Installation and maintenance licences for heat networks

There will be costs incurred by the licence regulator when assessing licence applications, as well as for the ongoing monitoring of licensees, and processing any licence modifications. We therefore propose to allow the licence regulator to charge application fees in relation to their functions.

Fee levels will be set in future regulations. Further information will also be set out in the financial memorandum to the future Heat in Buildings Bill, when it is introduced to Parliament. We expect there could be three types of licence fee:

• an application fee payable when first requesting a licence. The regulator will not need to consider the application until this initial fee is paid;
• a regular monitoring fee payable while the licence remains active; and
• a fee for any modifications made to the licence.

Fees will be proportionate and reflect the costs incurred by the licence regulator in carrying out its functions. These costs are difficult to predict at this time, but the financial memorandum to the 2021 Act estimated that a licence application fee under that legislation could be between £3,150 and £5,250 in 2019 prices (Heat Networks (Scotland) Bill | Scottish Parliament Website).

The aim of installation and maintenance licences is primarily to assist the development and operation of heat networks and encourage investment in the sector. Therefore, we believe it is right that the cost of licensing should fall on the developers and operators who stand to benefit. This approach is consistent with similar regimes such as gas and electricity licences.