Heat networks, and in particular district heating systems, definitely have a big part to play in tackling those challenges. I say in passing that I hope that we continue working on hydrogen as an option, using the existing gas pipework if possible. I find it tremendously exciting to hear about the H100 pilot project in Fife, although I accept that a lot of the technology on hydrogen is still at a relatively early stage of development.
I have been a member of the Economy, Energy and Fair Work Committee and its predecessors on and off since 2011. I was hugely impressed when, some time ago, we visited the University of St Andrews district heating system, which has its heat production facility at Guardbridge, some 4.6 miles away from most of the university buildings. The network is about 10.6km in length. Frankly, I had not realised that hot water could be transferred so far with such little loss in temperature. I suspect that I am not unusual in not fully understanding the systems.
The committee found a bit of a disconnect between the undoubted public support for climate change reduction measures and the lack of awareness of the role of heat. When district heating is mentioned, some of us perhaps think of the sort of hugely inefficient Soviet-era system that Andy Wightman referred to, leaking steam and heat all over the place, with little or no control for the individual household. However, a modern district heating system is completely different.
In its response to paragraph 143 of the committee’s report, the Government refers to a report entitled “Public awareness of and attitudes to low-carbon heating technologies: an evidence review”, the findings of which include the fact that the two main factors that put people off low-carbon heating systems are the expected cost and uncertainty about performance. I guess that that will gradually be overcome as such systems become more common and more people have them or know other people who have them and are benefiting from them.
In my constituency, the Commonwealth games village was an extremely desirable housing development, with a mix of owner-occupied and social rented housing. Of course, it was built to a higher than normal specification and was subsidised, so it was very attractive to prospective residents. I suspect that most of them moved in despite the district heating system rather than because of it. We had various complaints early on, especially about the charging system. At least to start with, the heating charges were set to match traditional heating costs, because the operators did not know what the actual costs, such as the cost of long-term maintenance, would be. I do not think that we have had any complaints about the system recently.
The hope is that heat networks can be one way of reducing fuel costs and therefore fuel poverty, so I welcome the Government’s response to paragraphs 131 and 132 of the committee’s report, which recommended that that aim be made more explicit in the bill.
A related issue is how we will deal with the existing heat networks when the new licensing system comes into play. The committee raised that topic in paragraph 86, and I welcome the Government’s response, which talks about possible exemptions, which could be time limited, the exclusion or modification of licence conditions, and the adaptation of fees.
Andy Wightman was particularly concerned that local authorities and communities should be as involved as possible with district heating. I have a lot of sympathy with that point of view, so I welcome the Government’s commitment to lodge an amendment at stage 2 to enable responsibility for the award of heat network consents to be transferred to local authorities if they wish that to happen.
There is a lot more that could be said—for example, about an obligation to connect and other issues—but I will leave it at that. Like the rest of the committee, I am very happy to support the general principles of the bill.
16:41Edward Mountain (Highlands and Islands) (Con)
I refer members to my entry in the register of interests.
It is interesting to take part in the debate as somebody who has not been involved in the committee process on the bill but has read some of the information that has come out. During my professional career as a chartered surveyor, I have witnessed the emergence of heating networks and have seen the practical benefits that they can bring.
As we all know, individual boilers take up significant space in homes and offices. Connecting up to a heating network means that people can remove not only the boiler, but the relevant alarms and the need for annual safety inspections. Overall health and safety can be improved, because the risk of fires and carbon monoxide poisoning is reduced or eliminated.
I believe that it is time for heating networks to be expanded, especially as the early adopters of such schemes have shown real promise. For example, in the Highlands, the Wick district heating scheme has been blazing the trail when it comes to delivering renewable and affordable energy. It is that energy that powers Caithness general hospital, Pulteney distillery, Wick assembly rooms and homes that are owned by Cairn Housing Association, which proves that such schemes are reliable and provide a sustainable source of heat for homes, businesses and our health service.
Although Wick is leading the way, Scotland has been falling behind when it comes to expanding heating networks. I believe that estimates suggest that only 1 per cent of Scotland’s total heat demand is met by heating networks. Scotland has a long way to go when we compare the situation here with that in Denmark, where 63 per cent of households are powered by heating networks, or that in Finland, where such heating accounts for 50 per cent of the total heating market. I truly believe that the Scottish Government has missed a trick in not legislating sooner for heating networks, and I am pleased that its work in the area is now gathering momentum.
The Government promised to create a licensing body for heating networks back in 2013, but such a body has not yet been delivered. If the Government had done so, the industry could have accelerated its expansion, which would have helped to reduce carbon emissions and household bills even more. There has been a seven-year delay. In that time, how much heat has been generated by distilleries in Speyside and squandered by being pumped back into the rivers, thereby increasing river temperatures by two or three degrees?
Paul Wheelhouse
I am grateful to the member for giving way; I will not take much of his time. I very much agree with him about the need for pace. I do not disagree with that at all. I merely highlight that we, the UK Government and indeed colleagues in Northern Ireland have needed to emerge with a framework for consumer protection that works for all parts of the UK. I do not say that to criticise, but I hope that the member appreciates that that is an important part of what we are discussing today.
Edward Mountain
I thank the minister for that, and I agree. Whoever is slowing it down and wherever the slowness is, I will criticise those people, because it is a great scheme, as we have heard this afternoon.
The Economy, Energy and Fair Work Committee’s report identifies that there is no formal role for communities or local authorities in planning and consent for heat networks. I am pleased to hear that the minister has taken steps to change that, because local democracy is an essential part of the planning process and it should never be undermined. Local communities should be involved at all levels.
If we are to reduce emissions and meet Scotland’s climate change targets, we require a mixture of renewable energy solutions, and heating networks have a key role to play. I am delighted that my party and, it appears, all the other parties support the general principles of the bill, which is, I believe, long overdue.
16:46Richard Lyle (Uddingston and Bellshill) (SNP)
As ever, I begin by welcoming the opportunity to contribute to this important debate.
Scotland and, by extension, this Scottish Government have a proud record of taking world-leading action to address climate change and tackle fuel poverty, and the Heat Networks (Scotland) Bill paves the way for even greater action on those priorities. In passing the bill, Scotland will be the first country in the United Kingdom to legislate on the development of heat networks in order to help to meet climate change targets and tackle fuel poverty.
The bill will introduce regulation and a licensing system for district and communal heating in order to accelerate the use of heat networks across Scotland. As many members will know, district or communal networks deliver heat from a central source through insulated pipes to local homes and other buildings, and they have the potential to reduce or remove emissions from the heating of buildings and homes across Scotland.
Heat networks are generally more efficient than individual gas boilers. They can be run wholly from renewable sources and they reduce the need for customers to procure and maintain their own boilers. Those are incredibly important elements of the bill. I will shortly outline why the fact that heat networks can be run wholly from renewable sources is particularly important given our global obligations to our climate.
As a member of the Economy, Energy and Fair Work Committee, I am particularly pleased that the committee has recommended that the Parliament agrees to the general principles of the bill, because it can make a difference.
We are facing a global climate emergency and we must reduce the emissions that are associated with heating our homes and businesses if we are to achieve our aim of net-zero emissions by 2040. One of the main challenges is to reduce and ultimately stop the impact from heating our homes and buildings, which is currently where more than half of the energy that we consume as a society goes.
In order to fully deliver on those ambitions, however, we need clarity from the UK Government on the future of the gas grid. In the meantime, Scotland will make full use of our devolved powers, and that will include the development of heat networks where they are appropriate. Heat networks will play a key role in supplying Scotland’s heat in future, and the bill will create the circumstances that are needed to unlock the full potential of the sector and support its growth.
It is welcome that the proposals in the bill were developed based on recommendations from an expert group of industry, consumer group and local government representatives, and that they are in line with the statutory advice that was received from the Committee on Climate Change.
The benefits of heat networks are not only environmental. However, heat networks are often more efficient than individual fossil fuel heating systems, as I mentioned, and they can be run fully from renewables, recovered waste or surplus heat sources. They can allow the heat source to be changed to one that is compatible with Scotland’s world-leading climate change targets without further disruption to the heat users, and they have the capacity to reduce or remove the emissions associated with heating buildings. The Committee on Climate Change has recommended that heat networks should form a part of Scotland’s future heat supply.
Heat networks can save space and remove combustion risk in buildings, and they have been shown to save householders and businesses up to 36 per cent of fuel costs, with consequent benefits for tackling fuel poverty and reducing costs faced by businesses and public bodies.
The Competition and Markets Authority found that costs for 90 per cent of heat network customers were similar to or less than the costs for those who used gas or electricity, and the evidence gathered for the impact assessments suggests that heat networks can result in fuel savings of up to 36 per cent.
The SNP Scottish Government has done much to support the sector in recent years. Between 800 and 1,000 heat networks are estimated to be up and running in Scotland. The bill marks the beginning of a transformational change as we seek to create a supportive market environment for the necessary expansion of our heat networks—an environment that supports the achievement of Scotland’s target to deliver 11 per cent of non-electrical heat demand from renewable sources by 2020, and the Scottish Government’s target that 50 per cent of all energy consumption should come from renewables by 2030.
Ultimately, these actions will contribute to our shared goal of dealing with our global climate emergency and creating the world we all want to see, which is sustainable and fit for our future.
The Deputy Presiding Officer
I have a little time in hand, so I am giving quizzical looks if members go over their four minutes. I am not upset.
16:51Daniel Johnson (Edinburgh Southern) (Lab)
Thank you for that reassurance, Presiding Officer. I speak on behalf of all members when I say that we do not like upsetting you at all.
Members: Hear, hear.
Daniel Johnson
I echo Edward Mountain’s comment. As a non-committee member, one can feel a little like an interloper, especially on a subject such as this. I would say, however, that any debate that can take one from the poet Horace to skiing in Siberia is worthy of every member’s consideration.
This area is of interest to me. One of the great privileges of this job is that we get introduced to areas with which we had perhaps had not been familiar but which become very important and interesting to us. I am certainly very thankful to David Somervell and Transition Edinburgh who, early on in this parliamentary session, invited me to a briefing that outlined the early progress that the University of Edinburgh had made in developing heat networks.
As members may or may not know, the University of Edinburgh has three combined heat and power pumps across its campus, the first of which was installed in 2000. In basic terms, they have been able to improve the university’s energy efficiency by more than a third, partly through the more efficient use of heat from power generation but also through the reduction of power loss by having power generated immediately next to where it is consumed. That has generated savings in excess of £1.5 million a year for the university.
That is not the only such scheme in or close to my constituency. Slateford Green, which is a housing association development of 60 flats in my constituency that was developed in 2000, had a heat network built as part of it. Tynecastle school, which is just outside my constituency, is heated using waste energy from the Caledonian brewery, which is much in line with the distillery schemes that Edward Mountain alluded to.
Despite the progress that we have had in Scotland and the benefits that have been outlined, heat networks provide only 1 per cent of Scotland’s heating. It is imperative that we do better and that we improve our ability to heat our homes in an energy-efficient way. Quite simply, as Andy Wightman pointed out, Scotland is cold. The fact that CO2 emissions from heating our homes are a quarter of our total emissions, as Claudia Beamish set out, is something that we have to tackle.
The improvements that we gain from efficiencies decline, so we need investment and infrastructure if we are going to remove gas boilers from our homes. In our cities in particular, heat networks can be an incredibly valuable part of that. The bill is therefore welcome. It provides a framework for the construction and running of heat networks, and it is a necessary starting point.
As has already been said, there is concern that the bill is permissive rather than enabling. I was encouraged by the minister setting out the range of other measures that the Scottish Government is seeking to take forward so that the bill is not simply a single shot but is part of a suite of initiatives. However, we need to go further.
If the University of Edinburgh example points to anything, it is that efficiency and carbon neutrality can go hand in hand in addressing fuel poverty. It is clear that, if savings of a third can be passed down to all consumers and communities, that will be advantageous as we seek to tackle fuel poverty.
The committee convener’s contribution was remarkable for a great number of reasons. Not least, I was struck by his conversion to municipal socialism. The example of Denmark and the way in which such schemes work in Scandinavian countries is important. We do not want large corporate investment that does not pass on benefits to our communities. The schemes work best when they are owned and controlled by local communities.
Andy Wightman
I am very glad that Daniel Johnson mentioned that. Does he agree that what we are seeing in countries such as Denmark is an example of municipal enterprise, not socialism?
Daniel Johnson
By the means of our collective endeavour, we achieve more than we do alone. I do not care much if we want to call that municipal socialism or co-operative enterprise; it sounds like a good thing.
I am encouraged by the sentiments from all parties across the chamber that we should build on the bill, build a means of building heat networks so that all communities benefit, tackle climate change and tackle fuel poverty.
16:56Willie Coffey (Kilmarnock and Irvine Valley) (SNP)
I think that Daniel Johnson has just condemned Gordon Lindhurst to banishment by describing him as a municipal socialist—but there we go.
I welcome the chance to say a few words in this stage 1 debate on the Heat Networks (Scotland) Bill. Before I say anything about the bill, it is worth saying something about the public perception—or the lack of perception—of what this is really all about. If members talk to constituents about heat networks and why the Parliament is legislating on them, they are unlikely to get a great deal of acknowledgment or even much awareness of what networks are and why we are legislating. Therein lies a problem for all of us as we take the bill forward. The help of all MSPs is needed to start to bring these matters to the attention of our electorate.
We are talking about a system of supplying heat that involves hot water or steam being piped to networks that connect to our houses. It does away with central heating boilers that burn gas to heat our homes, which most of us have. That is it in a nutshell. We have to start a discussion with the public at large about how we and they can go about all of that.
The aims and reasons behind the idea are clear enough. As many members have reminded us, we face a climate emergency and we need to reduce the emissions that are associated with our domestic homes if we are to make good progress towards our target of net zero emissions over the next 20 years.
During the committee’s evidence sessions, we heard that half of Scotland’s entire energy consumption was to create heat, with over 80 per cent of all our houses dependent on gas. We have also heard that about 50 per cent of Denmark’s entire heat demand is met by district and local heat networks. In Scotland, the figure is only about 1 per cent—I think that that is similar to England’s figure. We know that, for a variety of reasons, Denmark started off on its journey much earlier than we were able to. The challenge is formidable, but the prize can be even greater.
The bill is mainly technical, but it has a number of key provisions that are essential to allow us to begin the process. It starts us off on the necessary journey of regulating the heat network sector by creating a licensing system that heat network operators will be bound by. That provides for consumers the essential protection that those operators are fit and proper companies to deliver those services.
The bill also creates a consent system to make sure that local factors and local assets are taken into account before the approval of any new developments, although there was some discussion in the committee about the extent to which the public themselves may be able to give such consent. The bill will also allow us to identify potential heat network zones in which it would be appropriate to establish a heat network. Among a few other provisions, it will also require public sector building owners to assess the potential of their estate to connect to a heat network so that they can begin to make progress in that regard.
One of the issues that came up was who the regulator for the sector should be. The discussion centred around Ofgem, which is a statutory body that was established under UK legislation. It is fair to say that everyone, including the Scottish Government, I believe, was happy for Ofgem to provide those regulatory duties for us, provided that it applies whatever the Scottish ministers determine as appropriate criteria for the sector here in Scotland.
There was also a discussion about licensing, including the regime to be put in place, and who the licensing authority should be. There was a good bit of discussion about whether Ofgem could, or should, occupy both the regulatory and licensing roles, and whether there would be a conflict if it did so. It would be worth while hearing the minister’s further thoughts on those key duties and how we best set up and support those functions.
I will end where I started. In engaging with the public on such important work, local people will want to be involved and not feel that things are being done to them. We need to provide the means by which local people can participate in the whole transition to heat networks and feel that their interests are at its heart. They will want to know more about how existing systems in their homes could be decommissioned, and whether any support will be available to help with that transition. People will also want to know that what we end up with is not only better for the environment but much more efficient and cost effective for their homes and families.
I am happy to support the bill at stage 1.
17:02Dean Lockhart (Mid Scotland and Fife) (Con)
It is perhaps fitting that we are having this debate while many parts of Scotland are seeing the first snow of winter.
I was a member of the Economy, Energy and Fair Work Committee when it started gathering evidence on the Heat Networks (Scotland) Bill, but I left the committee before the report was published, although I confirm that there was no connection between those two events. I thank the clerks for all their hard work, not only on the bill but across a wide range of topics over the four years that I was a member of the committee.
As Gordon Lindhurst said, it is a technical bill and my colleague Alexander Burnett demonstrated that, when it comes to the technical details of the bill, he knows his onions. As he said, the bill covers a wide range of policy areas, including fuel poverty, climate change and delegated powers to local authorities. It is those areas that I will briefly touch on today.
The minister gave his commitment that fuel poverty was an “absolute priority” in the development of the bill. However, the evidence of Citizens Advice Scotland was compelling about the limitations of the bill when it comes to addressing fuel poverty. CAS said that the bill
“cannot guarantee lower fuel costs for heat network consumers as it does not have competency over pricing.”
It also said that
“the Bill cannot oblige heat networks to publish their tariffs so that consumers can compare what they are paying in the same way gas and electricity consumers can”
at the moment. It said that
“while heat networks are ... able to provide lower cost heating, ... consumers will not be guaranteed that”
that lower cost will be passed on for their benefit.
To be fair, not all those powers are in the minister’s gift. In his response to the stage 1 report, and in his opening remarks today, he undertook to consider what changes could be made at stage 2 to make the bill more explicit with regard to how heat networks will contribute to reducing fuel poverty. That is all very welcome.
As other members have said, addressing the fuel poverty issue will be an important part of developing the bill and ensuring that it has effective outcomes. Therefore, I encourage the minister to carefully consider the evidence that was given by Citizens Advice Scotland on that matter.
Outside of the bill, I know that the minister is working on other policy measures to address fuel poverty. However, it is now more than three years since we heard an announcement about the publicly owned energy company, which was announced as the primary answer in addressing fuel poverty in Scotland. Again, I know that the minister has been working hard to turn that announcement into a feasible working plan; perhaps in his closing remarks he will provide an update on when in the near future we might see the publicly owned energy company. For the record, and to continue the collegiate nature of the debate, I do not hold the minister himself wholly responsible for the delays in that policy, because I suspect that its announcement was cobbled together by a special adviser in order to grab headlines for the announcement of the programme for government. Perhaps the minister will confirm whether that was the case.
The second area of concern that I want to highlight is the support that local authorities will require in order to implement the legislation. Paragraph 181 of the report rightly states that
“The importance of the role of local authorities ... should not be underestimated”
in delivering targets.
The minister told the committee that he wants to “strike the right balance” between local authorities having the necessary powers and the Government giving them the necessary resources. A significant number of respondents gave feedback in the consultation to suggest that local authorities lacked the necessary resources and the necessary expertise to deliver the proposed targets that were set out for heat networks. In their written evidence to the committee, Glasgow City Council and Highland Council warned that
“Care must be taken not to overload local authorities”
in delivering targets. I will conclude on that point. Local authorities have done a tremendous job in responding to the Covid crisis and I think that we would all encourage the minister to make sure that they have all the necessary additional support, resources and expertise that are required to implement the proposals.
I am happy to support the bill’s general principles at stage 1.
The Deputy Presiding Officer
I call Colin Beattie, to be followed by Bob Doris. [Interruption.] I think that you are on mute, Mr Beattie. While we are waiting for things to be sorted at that end, I call Bob Doris.
17:07Bob Doris (Glasgow Maryhill and Springburn) (SNP)
It is just as well that I was paying attention, Presiding Officer.
I am pleased to speak in the debate and to highlight the very real opportunities to boost consumer protection that the licensing of heat networks, which is the central aspect of the bill, may bring.
The minister knows that I have a direct constituency interest in the matter. In November 2019, he visited Maryhill to hear about the issues facing residents of the Wyndford estate in my constituency, which are referenced in paragraph 133 of the committee’s report.
Households in Wyndford receive their heating and hot water through a heat network. Such households have less protection than energy customers; that is clear. My office was contacted by many households who were about to be disconnected or were seeking to get their supply reconnected. In what should have been a flagship scheme, residents had been cut off by SSE due to arrears—which were often disputed, it has to be said—for heating and hot-water charges. There were issues around SSE’s punitive £274 reconnection fee and the high level of the up-front payment—routinely of around 50 per cent of the debt owed—that it required before a household could be reconnected.
In the run-up to Christmas 2018, my office, along with Glasgow North West Citizens Advice Bureau, secured some reconnections by persuading SSE to show flexibility, and I warmly welcomed the actions that SSE took at that time. At the height of the situation, 121 households were disconnected, but the figure dropped to 46.
I very much hope that the licensing regime in the bill, along with the wider UK consumer protection framework that we have heard much about, can drive up the consumer experience, so that the situation in the Wyndford estate is not repeated in future. I want to be clearer about how that can happen and what needs to go in the bill to drive that expectation.
One of the key issues that customers in Wyndford faced was the daily accrual of debt through standing charges, even if they did not use heating or hot water. Low-usage households were particularly impacted. SSE was persuaded to introduce a low-usage, low-income tariff without daily standing charges—it was not ideal, but it was better than what had been in place. The definition of what constituted a vulnerable household was too narrow, and SSE extended the criteria to include households with children under five. I pay tribute to the Wyndford tenants union, which persuaded SSE to increase the threshold for residents seeking to qualify for the low-usage tariff, and which drove further changes to the criteria for access to that tariff.
I am keen to ensure that there is suitable regulation and levers of influence in the bill and the licensing regime so that, for example, reconnection fees are not a barrier to reconnecting constituents to heating and hot water, and that companies’ repayment plans are not unreasonable.
More important, there should not be disconnections in the first place, of course, and there should be a fair and consistent approach to protecting vulnerable groups. Standing charges accrue daily for users of heat networks, and we should remind ourselves that they also pay standing charges for electricity. We must not penalise users more generally and certainly not low-usage, low-income households.
In paragraph 135 of its stage 1 report, the committee wanted clarity about what the bill can do to drive that kind of change—and it is that kind of change that I would be hugely supportive of in the bill. I want to be very clear about how the bill will improve the lot of people on the Wyndford estate in my constituency and across Scotland in relation to existing heat networks, as well as how it will drive more heat networks, which we all want to see.
17:11Colin Beattie (Midlothian North and Musselburgh) (SNP)
Tackling our need to decarbonise heating systems must be a major priority for us all. To date, we have been fairly successful in decarbonising our electricity needs through wind farms and other renewable sources, but a comprehensive solution to decarbonising our heating has been more elusive.
We are facing a global climate emergency and we need to think of innovative ways to reduce the emissions that are associated with heating our homes. Heat networks will have a key role to play in supplying Scotland’s homes with heat in the future, and that is why we need to focus on unlocking the potential of the sector and supporting its growth. Heat networks have a huge potential to reduce our carbon emissions and provide a more efficient and environmentally friendly way of heating our homes. I was happy to take part in the Economy, Energy, and Fair Work Committee’s evidence taking in this key area.
The subject is very close to my heart, as I have long advocated making better use of our natural resources to provide the energy that is needed to run our heating systems. I give my constituency of Midlothian North and Musselburgh a quick plug. We have an abundance of flooded mine shafts, which creates the opportunity to develop geothermal energy from the water that they contain and to provide my constituency with jobs and relatively cheap heating sources.
I would like to highlight one or two points that arose from the evidence that the committee gathered. First, given the landscape around the opportunity to develop local heat networks, we need to consider carefully the likelihood that a variety of different designs and technologies will arise, depending on the heat source and the mode of extraction. It is vital that all those designs and technologies are capable of talking to one another and integrating at a national level. Although we are talking about “local” heat networks, it is important that they do not operate in isolation.
The committee had concerns about the regulatory framework and we need to consider whether there needs to be a Scottish regulator or whether Ofgem could be modified to take up the task—that issue is still to be resolved.
Companies investing in local heat networks would enjoy a virtual monopoly that might last as long as 20 or even 40 years as they recovered their costs. I emphasise the importance to consumers of a monitoring or price-matching system to ensure value for money and prevent excessive price hikes.
Fuel poverty is a real concern and is likely to feature more prominently, given our current economic situation. Evidence from the BRIA shows that heat networks can lead to fuel savings of up to 36 per cent. There are already many Scottish Government investments in the area, such as the heat networks early adopter challenge fund, and we need to ensure that such funds are utilised to support the transition to achieving net zero emissions by 2040.
I was pleased to hear the minister’s commitment that local councils and communities would be completely involved in the development of heat networks. Given the likely impact on local employment, the environment and energy supplies, there needs to be solid local buy-in for projects to be a success—and I am not talking about the contrived local consultations that have been the norm in some places; we need consultations that actively promote participation.
I foresee difficulties in implementing local heat networks where multiple landowners and stakeholders with conflicting interests are involved. The possibility of compulsion exists, but I am ambivalent about whether that is the best route to take in the interests of the wider community. There is an attraction in resolving issues in that way, but it can also create hostility and problems among local residents, so a form of statutory negotiation—with compulsion as the back-up position—might be the best solution. We might need to consider the all-too-common situation of there being no clear ownership of a necessary piece of land—compulsory wayleaves or purchase are obvious solutions.
Overall, the committee carried out a thorough and comprehensive investigation into local heat networks, which is particularly commendable given the disruptions that have been caused by Covid-19 and its fallout. The Scottish Government has been keen to review all the points that have been raised with it, which will result in effective and workable legislation, enabling Scotland to take the lead in developing the abundance of opportunity that is available.
I am happy to support the bill at stage 1.
17:16Lewis Macdonald (North East Scotland) (Lab)
As members have said, the Heat Networks (Scotland) Bill is a welcome and long-awaited development. Today’s debate has shown that there is broad support for its general principles. There is also consensus that the bill will need to be amended substantially if it is to achieve the desired results, and I am glad that the minister has acknowledged that so clearly today.
Local councils already play a number of roles in relation to district heating, whether as investors in networks, customers, landlords of customers or partners with commercial or not-for-profit network operators. The bill gives councils new responsibilities, and it is important to get those right from the start. I am glad that there now appears to be broad agreement that councils should be consenting authorities if they wish to be so. They are also critical to delivering the engagement of the communities that they represent.
The bill rightly promotes carbon reduction and increased energy efficiency, which are key public policy objectives, but currently makes no mention of fuel poverty. Therefore, it is welcome that the Government is intent on embedding the tackling of fuel poverty in parts of the bill. The bill should go beyond merely mentioning fuel poverty and should actively and positively encourage heat networks to be designed expressly to address it.
Evidence to the committee at stage 1 proposed that tackling fuel poverty should be a statutory consideration for local councils in deciding whether and where to designate heat network zones, and I hope that that is one of the areas that the minister is looking at with regard to addressing fuel poverty in the bill.
If we are to achieve a just transition to a low-carbon economy, carbon reduction and increased energy efficiency must go hand-in-hand with fuel poverty reduction. The opportunity that the bill offers to put all those objectives on an equal footing should not be missed.
The bill requires the availability of waste heat and renewable sources of energy to be taken into account, but they are not the only possible options.
If we succeed in putting new heat networks in place, they will undoubtedly help Scotland to meet the challenge of climate change but, first, we need to get the networks built. Once they are there, in the ground and in people’s homes, the source of energy and the technology employed can be changed at source without disruption to the end user, unlike more conventional technologies, such as gas central heating.
In the north-east of Scotland and elsewhere, a huge amount of investment is already being made in hydrogen, in the hope that it can replace hydrocarbons in the existing gas grid. Hydrogen might be a key fuel for future heating networks, too, although it is not there yet.
The bill must not get in the way of that, or of any other switch in fuels in future, by overspecifying what types of sources should be taken into account in designating and developing heat network zones in the short term.
The economics of network development also require a degree of certainty before the pipework is put in place and the investment is made. If a network is built up to the perimeter of a potential anchor-load building, there is currently no obligation on the operator of that building to connect, even if it is in a designated heat network zone. That lack of obligation potentially creates a high level of risk for the network operator. As Michael King of Aberdeen Heat & Power told the committee, there should at least be an obligation on owners of anchor-load buildings to explain their reasons if they choose not to connect. Such a statutory obligation would certainly concentrate the mind.
Finally, the bill can and should address the issue of community engagement. Currently, network customers rely on the efficiency and prudence of their network operator. If networks are built as purely commercial undertakings—as envisaged by the bill—there is an obvious risk that the interests of the operators and those of the customers could diverge over time.
As Ombudsman Services suggested, and as Claudia Beamish and Liam McArthur mentioned, better accountability of operators to customers is an alternative approach that could be achieved through requiring the provision of consumer advice, as opposed to consumer protection, and could make such provision a licence condition for new network operators.
I have followed the fortunes of Aberdeen Heat & Power since it was set up as a not-for-profit company in 2002, with a mission to reduce fuel poverty and cut carbon emissions. It supplies over 3,000 tenants in 50 high-rise blocks, and many public buildings besides, making AHP the largest operator of its kind, not just in Scotland, but anywhere in the UK. Clarity about the impact of the bill on existing networks is therefore important. The bill will allow other parts of Scotland to follow that lead, and so it is to be welcomed. The bill can be improved, and Labour looks forward to that being done as it proceeds through Parliament.
17:21Graham Simpson (Central Scotland) (Con)
I am glad that I turned up today, because the debate has been very interesting. On the face of it, that might not have been expected, but there have been some very interesting speeches and I thank everyone who has taken part. We started with Gordon Lindhurst gushing like mad about the minister—we will have to have with words with Mr Lindhurst about that. We discovered that Mr Lindhurst has a new role as a municipal socialist. I suggest that, for his next holiday, Mr Lindhurst could go with Andy Wightman to Russia—I am sure that the two comrades would make a very happy couple.
Daniel Johnson
Is the member proposing to send his colleague to the gulag? It sounds rather like it.
Graham Simpson
It has often been suggested. [Laughter.]
Gordon Lindhurst
The assumption is that we are not in a gulag already.
Graham Simpson
Let us get serious now. I was struck by Alexander Burnett’s speech. It is good to hear from someone who has hands-on experience of heat networks and I hope that the minister listens to him. The minister should consider Mr Burnett a critical friend—he was genuinely trying to be positive.
The bill was introduced on 2 March and provides for a regulatory and licensing system for district and communal heating, to accelerate its use in Scotland. That would be a good thing. We can easily see how there might be issues for consumers if there were no regulatory backup. The bill is an inherently good idea, but, as Citizens Advice Scotland has said, it is limited in what it can do. There are currently very limited consumer protections in place for heat network consumers. Consumer protection powers are reserved to the UK Government. The Scottish Government therefore cannot legislate for those, although it can introduce a licensing system.
I have thought about the issue a lot in regard to buyers of newly built homes. They, too, have few protections if things go wrong. People need to be protected, so it is encouraging that the UK Government is considering a framework for consumer protection in that area. It needs to get on with it. Once someone has signed up to a heat network, they could be tied to a provider for a long time; essentially they are off grid and unable to switch supplier if the price gets too high or they are not happy with the service. Claudia Beamish mentioned that issue.
What does the bill do? As we have heard, it is a pretty hefty bill. There are seven parts to it, and I will go through them quickly, because no one has yet done so. Part 1 provides key definitions, sets out a requirement for a heat networks licence and makes it an offence to supply thermal energy through a heat network without a relevant licence; part 2 establishes the heat network consent process for specific projects; part 3 places a duty on councils to consider undertaking the designation of heat network zones; part 4 builds on the designation of heat network zones by allowing ministers to award a heat network zone permit; part 5 places a duty on public sector building owners to assess the viability of connecting their building to a heat network; part 6 provides heat network licence holders with various special rights and powers; and part 7 requires that ministers identify the key assets of each heat network consent application that they receive. Heat networks have the potential to play a significant role in the green recovery and the just transition.
As I said at the start of my speech, there were a number of really good contributions from members. I slightly joked about Mr Wightman’s visit to the Soviet Union, but he saw at first hand the heat networks there, and he rightly spoke about fuel poverty. Liam McArthur mentioned the pioneering work that is being done in Orkney and the islands. John Mason mentioned his constituency experience in relation to the Commonwealth village.
Edward Mountain talked about the benefits of not having a boiler; that was also mentioned by Richard Lyle. Daniel Johnson, who is always interesting to listen to, talked about the heat networks at the University of Edinburgh and elsewhere in the city. Bob Doris—thankfully, minus his moustache—talked about the problems that his constituents had when they got disconnected from a heat network, which is clearly a potential issue.
The committee raised a number of questions with the minister, to which the minister responded positively. There will be a lot of work at stage 2, and I will be on the committee that will deal with that. There is work to be done, but we welcome the general principles of the bill. I look forward to dealing with the bill, in conjunction with other members and the minister, at stage 2.
17:27Paul Wheelhouse
I thank all members for their contributions to today’s debate. I particularly thank Gordon Lindhurst for probably ending my career by giving me so much praise in the early part of his speech.
I will use my closing remarks to respond to a number of the points that were made today, as well as to set out our intended approach to the remaining stages of the bill, and beyond, should the Parliament agree to its general principles, which I am grateful to say looks likely.
First, I will briefly recap on the need for the bill. I appreciate that there are challenges in delivering the bill. We are addressing a number of issues collectively and constructively with members across the chamber. We should not forget that the Parliament is taking on quite a task. This is a complex area. We all agree—including Mr Burnett, who is delivering heat networks—that the bill is badly needed. We are the first country in the UK to take such a bill through the parliamentary process. That is not to say that other Administrations across the UK are not looking at the issue—they are—but we are, in some ways, trialling the legislation, and I hope that some of the measures that we take will benefit others thereafter.
As we have heard, the bill represents a chance to unlock and enhance the latent potential of the heat networks sector in Scotland. I repeat Richard Lyle’s point that we have had fantastic input from the expert working group and stakeholders in shaping the bill. The input has not purely come from me, as someone who does not benefit from a heat network and has not built one; we have benefited from those who benefit from heat networks and those who have built them. We have taken on board the lived experience of people in the sector.
It is absolutely necessary that we pass the bill. As we have heard, only about 1.5 per cent of properties in Scotland are connected to a heat network, although there are some tremendous examples of such networks around Scotland, as we heard from Daniel Johnson, John Mason and Lewis Macdonald. My colleague Kevin Stewart is very familiar with Aberdeen Heat & Power and has previously filled me in on its work.
I was struck particularly by the networks around the University of Edinburgh that Daniel Johnson mentioned. We are not just talking about domestic projects; that project is benefiting a major institution in Scotland’s capital and it is great to hear about the savings that have been made for the university that mean money going into education for the public’s benefit.
All the Administrations across the UK would agree that we have to do better, and the bill is essential in providing the framework to do that. We know that renewable and low carbon heat networks are one of the technologies that we will need to install in order to remove the emissions that are caused by heating in our buildings. Willie Coffey rightly cited the figure that more than half of the energy that we consume is required to provide heat. We know that we will need to focus particularly on those systems during the remainder of the decade if we are to contribute to the interim targets set in the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019.
Denmark’s experience was cited by a number of members, including Andy Wightman and Willie Coffey. The trigger for its massive expansion of heat networks was the energy crisis during the early part of the 1970s. We are not facing an energy crisis, we are facing a climate crisis and I hope that the need to act quickly will help us to power forward and develop networks at pace. I need to be honest with the Parliament and say that it will be challenging to achieve the level of coverage that Denmark has, and there are a number of geographic and demographic reasons for that, but I think that we can outperform the 17 per cent upper end of the range that is being cited, although it will require concerted action from all parties.
I am pleased to note the broad agreement that we have heard in today’s debate about the role of heat networks and the role that this bill, in particular, can play. As I say, the bill could be an example of an area over which our Parliament can come together as a collective in support of a shared objective, and do a good job in doing so.
In that spirit, I welcome the Economy, Energy and Fair Work Committee’s helpful stage 1 report. We have genuinely endeavoured to take on its recommendations, including through making commitments to amend the bill. I am pleased that that has been welcomed by members in the chamber today.
I trust that the changes that I outlined at the beginning of the debate in our response to the report will also be welcomed by stakeholders. As I said in my opening statement, I want the bill to be one that we can all be proud of, and I genuinely mean that. I am therefore happy to take any opportunity to co-operate with members and listen to any constructive suggestions that they might have to strengthen the bill, to benefit from the experience of those who have developed and delivered heat networks, and to hear from members who are concerned about fuel poverty, local engagement, community awareness and other matters that have been raised today.
I have listened closely to the issues that have been raised today and I will try to respond to a few of them in the time that I have available to me. One of the main issues that was raised in the chamber today was about community involvement in decision-making. Colin Beattie, John Mason, Liam McArthur, Andy Wightman, Edward Mountain, Claudia Beamish, Dean Lockhart, and Lewis McDonald all mentioned that—I apologise if I have missed anyone off that list. It is one of the most important issues that was raised today and, under the bill as introduced, local authorities will be able to designate heat network zones within their local areas, a measure which one witness described in their written evidence as the biggest enabling feature within the bill.
I also note the committee’s desire for the balance of powers between the Scottish ministers and local government to be modified over time, and we intend to do that. I should state that our starting point for developing the bill was largely influenced by the situation in Norway, which is a more centralised model, but we are listening to the aspirations of the Parliament and we are reflecting that in our approach. The points raised in the debate re-emphasise the importance of that issue, and, as I set out in my opening statement, we intend to amend the bill at stage 2 in response.
Alongside that, we have committed to lodging an amendment that will require developers to submit evidence of real engagement alongside the heat network consent application, and provide powers for the Scottish Ministers to issue guidance on effective community engagement. I hope that members can see my commitment to further strengthening local involvement in decision-making within the regulatory system.
Many members have mentioned fuel poverty today, and I recognise that it is a very important issue. I reassure members that, although the bill as introduced does not specifically mention fuel poverty, it is our intention that the heat network developments should be deployed to eradicate fuel poverty in Scotland where possible. In that respect, the not-for-profit model was discussed by Andy Wightman, and Daniel Johnson and Dean Lockhart asked about a public energy company. We continue to work on that and some of the issues that have been talked about in today’s debate are very much the issues that we are now trying to take on board. We are looking at changing the utilities market, rather than preparing a company to deliver today’s utility market, and we are looking at heat as a service. There could be a role for a public energy company also to provide heat networks. I give the commitment that we are still working on the issue and taking it seriously. I will happily engage further with members on that matter as time goes on.
We will also be happy to provide details of the work that we are doing with the Scottish fuel poverty advisory panel in developing the relevant amendments on tackling fuel poverty that we wish to include in the bill. Prior to stage 2, we will engage with members who have a strong interest in that.
Presiding Officer, how much time do I have left?
The Deputy Presiding Officer
How much are you asking for?
Paul Wheelhouse
As much as I can get.
The Deputy Presiding Officer
I will give you a minute.
Paul Wheelhouse
In that case I will not be able to respond to some of the points that have been raised.
I will come back on the real rights issue, which was raised by Gordon Lindhurst. We are taking steps to amend the bill to address that. We must ensure that our approach is not disproportionate and that it does not act as a cost deterrent to projects. We are working with Registers of Scotland to ensure that licence holders would be required to make information about wayleave rights publicly available. We commit to a consultation on how that requirement will be implemented so that we hear the views of all the parties that are interested in that complex area.
I hope that these and my earlier comments will give the Parliament confidence that we are listening to stakeholders and members as we consider the provisions of the bill. We will plan secondary legislation. We do not intend to pre-empt the parliamentary process, but we have begun initial work to inform the development of regulations so that we can put the new regulatory system in place as quickly as possible and so that we can support the deployment of investment in the sector, should the bill be passed. Our response to the stage 1 report gives more detail about that work.
I hope that my remarks are helpful to members. I will try to communicate more with members about the issues that have been raised today. I repeat my commitment to meet interested members ahead of stage 2 to allow further opportunities to discuss the provisions of the bill and, in considering their support for the general principles of the bill, I ask members to bear that commitment in mind.
The bill seeks to address two crucial issues: climate change and fuel poverty. I thank members for their generous remarks today and for their supportive contributions to the debate. I hope that all members feel that they can get behind the bill and that they will vote in favour of the motion. I invite members to support me in agreeing to the principles of the Heat Networks (Scotland) Bill so that we can move to detailed consideration at stage 2.
The Deputy Presiding Officer
That concludes the stage 1 debate on the Heat Networks (Scotland) Bill.
3 December 2020
Vote at Stage 1

Vote at Stage 1 transcript
The Deputy Presiding Officer (Christine Grahame)
There are four questions to be put as a result of today’s business. The first question is, that motion S5M-23014, in the name of Christine Grahame, on the Solicitors in the Supreme Courts of Scotland (Amendment) Bill, be agreed to.
As the motion is on a bill, we must move to a vote. I suspend the meeting to allow members to access the digital voting system.
17:38 Meeting suspended.17:44 On resuming—
The Deputy Presiding Officer
I ask that members now vote on motion S5M-23014, please.
For
Yousaf, Humza (Glasgow Pollok) (SNP)
Wishart, Beatrice (Shetland Islands) (LD)
Wightman, Andy (Lothian) (Green)
White, Sandra (Glasgow Kelvin) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
Wells, Annie (Glasgow) (Con)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Tomkins, Adam (Glasgow) (Con)
Todd, Maree (Highlands and Islands) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Stewart, David (Highlands and Islands) (Lab)
Stewart, Alexander (Mid Scotland and Fife) (Con)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Somerville, Shirley-Anne (Dunfermline) (SNP)
Smyth, Colin (South Scotland) (Lab)
Simpson, Graham (Central Scotland) (Con)
Scott, John (Ayr) (Con)
Sarwar, Anas (Glasgow) (Lab)
Russell, Michael (Argyll and Bute) (SNP)
Ruskell, Mark (Mid Scotland and Fife) (Green)
Rumbles, Mike (North East Scotland) (LD)
Ross, Gail (Caithness, Sutherland and Ross) (SNP)
Robison, Shona (Dundee City East) (SNP)
Rennie, Willie (North East Fife) (LD)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Neil, Alex (Airdrie and Shotts) (SNP)
Mundell, Oliver (Dumfriesshire) (Con)
Mountain, Edward (Highlands and Islands) (Con)
Mitchell, Margaret (Central Scotland) (Con)
McNeill, Pauline (Glasgow) (Lab)
McMillan, Stuart (Greenock and Inverclyde) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McKee, Ivan (Glasgow Provan) (SNP)
McArthur, Liam (Orkney Islands) (LD)
McAlpine, Joan (South Scotland) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Mason, Tom (North East Scotland) (Con)
Mason, John (Glasgow Shettleston) (SNP)
Martin, Gillian (Aberdeenshire East) (SNP)
Maguire, Ruth (Cunninghame South) (SNP)
Macpherson, Ben (Edinburgh Northern and Leith) (SNP)
Mackay, Rona (Strathkelvin and Bearsden) (SNP)
MacGregor, Fulton (Coatbridge and Chryston) (SNP)
Macdonald, Lewis (North East Scotland) (Lab)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
Lyle, Richard (Uddingston and Bellshill) (SNP)
Lockhart, Dean (Mid Scotland and Fife) (Con)
Lochhead, Richard (Moray) (SNP)
Lindhurst, Gordon (Lothian) (Con)
Leonard, Richard (Central Scotland) (Lab)
Kidd, Bill (Glasgow Anniesland) (SNP)
Kerr, Liam (North East Scotland) (Con)
Kelly, James (Glasgow) (Lab)
Johnson, Daniel (Edinburgh Southern) (Lab)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Haughey, Clare (Rutherglen) (SNP)
Harvie, Patrick (Glasgow) (Green)
Harris, Alison (Central Scotland) (Con)
Harper, Emma (South Scotland) (SNP)
Hamilton, Rachael (Ettrick, Roxburgh and Berwickshire) (Con)
Halcro Johnston, Jamie (Highlands and Islands) (Con)
Greene, Jamie (West Scotland) (Con)
Gray, Iain (East Lothian) (Lab)
Grant, Rhoda (Highlands and Islands) (Lab)
Gougeon, Mairi (Angus North and Mearns) (SNP)
Golden, Maurice (West Scotland) (Con)
Gilruth, Jenny (Mid Fife and Glenrothes) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Forbes, Kate (Skye, Lochaber and Badenoch) (SNP)
FitzPatrick, Joe (Dundee City West) (SNP)
Finnie, John (Highlands and Islands) (Green)
Findlay, Neil (Lothian) (Lab)
Fee, Mary (West Scotland) (Lab)
Fabiani, Linda (East Kilbride) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Ewing, Annabelle (Cowdenbeath) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Doris, Bob (Glasgow Maryhill and Springburn) (SNP)
Dey, Graeme (Angus South) (SNP)
Denham, Ash (Edinburgh Eastern) (SNP)
Davidson, Ruth (Edinburgh Central) (Con)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Crawford, Bruce (Stirling) (SNP)
Corry, Maurice (West Scotland) (Con)
Constance, Angela (Almond Valley) (SNP)
Cole-Hamilton, Alex (Edinburgh Western) (LD)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Carson, Finlay (Galloway and West Dumfries) (Con)
Carlaw, Jackson (Eastwood) (Con)
Campbell, Aileen (Clydesdale) (SNP)
Cameron, Donald (Highlands and Islands) (Con)
Burnett, Alexander (Aberdeenshire West) (Con)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Briggs, Miles (Lothian) (Con)
Boyack, Sarah (Lothian) (Lab)
Bowman, Bill (North East Scotland) (Con)
Bibby, Neil (West Scotland) (Lab)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Beamish, Claudia (South Scotland) (Lab)
Ballantyne, Michelle (South Scotland) (Ind)
Balfour, Jeremy (Lothian) (Con)
Baker, Claire (Mid Scotland and Fife) (Lab)
Baillie, Jackie (Dumbarton) (Lab)
Arthur, Tom (Renfrewshire South) (SNP)
Allan, Alasdair (Na h-Eileanan an Iar) (SNP)
Adamson, Clare (Motherwell and Wishaw) (SNP)
Adam, George (Paisley) (SNP)
The Deputy Presiding Officer
The result of the division on motion S5M-23014, in the name of Christine Grahame, on the Solicitors in the Supreme Courts of Scotland (Amendment) Bill, is: For 109, Against 0, Abstentions 0.
Motion agreed to,
That the Parliament agrees that the Solicitors in the Supreme Courts of Scotland (Amendment) Bill be passed.
The Deputy Presiding Officer
The next question is, that motion S5M-23564, in the name of Paul Wheelhouse, on the Heat Networks (Scotland) Bill, be agreed to.
Motion agreed to,
That the Parliament agrees to the general principles of the Heat Networks (Scotland) Bill.
The Deputy Presiding Officer
The next question is, that motion S5M-23140, in the name of Kate Forbes, on the financial resolution on the Heat Networks (Scotland) Bill, be agreed to.
Motion agreed to,
That the Parliament, for the purposes of any Act of the Scottish Parliament resulting from the Heat Networks (Scotland) Bill, agrees to—
(a) any expenditure of a kind referred to in Rule 9.12.3(b) of the Parliament’s Standing Orders arising in consequence of the Act, and
(b) any charge or payment in relation to which Rule 9.12.4 of the Standing Orders applies arising in consequence of the Act.
The Deputy Presiding Officer
I propose to ask a single question on the two Parliamentary Bureau motions, unless any member objects.
As no member objects, the question is, that motions S5M-23574 and S5M-23589, in the name of Graeme Dey, on behalf of the Parliamentary Bureau, be agreed to.
Motions agreed to,
That the Parliament agrees that the following change to committee membership will apply from 7 December 2020—
Neil Bibby to replace Anas Sarwar as a member of the Public Audit and Post-legislative Scrutiny Committee
That the Parliament agrees that—
Gordon MacDonald be appointed to replace Gail Ross as a member of the Local Government and Communities Committee;
Gail Ross be appointed to replace Willie Coffey as a member of the Public Audit and Post-legislative Scrutiny Committee;
Christine Grahame be appointed to replace Annabelle Ewing as a member of the Culture, Tourism, Europe and External Affairs Committee; and
John Mason be appointed to replace Shona Robison as a member of the COVID-19 Committee.
Meeting closed at 17:45.3 December 2020
Stage 2 - Changes to detail
MSPs can propose changes to the Bill. The changes are considered and then voted on by the committee.
Changes to the Bill
MSPs can propose changes to a Bill – these are called 'amendments'. The changes are considered then voted on by the lead committee.
The lists of proposed changes are known as a 'marshalled list'. There's a separate list for each week that the committee is looking at proposed changes.
The 'groupings' document groups amendments together based on their subject matter. It shows the order in which the amendments will be debated by the committee and in the Chamber. This is to avoid repetition in the debates.
How is it decided whether the changes go into the Bill?
When MSPs want to make a change to a Bill, they propose an 'amendment'. This sets out the changes they want to make to a specific part of the Bill.
The group of MSPs that is examining the Bill (lead committee) votes on whether it thinks each amendment should be accepted or not.
Depending on the number of amendments, this can be done during one or more meetings.
First meeting on amendments
Documents with the amendments to be considered at this meeting on 26 January 2021: