Installation and maintenance licences for heat networks

This consultation is focused on installation and maintenance licences, so that we can move quickly to implement them following the passage of the future Heat in Buildings Bill, in line with the priorities that heat network developers have indicated they have.

A further critical step in supporting heat network projects to progress more quickly and at a larger scale, is providing their investors with greater confidence about the heat demand they can expect from future customers.  To support this, we will regulate to require certain buildings to decarbonise their heating system when they are able to connect to a local heat network. These regulations are subject to the passage of the future Heat in Buildings Bill, but we know that in the meantime, many projects are undergoing detailed feasibility studies and investment decisions will be made. To provide the sector with the confidence it needs, our initial view is that buildings will be required to decarbonise their heating systems in the following circumstances:

• when they are located within a designated heat network zone.
• for non-domestic buildings only, and where they have an annual heat demand of over 100 megawatt hours (MWh) per year.
• where they are not subject to an exemption (e.g. the building is planned for demolition or is already using a form of clean heating).

To support these future regulations, we are working with our partners, Zero Waste Scotland (ZWS), to build on the existing process for designating heat network zones. We expect this work to conclude during 2026/27 and that we will be able to designate zones with local authorities thereafter (this will not stop local authorities designating zones using the current guidance should they wish).

A ’Zone Coordinator’ will then be responsible for issuing notices to building owners within the zone, where they are required to decarbonise their heating systems.  This notice will provide a minimum notice period of no less than six months.  The Zone Coordinator may be the relevant local authority or the Scottish Government.

We will make this decision in consultation with local government and informed by an ongoing strategic review of the Scottish Government’s role in supporting heat network developments. We expect this work to conclude in the first half of 2026, and to inform a revised Heat Network Delivery Plan which we will publish during 2026/27.

This work which will also be supported by a new Heat Networks Advisory Forum, will also help us to determine whether Zone Coordinators should have any further role(s) in relation to the delivery of heat network projects in those areas they are responsible for. Once we have determined the full remit of the Zone Coordinator(s), we will set out our next steps in implementing the heat network consent and heat network zone permit provisions made in the Heat Networks (Scotland) Act 2021.

As well as enabling the introduction of the proposed installation and maintenance licensing system and enabling Zone Coordinators to require buildings to decarbonise, the draft Heat in Buildings Bill will remove aspects of the Heat Networks (Scotland) Act 2021 that are no longer required following the passage of the UK Energy Act 2023.

Specifically, the Register of Key Network Assets and associated Transfer Scheme will be removed from our 2021 Act. These provisions aimed to make sure that the operation of all of a heat network’s assets could be taken over by a third party in certain circumstances. This would have ensured consumers continued to be supplied heat if there was a key failure of some kind (for example if the heat network operator went bankrupt).

We are instead working closely with the UK Government and Ofgem on their plans to introduce GB-wide “step-in” provisions, which will provide the necessary protections for consumers should a heat network fail. Certain aspects of financial and insolvency law are reserved, and UK law can provide a greater degree of protection than is currently possible using the powers devolved to the Scottish Parliament.