DISTRICT HEATING

ACTION PLAN

Response to the
Expert Commission on
District Heating

May 2013
MINISTERIAL FOREWORD




In 2012, I convened the Expert Commission on District
Heating to consider how to accelerate the uptake of district
heating in Scotland, and make recommendations to the
Scottish Government. District heating is key to our vision
for the future of heat in Scotland, helping us use energy
more efficiently and increase the opportunities for
renewable heat. I am grateful to the Commission for
sharing their expertise, and their enthusiasm in working
with Scottish Government to tackle the barriers to
increasing the scale of heat networks across Scotland.

Scotland already has examples of successful district
heating schemes from smaller renewable projects such as
the Comrie Developments Trust at the Cultybraggan Camp
near Comrie, supported by our District Heating Loan Scheme, to large urban projects
such as Glasgows Commonwealth Games Village. But this is only the beginning, as
is demonstrated by the expansion of the Aberdeen Heat & Power network which is
connecting more buildings every year.

The Expert Commission was asked to look at how we can build on the successes of
individual projects, to create a step change in the scale of heat networks. The Action
Plan sets out how the Scottish Government will help to create the frameworks to
support the investment needed in infrastructure to deliver integrated heat networks
supplying homes, industry and the public sector.

I welcome the willingness of the Expert Commission to continue to provide an
important role in reviewing implementation of the Action Plan. We are already seeing
the benefits of both renewable and low carbon district heating in our towns and
cities. But our Action Plan will set us on a course to expand the scope of our vision to
build the infrastructure to deliver a long-term affordable, low carbon heat supply,
making a major contribution to Scotlands Low Carbon Economy.





Fergus Ewing

Minister for Energy, Enterprise and Tourism


3


INTRODUCTION
1. Heat and District Heating

1.1 Roughly half the energy we use in Scotland is used for heating (or cooling) for
our homes, for our communities, offices and public buildings, and for Scottish
manufacturing such as our food and drink, wood products and chemical industries.

1.2 Heat must therefore be at the centre of our move to low carbon economy. Our
Outline Heat Vision for Scotland sets out the Scottish Governments ambition to
decarbonise Scotlands heat supply by 2050, with significant progress to 2030. We
need to develop a holistic approach to how we deliver heat, to ensure a long-term
affordable and sustainable heat supply for the future.

1.3. District heating the supply of heat by hot water to a number of buildings
through a heat network of underground pipes is an effective way of making the
most of our heat resources, reducing the carbon intensity of heat and reducing fuel
costs. A large-scale heat network may take heat from several sources including gas-
fired Combined Heat & Power (CHP) plants, renewable energy such as geothermal,
solar and biomass, stored heat from intermittent renewable electricity generation and
heat recovered from industrial processes.

1.4 Scotland now has district heating schemes varying in size from a handful of
buildings on farm steadings to thousands of homes in urban areas like Glasgow and
Aberdeen. And there is even greater opportunity for expansion, to create large-scale
integrated heat networks to heat our towns and cities.

1.5 But this will require new partnerships between the public and private sector,
new ways of supplying our heat and most of all long-term strategic planning to
deliver the public and private investment needed in infrastructure.

2 The Opportunity

2.1 The scale of the opportunity is potentially huge. European heat networks are
estimated to deliver an annual turnover of 25-30 billion and 556 TWh heat sales.
1

Many European cities are almost entirely connected to a heat network and models
being developed by the UK Government suggest that up to 20% of UK domestic heat
demand might be served by heat networks by 2030
2
.

2.2 The economic opportunities of accelerating the uptake of heat networks
include jobs in the construction sector to build the infrastructure and in energy supply
services. The potential market in Scotland can attract inward investment from district
heating manufacturers as well as opportunities for our existing businesses,
particularly in the supply and design of energy systems where Scotland has a large
share of the UK market.


1
DHC+ Technology Platform, 2013. District Heating & Cooling: A Vision Towards 2020-2030-2050
2
Department of Energy & Climate Change (DECC), 2013. The Future of Heating Meeting the Challenge
4

2.3 District heating is also an opportunity to reduce energy costs for businesses
and households. Reducing energy costs will enhance Scotland as a competitive
location for business. The Low Carbon Innovation Coordination Group estimated that
innovation in heat pumps, heat networks and heat storage could reduce UK energy
system costs between 14-66 billion to 2050 (cumulative 2010-2050)
3
. Heat
networks can use heat recovered from processes such as distilling or data centres,
producing a low cost, low carbon heat supply and generating additional revenue
streams for those businesses.
2.3 Reducing heating costs will help households reduce energy bills, particularly
for those most in need. Projects such as Cube Housing Associations Wyndford
Estate, managed by SSE Heat Networks, with funding from CESP and grants from
the Scottish Government, use gas-fired CHP plants to supply heat at up to half the
cost to thousands of households. We want to see more households benefit from
such schemes, and are working with registered social landlords to see how district
heating can help them gain more control over the costs of heating for their tenants.

2.2 Heat networks give us the opportunity to tackle carbon emissions on a city
scale. Aberdeens gas-fired CHP scheme is reducing carbon emissions by up to 45%
across all the buildings in the scheme. But heat networks can also help us make best
use of renewables such as hydrogen or biomass. Networks heated by gas may be
the most straightforward to build initially, creating the infrastructure needed to
connect more renewables and low carbon heat supplies such as recovered heat in
the future.

2.3 We are just starting to realise the potential in Scotland. The Scottish Cities
Alliance is committed to rolling out the Heat Mapping Programme for Scotland, with
heat maps completed for Inverness and Perth, and about to start in Edinburgh and
Glasgow; Aberdeen Heat & Power are continuing to extend their heat network, with a
heat main now taking the system into the city centre; Sustainable Glasgow has set
up a District Heating Strategy Group to develop proposals for an integrated city
network, to coordinate major public and private projects currently in planning and
development; and, in Wick, a biomass district heating scheme is providing heat to
the Pultneytown Distillery and social housing, with plans for further expansion.

2.4 We have created opportunities for investment and the Scottish Green
Investment Portfolio is supporting projects for UK Green Investment Bank and
Scottish Government's 103 million Renewable Energy Investment Fund. An
individual project such as the heat network for Glasgow Commonwealth Games
Village need may need of millions of pounds of investment. But to maximise the
benefits, we need to create integrated heat networks, connecting individual projects.
This requires long-term strategic planning, and partnership between the public and
private sectors for example in Glasgow where SSE and ScottishPower are working
with Sustainable Glasgow on the European funded Strategies Towards Energy
Performance and Urban Planning (STEP UP).




3
TINA Technology Innovation Needs Assessment: Heat (September 2012)
5

3. The Barriers

3.1 The Heat Mapping Programme will give local authorities the tools they need to
identify the opportunities in their areas. But we recognise there still barriers to
unlocking investment in district heating, as identified by the Expert Commission.
These can be institutional and we will work with COSLA, local authorities and the
wider public sector to provide support through the Heat Network Partnership.

3.2 Barriers may also be due to perceptions of risk as the supply of heat has not
been viewed as a utility in the same way as gas or electricity. We do not want to
place unnecessary burdens on a developing sector, but to achieve the scale of
ambition we need to see, we need to explore with existing regulatory bodies and with
industry the nature and scope of regulation and licensing for district heating.

3.3 Barriers may also be physical creating networks that need to take pipes
across rivers, road and railways to create the core network to which heat suppliers
and heat users can connect. We need to have a better understanding of the strategic
infrastructure need to make the connections between heat supply and demand, so
will issue a Call for Evidence later in the year.

4. The Action Plan

4.1 In order to address the barriers and realise the opportunities provided by
district heating, we need to take action. The Expert Commission on District Heatings
recommendation set out the key areas to be addressed. The Scottish Governments
Action Plan now sets out the steps we will take in partnership with the wider public
sector, business and industry to build confidence in the public sector to drive forward
projects, the private sector to invest and in consumers to connect.

4.2 The Expert Commission made 18 recommendations across 5 areas:

Heat Vision and Action Plan (Recommendation 1)
Overarching measures: including targets, coordinated support and heat
mapping (Recommendations 2 to 10)
Planning and regulation: including planning issues, procurement and licensing
(Recommendations 11-16)
Funding (Recommendation 17)
Future of the Expert Commission (Recommendation 18)

4.3 The Action Plan sets out the next steps that the Scottish Government is taking
in response to those actions and how they will integrate with wider policy
development. How we will take forward these actions in a coordinated way is
summarised in routemap at the end of the Action Plan.


6

HEAT VISION AND ACTION PLAN

Recommendation 1: The Scottish Government, working with the district heating
industry and other stakeholders, to set out a clear vision and road-map for district
heating in Scotland by December 2012.
The Scottish Government welcomes this recommendation and set out a range
of current measures and proposed actions in its initial response at the Expert
Commissions plenary session in December, chaired jointly by Fergus Ewing,
Minister for Energy, Enterprise and Tourism and Mike Thornton, Head of the
Energy Saving Trust in Scotland.
This Action Plan now sets out a full response and road map for district
heating. This Plan will be taken forward as part of our overall policy on heat:
we published an Outline Heat Vision on 29
th
January 2013, alongside the
Draft Second Climate Change Report on Proposals and Policies. We also set
out our intention to develop a Heat Generation Policy Statement (HGPS) over
the coming year. The HGPS will present our understanding of how heat is
delivered now, and set out scenarios for meeting our heat vision. Work is now
underway and we will engaging with stakeholders over the coming months.
Next Steps:
1. Scottish Government to
develop Draft Heat Generation
Policy Statement (HGPS)
Status
In
progress
Timing
Stakeholder engagement
summer 2013
Publication end of 2013





Shetland Heat &
Powers district
heating network,
which now
supplies heat to
around 1,150
domestic and
110 non-
domestic
customers in
Lerwick.
7

OVERARCHING MEASURES

Recommendation 2: That the Scottish Government commission work to establish
baseline information and allow it to set stretching yet realistic targets for penetration
of district heating in 2020 and 2030, based on the emissions trajectory defined by the
Climate Change Act. This should happen with some urgency so that district heating
policy can be quickly driven by a common level of ambition.
The Scottish Government accepts this recommendation, and work to establish
baseline information is now complete, and a report will be finalised for
publication.
The baseline report will demonstrate the range of district heating models, with
the largest number being small-scale networks in rural areas, mainly heat only
networks using woodfuel. A small number of large systems supply much
greater numbers of properties, typically using heat from gas-fired CHP plants.
Typical examples of smaller-scale district heating supply a few buildings up to
a few hundred properties with heat. Many are woodfuelled heat only systems
such as on farms and estates (case studies are available from the
Usewoodfuel website) or social housing schemes such as Albyn Housings
Aviemore North scheme.
Typical examples of large-scale district heating are networks supplied by gas-
fired CHP such as Aberdeen Heat & Powers district heating scheme and the
University of Edinburghs campus networks, or by Energy from Waste CHP in
Shetland and Fife Councils Dunfermline Heat Network.
We will be considering all these models and their scope for deployment as
part of the scenarios being developed for HGPS and will consider how to
define targets for district heating as part of that work.
Next Steps:
2. Scottish Government to publish
baseline district heating report.

Status
In
progress
Timing
TBC
3. Scottish Government to include
consideration of targets for
district heating in HGPS.
Scoping
in
progress
Specification May 2013
Publish end of 2013


8

Recommendation 3: Scottish Government to include within the brief for the work
above the investigation of options for setting subsidiary targets for a set proportion of
the public sector estate being connected to a district heating system by 2020 and
2030 and for conversion by a medium-term deadline of all multi-storey social housing
to district heating where there is a viable business case.
Public Sector Estate
The Scottish Government recognises the importance of the public sector
estate in in transforming the district heating market, by providing anchor
loads.
The public sector estate covers a wide range of organisations at national and
regional level. We therefore need to review the make up the estate to identify
the proportion of public buildings located in areas practically and commercially
viable for district heating. This review will need to take into consideration the
target of a 25% reduction in the size of the Scottish Governments estate by
2016, and whether Scottish Government owns or lease the buildings.
Existing work to look at different aspects of the public sector estate has been
carried out including Energy Management Solutions report for the Scottish
Government
4
, work by Scottish Futures Trust (SFT)
5
and by the Carbon
Trust.
6
Resource Efficient Scotland also have extensive knowledge of the
public estate, the actions required to make their existing systems district
heating ready and the associated cost of these modifications.
Using the expertise available through the Heat Network Partnership, the work
should review the data, linking where possible to the Heat Mapping
Programme for Scotland, and consider the conditions under which district
heating is practically and commercially viable. This will depend on a number
of factors including heat density in an area, vicinity of fuel sources particularly
where renewable energy is an option and the comparative costs of heating.
The review should also highlight where public buildings can provide key
anchor loads to catalyse implementation of heat networks.
Multi-storey social housing
The Scottish Government also recognises the often compelling advantages of
district heating as an approach for multi-storey blocks. In 2012, Cube Housing
Associations district heating scheme at Wyndford Estate, one of the largest
social housing projects in the UK, was opened by the First Minister, Alex

4
Scottish Government. Research project to carry out a further study on mapping the non-domestic building
stock of Scotland. Report by Energy Management Solutions Ltd for Scottish Government, 2011
5
Scottish Futures Trust. Improving Asset Management across the Scottish Public Sector - The Local Civil Estate.
SFT, 2011.
6
Carbon Trust. Potential Carbon Abatement from the Public Sector in Scotland Report for Scottish Minister.
Scottish Government, 2012
9

Salmond. Around 1,500 households on the estate are benefitting from
reduced heating costs, through heat supply contracts with SSE Heat
Networks. The Scottish Government also made grant funding available to
allow around 300 private households the opportunity to connect.
Other examples include the Aberdeen Heat & Power district heating network,
where carbon emissions from these buildings have reduced by 45% and
typical fuel costs to tenants have been reduced by 50% over the previous
heating system. Customer satisfaction surveys also report improved health
conditions, and happier and more content people.
We are already working with SFHA and a number of social housing
organisations on identifying and developing district heating opportunities
across their property portfolios. We will explore with SFHA, COSLA and other
stakeholders the potential opportunity, timescales and possible targets for
conversion of multi-storey blocks to district heating. In particular, district
heating is included as a measure under the Energy Company Obligation
(ECO), and the Scottish Governments Warm Homes Fund and Home Energy
Efficiency Programme will help Registered Social Landlords to maximise this
opportunity.
Next Steps:
4. Scottish Government to
commission review of suitability
of public sector estate for
district heating.

Status
Not
started
Timing
ASAP



Multi-storey
tower blocks
connected to
Aberdeen Heat &
Powers heat
network
10


Recommendation 4: The Scottish Government to fund a small team supporting
district heating development and co-ordinating exchange and sharing of good
practice for a period of at least three years, reflecting the long development cycles of
district heating projects.
The Scottish Government agrees that there is a need for support for district
heating. We are therefore building on our existing programmes of support to
integrate district heating into our new programmes and to co-ordinate that
support through the Heat Network Partnership . The key organisations and
work programmes are:
Resource Efficient Scotland is a new Scottish Government-funded
programme to help businesses and the public and third sectors save
money by using resources more efficiently. Their role will be to build up
technical knowledge and provide project specific assistance in
procurement and implementation.
Scottish Futures Trust is funded by Scottish Government support public
sector investment in infrastructure in Scotland. SFT has extensive
commercial expertise in infrastructure financing, procurement and delivery
into the public sector.
Energy Saving Trust in Scotland deliver a number of schemes for
Scottish Government including the District Heating Loan Fund, and the
Warm Homes Fund that supports renewable district heating aimed at
addressing fuel poverty.
Heat Mapping Programme through this programme, we have a
programme manager working with local authorities across Scotland to
implement heat maps in their areas. This is already being rolled out by
Scotlands 7 cities to help city-wide energy planning.
SEGEC work with organisations across Scotland to encourage stronger
engagement at a European and international level. They are working with
a number of organisations to identify opportunities for European funding
for district heating support programmes and capital investment.
Scottish Enterprise and Scottish Development International are
working with district heating projects to identify and exploit the
opportunities for economic growth and have a key role in integrating public
and private investment in district heating.
Scottish Government will have a coordinating role in support for district
heating and developing the District Heating Action Plan as part of our
wider heat vision and Draft Heat Generation Policy Statement, which will
be published by the end of the year.
District heating projects are being developed by public, private, community
and social housing organisations and Heat Network Partners deliver a number
11

of Scottish Government funded initiatives targetted at these sectors as
outlined above. The role of the Heat Network Partnership for Scotland will
be to co-ordinate support for district heating projects, district heating
development and co-ordinating exchange and sharing of good practice.
This network will provide support at all stages, from strategic planning to
procurement and implementation, and will have a secretariat to coordinate
actions and outputs. Figure 1 below outlines the key organisations involved
and sets out their core project support roles.
The Heat Network Partnership will also provide a focus for building links with
other key partners including the UK Governments Heat Network Delivery
Unit, industry bodies such as the CHPA and initiatives such as Heat in the
City which is working with vanguard local authorities across the UK.
Next Steps:
5. Scottish Government to
initiate Heat Network
Partnership for Scotland.

Status
In
progress
Timing
Initial Meeting June 2013



12

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PROJECT
DEVELOPMENT
Feasibilty
Technical
specification
Finance package
Procurement
Implementation
UK Government
District Heating Support Unit
Local authorities
Scottish Cities Alliance
City/LA DH Teams
COSLA
Other agencies
SEPA
Forestry Commission
Scotland
Industry
CHPA
IET
Finance
Scottish Green Investment
Portfolio
REIF
UK GIB
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Heat in the City
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Strategic planning
Coordinated support programme
Knowledge sharing
Share best practice
Identify collaborative opportunities
Share best practice
Heat mapping data
Identify financial support for feasibility
Share best practice
Technical advice and support
Technical standards
Share best practice
Advice and support
Identification of funding
opportunities
Coordinated investment pipeline
Advice, support
Standard documents, business
models
Monitoring and learning
Data capture and mapping
Case studies
Primary role
Support role
HEAT NETWORK PARTNERSHIP
KEY PARTNERS
STRATEGIC
PLANNING
13

Recommendation 5: The Scottish Government to support district heating
champions with appropriate skills in local authorities with a demonstrable
commitment to district heating; such support to be available for a period of at least
three years, again reflecting the long development cycles of district heating projects.
The Scottish Government recognises the important role that has been played
by key individuals within local authorities and other organisations, acting as
champions for district heating. It is also important that a dedicated district
heating role is embedded within the key organisational structures and
supported by a commitment from the local authority to support these roles and
the development of district heating.
Each local authority has different organisational structures, skills and resource
needs. Through our Heat Mapping Programme we are developing a better
understanding of the key stakeholders across local authorities and existing
initiatives and strategies which will support district heating, for example in
Scotlands cities through the Scottish Cities Alliance Sustainability Group.
We will continue to monitor the situation to identify where additional resources
and skills may be required, on a case by case basis, and consider how best to
ensure that we support capacity building within local authorities themselves.
As part of the Call for Evidence on funding (see Action 19), we will also ask
local authorities to consider where there are barriers that could be addressed
by additional support either through external support from the Heat Network
Partnership or through direct support to local authorities.
Next Steps:
6. Scottish Government to monitor
resource requirements through
Heat Mapping Programme.

Status
In
progress
Timing
Ongoing



14


Recommendation 6: The Scottish Government and local authorities to take
forward heat mapping of Scotland as a priority with the aim of completing all local
authority heat maps by September 2013.
The Scottish Government is committed to taking forward heat mapping,
having funded pilot Heat Maps for the Highland Council, Perth & Kinross
Council and Fife Council in 2011 and 2012. The Heat Mapping Programme for
Scotland is ensuring that the maps are being built on readily accessible local
data sources and consideration is being given to ensuring they can be
updated on an agreed cycle. Using local government GIS to host the maps,
allows local data (such as local development plans) and priorities to guide
decisions.
This is big and challenging programme, making sure that heat maps will
contribute effectively to local decisions and to build capacity in local
authorities for their use, at the same time supporting national strategies and
targets, including the HGPS. We intend to complete a significant proportion of
the heat mapping work by October 2013 and will continue to support the
remaining Scottish local authorities to roll-out of heat maps with the intention
of creating a detailed representation of the entire country by March 2014.
Next Steps:
7. Scottish Government to roll
out Heat Mapping
Programme.
Status
In progress
Timing
Phase 1 Oct 2013
Phase 2 March 2014



Fife Councils Heat
Map showing heat
demand in North
Dunfermline, with
existing (red) and
planned (yellow)
district heat
network.
15

Recommendation 7: The Scottish Government and other public bodies such as
local authorities, NHS Scotland and the higher education sector to adopt a
policy of connecting their estates to district heating schemes.
As set out in the response to Recommendation 3, the Scottish Government
recognises the importance of the public sector estate in transforming the
district heating market. We will take forward this recommendation in
conjunction with Recommendation 3, to review what policies are already in
place and provide further guidance where required.









The Carnegie Leisure
Centre in
Dunfermline, one of
several public
buildings on
Dunfermlines heat
network.
16


Recommendation 8: COSLA and the SFHA should hold seminars on district
heating for senior local authority and housing association managers respectively.
The Scottish Government should hold similar seminars for other key public sector
stakeholders. Support for these seminars to be provided by the district heating
industry (practitioners on the Commission indicated willingness to do this).
Scottish local authorities are committed to their duties under the Climate
Change (Scotland) Act 2009 and correspondently seek efficiencies to reduce
carbon and costs through carbon management programmes. Councils
including Fife, Shetland and Aberdeen are already leading on district heating
projects.
Highland Council, Perth & Kinross Council and Fife Council are amongst the
councils that have so far been supported by the Scottish Government on heat
mapping. COSLA will work with relevant partners such as the Sustainable
Scotland Network and Resource Efficient Scotland to disseminate the
value of heat mapping to local authorities. COSLA recognises that there is
best practice that can be shared and that an opportune time for this may be in
correspondence with the completed participation of Phase 1 and Phase 2 of
the Scottish Governments heat mapping programme. COSLA will engage
with the Heat Network Partnership for Scotland to ensure continued
promotion of information and best practice in district heating.
Housing associations and co-operatives have already led on the development
of district heating schemes in Scotland, with schemes installed for example
West Highland Housing Association in Oban, Lochalsh & Skye Housing
Association in Portree and Cube Housing Association in Glasgow. The SFHA
is working with a number of housing associations to raise awareness of the
opportunities for district heating. In February, the SFHA, housing associations
and local authority housing officers met with representatives of the District
Energy Partnership on a visit to Scotland.
Through its Warm Home Fund, the Scottish Government is actively promoting
the opportunities for both microgeneration and renewable district heating to
Registered Social Landlords to enable them to develop renewables for their
housing stock. SFHA and Scottish Government are also in discussions
regarding potential social housing data to support heat mapping.
Next Steps:
8. Further seminar programme to be
considered by Heat Network Partnership.
Status
Not
started
Timing
TBC


17


Recommendation 9: The Scottish Government to commission appropriate
standard legal and contractual document templates for district heating projects.
The Scottish Government agrees that the costs of drawing up legal and
contractual documentations can be onerous and costly, and an additional
barrier to district heating. The first stage is understanding the type of
documents needed, therefore the Scottish Futures Trust commissioned
work to look at the types of business models for public sector energy
efficiency and district heating.
A number of guidance documents have been developed such as the London
District Heating Manual, and other documentation has been generated
through programmes such as Community Energy Programme and the District
Heating Loan Fund managed by the Energy Saving Trust and other district
heating projects.
The Heat Network Partnership for Scotland will bring together the expertise
across a number of organisations to build on existing documents for the public
sector on district heating and elsewhere. In addition, industry bodies for
district heating such as the CHPA and UKDEA have a key role to play and are
seeking to the address these issues, particularly consumer protection. The
CHPA have set out draft proposals for an Independent Heat Customer
Protection scheme which they will develop over the coming year
7
. The
Scottish Government will continue to engage with the UK Government and
with industry on the development of industry-led consumer protection.
Next Steps:
9. SFT to publish report on public sector
business models including district heating.

Status
For
publication
Timing
June 2013
10. Heat Network Partnership to build library of
existing documents and new requirements.

Ongoing TBC
11. Scottish Government to liaise with UK
Government and industry on
standardisation of legal and contractual
documentation.
Ongoing TBC



7
CHPA, 2013. Independent Heat Customer Protection scheme Draft Proposals
18


Recommendation 10: The Scottish Government should ensure that district
heating companies have the same wayleave and access rights as other utilities.
The Scottish Government recognises the major infrastructure needed for
district heating bring new requirements for access for maintenance and repair.
However, there is currently no central regulation or licensing of district heating
companies, so this recommendation will be consider in parallel with
Recommendation 14 on the licensing of district heating.






District heating
pipework being laid
for the
Commonwealth
Games Village in
Glasgow.
19

PLANNING AND REGULATION

Recommendation 11: The Scottish Government should issue guidance on both
national and local aspects of planning for district heating. Local authorities should
designate areas based on heat maps where district heating would be the
presumption for new developments or refurbishments. The district heating
industry should support seminars on district heating planning issues for planning
practitioners and stakeholders (practitioners on the Commission indicated
willingness to do this)
The Scottish Government recognises the importance of strategic planning to
support uptake of district heating. As set out in our response to
Recommendation 6, we are working with local authorities on heat mapping
to support strategic planning for heat at a local level.
This recommendation is also timely as the consultation process for the next
National Planning Framework 3 (NPF3) and Scottish Planning Policy (SPP)
began in autumn 2012. The NPF3 Main Issues Report and Draft SPP were
published on 30 April 2013 for consultation. The consultation documents are
avaliable on the Scottish Government website and the deadline for response
is 23 July 2013.
The NPF3 Main Issues Report:
sets out the Scottish Governments ambition, as stated in the Outline Heat
Vision for Scotland, for a largely decarbonised heat sector by 2050, with
significant progress made by 2030;
highlights the opportunities to use heat mapping to help identify the
strategic opportunities for district heating and cooling;
promotes greater use of renewable sources of heat energy and recovery
of waste heat;
asks how NPF3 could go further in supporting a spatial framework to help
achieve our ambition of decarbonising the heat sector and guiding the
necessary infrastructure investments?
The Draft SPP sets out recommendations that:
development plans should use heat mapping to consider the benefit of
allocating and co-locating heat supply and demand;
development plans should support heat networks where they are possible;
development plans should support heat networks using non-renewables
until it is possible to connect to low carbon solutions through renewables.
In addition, online advice on Planning and Heat has been published following
publication of the NPF3 Main Issues Report and draft SPP.
20

The consultations include a number of key questions on district heating and
the Expert Commission will be asked to comment on the proposals.
Next Steps:
12. Heat Mapping Programme
to include guidance and
training on heat mapping for
local authorities

Status
In progress
Timing
Ongoing
13. The NPF3 Main Issues
Report and Draft SPP will
be published for formal
public and stakeholder
consultation.

Consultation Closes 23 July 2013
14. Planning and Heat online
planning advice to be
published alongside NPF3
and SPP

Guidance
now
published
15 May 2013


21


Recommendation 12: Procurement Scotland/Scottish Government to issue
guidance which defines how the public sector can sign up to long term energy
supplies from district heating whilst still demonstrating value on a whole life cost
basis.
Guidance on the use of Framework Agreements was published by Scottish
Procurement in May 2010. The European Commission has advised that call-
off contracts, as well as frameworks themselves, should not last for more than
four years.
However, there is no express legislative restriction on the length of call-off
contracts under a framework agreement. The length of call-off contracts, as
with other contracts, should be appropriate and proportionate to the subject
matter of the purchase in question and should reflect value for money
considerations. The duration must be determined based upon a number of
factors including the subject matter of the contract in question, value for
money and industry-norm contracts.
This is different for the Framework Agreement itself, as legislation states that
the duration of a Framework Agreement should not exceed 4 years unless
exceptional circumstances exist.
Scottish Procurement has recently put in place a Framework Agreement for
the supply of Biomass Energy Efficiency Contracts. The Framework duration
is 2 years with the potential to extend a further 2 years to make a total of 4
years for the Framework. The individual call off contracts will have a duration
which is significantly longer due to the nature of the requirement. The
Government Procurement service has also recently placed a long term power
purchase agreement as part of its Energy for Growth Strategy and the ITT
documents are available on the Cabinet office website.
Next Steps:
15. Heat Network Partnership to
share best practice and
provide guidance on
procurement.
Status
Not started
Timing
ASAP


22


Recommendation 13: Procurement Scotland to set up a framework contract for
district heating consultants who meet defined standards and prices.
Scottish Government supports the need for greater standardisation and
confidence in the consultancy work carried out, particularly for feasibility
studies. The first step is to set out what the requirements and specifications
should be for a framework. The Scottish Government will therefore
commission a review of previous work, particularly where feasibility studies
have been carried out including feedback from the commissioning
organisation on lessons learned.
Once this work is completed we will consider whether a centralised framework
or other guidance is the best way to ensure consultancy contracts for district
heating deliver the necessary results.
Next Steps:
16. Scottish Government to
commission review of
feasibility work to set out
best practice and guidance
on commissioning.
Status
In
progress
Timing
Specification May 2013
Completion September 2013


23


Recommendation 14: The Scottish Government should create a licensing body
for district heating or add this to the responsibilities of an existing agency or
organisation. Licences should be issued only to suppliers who meet defined design
and operating standards and use a standard heat supply agreement which contains
robust clauses guaranteeing supply and customers rights for all tenancies and
provides full transparency on price. The Scottish Government should also
commission work to define appropriate technical standards for design of district
heating systems and for operating standards for heat only district heating.
The Scottish Government supports the recommendation for licensing of
district heating based on defined design and operating standards, potentially
within the existing responsibilities of Scottish Government agencies. We also
welcome industry initiatives such as the CHPAs Independent Heat Customer
Protection, setting out proposals for an industry-led consumer protection
scheme, across the UK. IET Standards have also engaged with government
and industry on the development of a Code of Practice for Heat Network
Design, Installation, Operation and Maintenance.
We recognise the need to minimise any regulatory burden on a developing
sector, while ensuring licensing delivers protection for Scottish consumers.
We will therefore continue to engage with industry and the UK Government on
the development of industry codes of practice at Scottish and UK level and
explore with existing regulatory bodies the scope for development of a
licensing scheme.
On technical standards, Scottish Government will continue to engage in
discussion with CHPA, UKDEA, IET Standards and the UK Government on
the development of codes of practice for district heating (see also
Recommendation 9).
Next Steps:
17. Scottish Government will
continue to engage with UK
Government and with
industry on standards and
regulation.

Status
Ongoing
Timing
Ongoing
18. Scottish Government to
explore with existing
regulatory bodies the scope
for development of licensing.
Not
started
TBC


24


Recommendation 15: The Scottish Government to consider the case for relief
from business rates for district heating projects serving only domestic properties and
partial exemption for those serving a mixture of domestic and non-domestic
properties in line with the proportion of domestic properties connected to the
network.
The Scottish Government has considered this recommendation, which needs
to be set in the context of the importance of business in funding Councils to
provide services across Scotland, including services to support businesses.
The Scottish Governments view is that the 2010 amendments to the
regulations on district heating, along with exemption available by central
Government for charitable bodies and local authority discretionary exemptions
for not for profit organisations, which could apply to many social housing
projects already address the issues raised in this exemption.
In addition, the Scottish Government recently consulted on business rates,
including the reliefs offered (details available on the Scottish Governments
website). The consultation sought views on how the rating system can support
business; and how to improve the transparency and streamline the operation
of the rating system, whilst still raising the revenue to deliver the services on
which businesses rely. The consultation closed on 22 February 2013 and the
Expert Commissions recommendations were provided to the consultation
team.

25


Recommendation 16: The Scottish Government to ensure that SEPA have the
power to require producers of significant amounts of heat to investigate options for
capture and use of their waste heat and to facilitate the supply of waste heat to a
network where this is economically viable.
The Scottish Government has asked that SEPA undertake a review of its
powers, the landscape of regulatory change underway, and what options for
framing further powers might exist. SEPA will provide a report to Scottish
Government by July 2013.
The Energy Efficiency Directive sets out a requirement that after 5 June 2014,
new or refurbished electricity generation and industrial plants will, subject to
certain exemptions, be required to carry out a cost benefit analysis on heat
use. Larger district heating networks will also need to carry out a cost benefit
analysis where potential industrial heat sources are available. Scottish
Government is working with the UK Government on transposition of the
directive into UK and Scottish legislation where required.
Next Steps:
19. SEPA to report to Scottish
Government on relevant
powers

Status
In
progress
Timing
Report - July 2013
20. Scottish Government to
transpose EED Article 14
In
progress
Implementation 5 June 2014


26

FUNDING
Recommendation 17: Scottish Government to consider providing initial
development funding through either grants or loans to take projects forward in the
early stages to the point where a business case can be demonstrated. The existing
Scottish Government district heating loan scheme to be continued and
expanded. Scottish Government to ask the Scottish Futures Trust to investigate
options for public funding or underwriting for heat mains and oversizing. Scottish
Government support through loans or grants for connections to district heating
networks where such support is not available through the ECO.
The Scottish Government welcomes the input from the Expert Commission on
funding for district heating projects. There is a complex funding landscape
across renewable and non-renewable district heating, compounded by the
fact that large-scale district heating necessarily cuts across support targeted
at specific sectors domestic, industrial and public sector.
The Heat Network Partnership for Scotland will bring together funding streams
which can provide initial development funding for public and private sector
resource efficiency, including district heating, social housing through the
Warm Homes Fund and Home Energy Efficiency Programme, ECO and the
Green Deal, and specific district heating support through the District Heating
Loan Scheme.
For capital support, we are committed to continuing the District Heating Loan
Scheme, and both the 50 million Warm Homes Fund and 103 million
Renewable Energy Investment Fund have identified district heating as a
priority area. The Heat Network Partnership will work closely with the Scottish
Green Investment Portfolio (SGIP) to identify where support is needed to
develop investment opportunities in district heating for both REIF and the
Green Investment Bank.
We also recognise the potential need for capital funding for core
infrastructure, but further work needs to be done both at a local level to
identify the scale and nature of the funding gap, ownership of infrastructure
and, at a city level, the development of business models and infrastructure
needed to integrate individual projects into a city-wide network.
As set out in the response to Recommendation 1, the HGPS will help to set a
clear framework for infrastructure investment in district heating. Within that
framework, the Scottish Government will ask the Heat Network Partnership
through its engagement programmes with projects to consider the level and
nature of investment needed in core infrastructure to unlock the major
investment opportunities for district heating.
27

Over this year we will build up better picture of the strategic infrastructure
needs through the Heat Mapping Programme for Scotland, the Heat
Generation Policy Statement and carrying out additional work on public sector
building as set out in response to Recommendation 3. We also need to have
a better understanding of the timing of investments, given the long timescales
for design, specification, financing, procurement and implementation of large-
scale complex district heating projects. The Scottish Government will
therefore issue a formal call for evidence on funding later this year.
Next Steps:
21. Heat Network Partnership
to build up data and
recommendation on
funding gaps

Status
Not started
Timing
Summer 2013.
22. Scottish Government to
issue call for evidence on
funding for district heating

In
development
Summer 2013







The Old Pultney
Distillery is heated
by steam from Ignis
Wick Ltds biomass
district heating
scheme, which also
serves nearly 200
homes in Wick.
(Photo courtesy of
Inver House
Distillers Ltd)
28

FUTURE OF THE EXPERT COMMISSION
Recommendation 18: That the Scottish Government consider how to utilise the
expertise represented by the Commission in the development and review of its
district heating vision, road-map and policies.
The Scottish Government thanks the Expert Commission for the work done on
the recommendations in its report and agreed that the expertise represented
by the group can provide an important role in the development and review of
its district heating vision, road-map and policies.

As set out in the Next Steps below, the Scottish Government will be engaging
with stakeholders on development of the Heat Vision for Scotland and HGPS,
of which the District Heating Action Plan is a key part.

Over the coming year therefore the Scottish Government would ask the
Expert Commission to convene again to participate in the public engagement
process for the HGPS to take place this summer and review the next steps
under the District Heating Action Plan.

Next Steps:
23. Scottish Government to
convene a further meeting of
the Expert Commission on
District Heating

Status
Not
started
Timing
Summer 2013

29






























SCOTTISH GOVERNMENT

Scoping Specification and Tender Scenario Development
Stakeholder
Engagement
Draft published for
consultation
Public
consultation
Publication of targets (3)
Expert Commission input [22]
Consideration of district heating targets (3)
Review of public sector estate [4]
HEAT GENERATION
POLICY STATEMENT
[1]
DISTRICT HEATING
ACTON PLAN
HEAT MAPPING
PROGRAMME [7]
Phase 1 Phase 2 to March 2014
Guidance and training on heat mapping [12]
Monitor local authority resource requirements [6]
SEPA Report [19]
Energy Efficiency Directive Article 14 - Transposition [20] Implementation 5 June 2014
NPF and SPP [13]
NPF Main Issues Report and
Draft SPP
Consultation Final SSP
Final NPF
Summer 2014
Scottish Government heat guidance published on Heat [14]
Expert Commission to consider [20]
HEAT NETWORK
PARTNERSHIP [5]
2013
Apr May Jun Jul Aug Sep Oct Nov Dec
2014

Publication of district heating baseline (2)

Publication Next Steps Review
Expert Commission to review [23] Expert Commission to Review [23]
Scottish Govt to engage with UK Govt and industry on standards and regulation [17] Explore scope for licensing [18]
initial Meeting Coordinate support and development of DH project pipeline Review support needs
HNP to build up library of existing documentation and identify gaps [10] Commission additional documentation where necessary.
Scottish Government to liaise with UK Government and industry on standardisation of legal and contractual documentation[11]
Scottish Government to commission review of feasibility work [16]
HNP to collate evidence of funding gaps [21]
FORMAL CALL FOR EVIDENCE [22] SFT report on public sector business models
HNP to develop seminar programme [8]