Seòmar agus comataidhean

Thank you very much, convener. I give my sincere apologies for the short delay—that is more than I got from the train announcement as we were held outside Waverley station. I am sorry to have taken a few minutes longer than expected to get here.

I am grateful for the chance to speak to the instrument, which supports our ambition to grow the number and scale of heat networks in Scotland. I know that it is widely recognised that heat networks should and will be an increasingly significant part of our transition from fossil fuels for heating our homes, workplaces and buildings to clean heat.

The Heat Networks (Scotland) Act 2021 requires that we set a target for 2035. As well as the fact that it is a requirement, the target is in and of itself useful. It will send a clear signal to the heat network sector that the Scottish Government and, indeed, future Scottish Governments are committed to the growth of heat networks.

The proposed target of 7 terawatt hours—TWh—is one of the three options that we proposed in our consultation. Each of those options was evidence based and developed using data from the report “First National Assessment of Potential Heat Network Zones”. However, as we set out in the Government’s response to that consultation, the data about the sector that we have is limited at the moment. We have to continue to use the powers that we have in the act to obtain more accurate and reliable information so that we can report on the progress that we are making against all the statutory targets. Recognising that, the Government’s response also committed to keeping that target and other targets under review as further evidence emerges on the potential for heat networks across Scotland—for example, as local authorities produce their local heat and energy efficiency strategies, or LHEES.

Setting that target is just one of the things that we are doing to help to grow the sector. We are taking a range of other concerted actions to meet the targets that have been set and that we are proposing now to allow the heat network sector to flourish. We are resourcing and providing technical support to local authorities to develop their LHEES, which are identifying opportunities across Scotland for heat network development. In February 2022, we launched the heat network support unit, which provides skills, capacity and other resources to local authorities to help them through the pre-capital stages of heat network development. We have also launched Scotland’s heat network fund, which makes £300 million available to large-scale district and communal heating projects across Scotland. In May this year, we also commenced legislation that requires Scottish public buildings to produce building assessment reports as soon as practical.

Collectively, those actions will help us to achieve our proposed target and increase the likelihood that consumers will want to connect into heat networks. Based on the analytics that we have done in combination with the broad support that we received in response to the consultation, I am very happy to be here to move the motion and to ask the committee to agree to set a new target for heat network deployment in Scotland of at least 7TWh by 2035.

I see no reason why we should not be using waste heat from a facility that already exists. Waste heat is a resource that, at the moment, is going to waste.

Separately, quite unconnected to the specific policy of heat network targets, the Government has an approach on incineration that aims to move away from the development of new incinerators. However, the use of any source of waste heat from an existing facility—whether it is energy from a waste plant, a data centre or an industrial site—makes a valuable contribution by putting heat into a heat network.

I am sure that it is a sincere question, but I think that it is one for colleagues whose remit and portfolio is around circular economy and waste management, rather than one that is about the setting of a heat network target.

I would like to see ambition coming from local authorities and, indeed, other bodies such as social landlords, which would see connection to a heat network as something that is in the interests of their tenants as well as their business model. If we do see that level of ambition from public bodies, including local authorities, it will contribute very substantially to meeting the 7TWh target.

As for some of the consumer protection issues that Sarah Boyack quite rightly raises, they are, as we are all aware, reserved, but the recent legislation and the appointment of Ofgem to its role will go a significant way towards addressing them. I very much wish that we were able to legislate for those matters here. As things stand, we are not, and we therefore need to work with the UK Government, which is what we have been doing.

As we have discussed in the evidence session that we have just held, the Scottish Government has consulted widely on a number of options for this target. Not only is it a legal requirement that we set a 2035 target, it sends, I believe, a very positive signal to the industry that we are serious about the development of heat networks.

We could have set a very stretching and much more aspirational target. I think that the target that we have set is more achievable; it still shows an aspiration to grow heat networks significantly in Scotland, but it is achievable. The target is consistent with the advice that we have had from the UK Climate Change Committee and consistent with the position that was widely supported in the consultation.

I will also mention that the business and regulatory impact assessment that has been provided suggests that the cost of meeting the target that was set in the Scottish statutory instrument could be up to £6.2 billion and that it is likely that that cost will be shared between the public support that has been made available and private investment.

Yes, £300 million of public funding.

Once again, I would say that we have consulted widely on a range of evidence-based targets. The target that we are setting was widely supported in the consultation. It sets out strong growth in the heat network sector, which we believe not only sends a signal about what we intend to achieve and builds confidence among investors but represents an achievable target that will help to decarbonise Scotland. I genuinely hope that, as we develop policy and the wider heat in buildings approach, members across the chamber will recognise not only the opportunity but the necessity of decarbonising Scotland’s heat.

The heat networks that exist at the moment—some are district networks that serve multiple buildings and others are communal networks that serve multiple customers in a single building—are found in a range of urban and rural settings, including in some island communities. It is clear that there will be a high level of potential in dense urban environments such as Glasgow, but that should in no way inhibit the development of networks in other parts of Scotland where they represent the most suitable approach to decarbonisation. That is why we are asking all local authorities to lead on the development of the LHEES. It would be wrong for central Government to say, “We’re going to decide what is appropriate in each local area.” Local leadership is necessary if we are to achieve this.

As I mentioned in my opening remarks, we already have the heat network support unit and the heat network fund. The unit is providing pre-capital support and the fund is providing capital support.

On the question about when this will happen, it is already happening. Local authorities are producing their LHEES and we completed the first national assessment report some time ago. Local work is being done to develop the LHEES and they are coming in local authority by local authority. I think that they are all expected and due in by the end of the year. Is that correct, James?

A range of discussions have taken place not only with individual potential investors—the Scottish Government has an investor panel that advises it—but through the green heat finance task force. As the committee knows, that has now been meeting for some significant time. Its first report will be due out very soon, alongside the imminent consultation on the heat in buildings proposals more generally. The expectation is that the first phase of that task force report will focus on individual approaches and that the second phase report will look at the more communal, area-based approaches, which might include greater focus on heat networks. A significant amount of work is happening in that area.