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Yes. The legislation that was passed in the previous session of the Scottish Parliament to get the work under way was done before we knew that the United Kingdom Energy Act 2023 was coming, so we have taken account of some of the changes that took place in that. The committee will be very pleased to know that there were some areas where the Scottish and UK Governments were able to work together on useful changes to that energy legislation, in particular in dealing with some of the consumer protection issues. However, some other changes require us to perhaps reconsider some aspects of how we approach the implementation of the Scottish heat networks act. For example, in the light of the UK legislative changes, we will consider our approach to permitting and consenting and ensure that we have got the balance right. Over the course of time, there will no doubt be other legislative changes.

A critical thing that we are still awaiting from the UK Government is the rebalancing of electricity and gas prices. Whether the current UK Government makes good on that or whether we have to wait on a successor Government, we know that that is one of the critical issues that will spur not only the viability of decarbonisation of heat but its attractiveness. For example, as we decarbonise existing heat networks, some of them will shift over to using devices such as heat pumps as one of their energy sources. If those are using electricity rather than gas, that is great to decarbonise those existing networks, but the rebalancing of prices will be one of the things that are critical to making that viable and attractive to customers.

As I said, we have been exploring a number of different models for the development and operation. We think that it will be an attractive area for private investment, but we also know that there is a need for the public sector to give leadership, particularly at local level, where local authorities understand both the building stock and the energy resources that they can bring to bear. That is why they are leading on the development of LHEES. As I said, we have looked at a range of models, including direct municipal ownership and joint ventures.

The aspiration is always to work together on issues that sit between devolved and reserved powers. Sometimes we are more successful at achieving that co-operation than at other times. As I mentioned, some of the changes that were recently made to the Energy Act 2016 at Westminster were agreeable, and we made good progress on some of those issues, although not necessarily all of them. We will continue to try to work together.

Of course my preference would be that we are able to make those regulatory changes here in Scotland. We have to work with the situation that we are in as we continue to—as the member knows—make the case for Scotland at some point taking those powers to itself. However, that certainly should not prevent us from rolling out heat networks urgently, because they are one of the most obvious ways to decarbonise Scotland, and particularly urban Scotland.

Yes, and the appointment of the Office of Gas and Electricity Markets as the regulator is one example of that. We need to ensure that there is consumer protection, and the appointment of Ofgem in that capacity will help to achieve that.

That question is relevant to the whole heat in buildings agenda. We know that we need to scale up and skill up. I have been working closely with Graeme Dey on the skills and education side of things. Work on the supply chain delivery plan is also including voices from industry who see the agenda as an opportunity.

I genuinely think that there is huge potential for us to see the heat in buildings agenda as an economic opportunity for Scotland. There is work to be had in decarbonising, and high-quality careers to be had from doing that work, not just between now and 2045 but beyond that, in maintaining and operating those systems.

James Hemphill wants to come in on your previous point.

The act allows us to continue to review the target. I think that it is at least a fair possibility that we will review the target upwards rather than downwards but, if a future Government decides that heat networks have not been the success that I believe that they will be, it would be for it to come back to committee and Parliament and ask to review the target in the other direction. However, I think that there is a stronger likelihood that we will see greater progress. We should be throwing our weight behind the development of heat networks as one of the most effective ways to decarbonise Scotland.

I would encourage the member and others in the committee, if they have not yet taken the chance, to visit some of the heat networks that are already in operation, including some that are being expanded or redeveloped.

In essence, the networks are made up of highly insulated pipes that go under the ground and come from a central heat source. They might involve the deliberate generation of heat for the network, or they might use a waste heat source. At the moment, we are letting valuable warmth from some waste heat sources go to waste, and heat networks can bring that heat to the consumer.

With heat networks, individual businesses or households would not need to have their own boilers, except, potentially, as an emergency back-up. They might choose to have something in reserve, but their main heating needs—and, in some circumstances, cooling needs—would be met via the network.

That is correct. That is what generates a revenue stream for the network, which is what makes it an attractive proposition for investors. The experience with heat networks in this country—and, I think, in Denmark, where they are used the most extensively of any European country—is that they tend to be affordable and attractive for that reason, compared with individual consumption of gas or other fuels.

Heat networks are particularly viable and effective when they have a range of different heat consumers—not all domestic but some commercial, some industrial, and large public buildings, for example—and a range of heat sources. Some networks will have a heavy reliance on a single heat source or small number of heat sources. Existing networks will be under a duty to bring forward a plan to decarbonise if they have a polluting heat source.

However, over time, as we see the extensive development of heat networks, we are likely to see that viability become an incentive for any operator to diversify its heat sources. That might be by using banks of heat pumps. In the Glasgow area, it might be using the River Clyde as a heat source, as Queen’s Quay does. It could also include industrial sources of heat, such as waste heat and other options. The diversification of heat producers and heat consumers is one of the things that will make the networks more viable for the long term.

We believe that it is.