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Laying the groundwork - the growth of heat networks in Scotland

by Aoife Deery, CAS senior energy policy officer

This article was first published in the Herald on 14 October 2020.

A few weeks ago, my partner popped his head around the door to the living-room-come-my-pandemic-workspace. “Last month’s energy bill arrived today… and it’s pretty high.”

At that point we realised, like many others have, that the cost of staying at home for months was growing. Keeping the lights on for longer as the days became duller, putting the heat on for an hour as the chills set in, powering an array of technology for work (and Netflix, I won’t lie to you) as well as using the kettle, cooker and microwave much more than before was all adding up. However, following a bit of research on price comparison sites, we found a better deal and are now the proud owners of a tariff that is £60 a year cheaper.

As the daughter of a woman whose favourite phrase was, “it’s lit up like a Christmas tree in here!”, I’m all too aware of the fear of high energy bills. Thankfully, as in our case, the ability to switch tariffs and providers in the gas and electricity market can be a life-saver. But what about those who don’t have that option?

As part of the move to net zero, governments are looking at ways to develop and expand low-carbon technologies. One of their preferred options is heat networks (sometimes known as ‘district heating’).

A heat network is essentially a system of insulated pipes which transports heat from one central source to a building or group of buildings - like, say, a tenement block or a housing estate. It’s almost like having a big, efficient, communal boiler instead of lots of individual boilers. They are very popular in Scandinavian countries, and there are currently over 800 in Scotland, but policymakers here are currently considering a bill which would seek to grow this number substantially.

As well as cutting carbon emissions, heat networks can also deliver heat at a lower cost, meaning lower bills for customers. Great, right? Well, it’s not quite as straightforward as that.

Heat networks are currently un-regulated, so existing customers don’t have the same consumer protections as users of other energy sources. This means when things go wrong, they have far fewer options for redress. Pricing is also un-regulated, and while many heat networks do provide lower cost heat, there is no obligation for operators to pass this on to the customer, so bills can change at any time. A study by the Competition and Markets Authority in 2018 found great variation in pricing in the sector, with some consumers paying more than £1,000 or even £2,000 per year.

Also, because heat networks are very expensive to set up, exclusive licences to operate are generally granted. So once a building is connected to a heat network, it is very difficult for the customer to disconnect, and nigh on impossible to switch to a different supplier.

To make things even more complicated, while the Scottish Government can legislate for heat networks to some extent, it cannot legislate for consumer protection, as this is a reserved matter. Scottish ministers have repeatedly asked for consumer protection to be devolved solely for the purposes of this bill, but this has been unsuccessful. The UK Government is currently looking at GB-wide regulation for heat networks, which would include consumer protections, but it is not guaranteed that this will go ahead, and if so, what the timescale will be.  

So, what can we do in the meantime while this is all sorted out? At Citizens Advice Scotland, we support the growth of heat networks in principle, as they can deliver both cheaper bills and lower emissions. And we certainly back the objective of properly regulating them. However, we think it’s crucial that heat network developers properly understand the communities they serve, and that communities are more involved in decisions that affect them. Joining a heat network is a big change for consumers, and there must be efforts to make sure they understand all aspects of the system.

Therefore we have told policymakers that we want to see greater community engagement obligations on the face of the current bill, meaning that genuine consultation must be carried out and the findings incorporated into any final plans. Many heat network operators already do this extremely well, and lessons can be learned from them. We also believe that Local Authorities should have a role in facilitating this and sharing the task, as proper community engagement can be time-consuming and sometimes expensive, though the benefits it brings far outweigh these issues.

The Scottish Government has in the past supported the principle of increased community involvement in decisions that affect people, most notably through the Community Empowerment (Scotland) Act in 2015, and we believe that this principle must be applied here too. Forgetting for a moment the laying of the necessary pipes for a heat network, this is the groundwork that really matters.