Scottish Futures Trust
Stephen Vere of Scottish Futures Trust (SFT) discussed their work on heat network models. He explained that the driver for considering the efficacy of different models is to attract investment, bring in skills & resources, deliver at scale, pace in the longer term, and meet policy objectives, including decarbonisation and fuel poverty.
Stephen also touched on how having effective models – along with a robust policy and regulatory framework – will help to support heat network strategic planning. He set out, at a high level, the delivery context, the role of the public sector in heat networks and the different options for models, and the alignment between different model types and policy objectives.
In considering heat networks through a specific fuel poverty lens, he addressed specific Panel questions on the SFT work and its connection with fuel poverty.
He shared that:
- SFT used fuel poverty in evaluating the efficacy of different delivery models – including it in whether or not a model contributed to “wider policy objectives”.
- The kind of models which align well with the mitigation of fuel poverty tend to be influenced by the nature and extent of public sector involvement – the more public sector involvement, the stronger the ability to influence for priority policy levers to follow through to delivery.
- While there are lots of good examples of where heat networks have been used to mitigate fuel poverty – this needs to happen at scale. A level of subsidy has been a feature of these too – there will be a challenge for unsubsidised models.
- It is still too early to tell yet how effective heat in buildings legislation might be in accelerating the pace of heat network delivery.
- Demand assurance is needed to enable investment at scale which will in turn enable price differentiation and competition. Public sector involvement and influence including through procurement (community benefit/social value) will be needed for heat network delivery.
- There is a potential for “trigger points” to militate against the aggregation of demand, as an area approach rather than an individual property by property is needed to allow the aggregation of demand that will facilitate investment in heat networks. There are however indications that this will be taken into account in the final form of the Heat in Buildings’ legislation.
Other question/areas discussed were:
- The potential for regional ESCO – a joint venture model with multiple public sector partners to aggregate demand while keeping fuel poverty mitigation as a key success factor.
- The potential for the Scottish National Investment Bank and the National Wealth Fund to invest in heat networks.
- There are choices to be made. The prioritisation on social grounds could risk a fuel poverty postcode lottery which does not lead to fuel poverty mitigation equity nationally, given the barriers to rural heat network development. There’s a risk that prioritising heat networks could reinforce the rural poverty premium. Although it should be acknowledged that there are effective smaller scale heat networks in rural areas which are community-led subsidised pilot ones.
- The differential pricing of gas and electricity needs to be addressed.