Installation and maintenance licences for heat networks

The licence regulator will be responsible for the day-to-day delivery of the Scottish installation and maintenance licence regime as set out in this consultation paper. The draft Heat in Buildings Bill proposals allow for the licence regulator to be either the Scottish Ministers (in which case the day-to-day work would be done by the Scottish Government), or an organisation selected by Scottish Ministers.

The Scottish Ministers will carefully consider who would be best placed to act as licence regulator, weighing up the costs and benefits of different options, and make their decision at a future date. We will engage with industry stakeholders in the near future as we develop our plans in this area.

The UK Government has appointed Ofgem to administer the GB authorisations regime. As set out under the section ‘Background and change of approach to licensing’, this role will be focussed on consumer protection and improving standards in heat networks by ensuring only fit and proper persons can run them. Only the UK Parliament can delegate functions to Ofgem as this is a reserved matter.

It is difficult to predict exactly how many licence applications the regulator might have to deal with, but we expect the number will be relatively small. Although there are currently over 1,000 known heat networks in Scotland, most of these are communal (single building) and only 4% supply 100 or more customers (Heat Networks Delivery Plan: review report 2024 - gov.scot). We therefore think many existing heat networks will be too small to need or want the rights and powers available to licence holders. Based on information from Scotland’s Heat Network Fund about medium to large scale heat network development projects, we estimate there might be between 10-30 licence applications when the scheme first launches, with one to four new applications per year after that.