By Neil Kitching, Energy Specialist, Scottish Enterprise

Scotland is on the cusp of a mass roll-out of district heating. Progress to date has been slow and steady, but once the building blocks are all in place I believe that we will rapidly roll out district heat across our main cities and in certain rural areas. This will create jobs and an economic boom in construction, consultancy, and the manufacturing supply chain.

In 2012 I was lucky enough to help organise a Scottish Enterprise-led learning journey to Copenhagen. This trip introduced Scottish companies to Denmark, the recognised leader in district heating using heat networks. We learnt about the economic opportunities that arise from constructing heat networks. Denmark chose district heating after the 1970's oil crisis, whilst the UK took a different path by taking advantage of its newly found North Sea gas reserves.

Heat networks now supply 97% of Copenhagen’s heat. Their great advantage is that the heat can be sourced from renewable energy and that the price is more stable, decoupled from the fluctuations of the natural gas market. Our group all left Copenhagen with a sense of optimism that heat networks were the future for Scotland.

District Heat in Scotland – where are we now?

In the 13 years since this learning journey, Scotland has made slow but steady progress to install heat networks. Early schemes, such as the one operated by Edinburgh University, were powered by gas combined heat and power plants with the income from selling electricity being a crucial element to their financial viability.

District heat networks are now being built in Aberdeen, Midlothian and Glasgow around newly constructed energy from waste plants, subsidised by the Scottish Government’s Heat Network Fund. With the advent of the 2024 ban on polluting heat from new-build properties, district heat is also planned in development areas such as Granton and Glasgow Harbour.

In addition, Scottish and UK Government grants have supported trailblazing demonstration projects. Scottish Water Horizons has enabled several innovative schemes using warm wastewater from sewage pipes (Galashiels College) or sewage works (Stirling). West Dunbarton Council built the UK’s first large-scale water sourced heat pump at Queens Quay using water from the Clyde Estuary.  AMIDS in Renfrewshire and Clyde Gateway have built innovative lower temperature, ambient loop district heat networks.

Business Opportunities

These schemes have opened up new business opportunities in Scotland. For example, Noventa Energy has bought three wastewater district heat schemes from Scottish Water to operate and maintain. Star Renewables manufactured the large heat pump installed at Queens Quay and contractors like FES Group Ltd and CalForth Construction are picking up major construction opportunities.

Gren has announced £150m of investment in district heating around the South Clyde waste from energy plant in Glasgow. Meanwhile Midlothian Council has signed a long-term partnership with Vattenfall to build district heating and improve energy efficiency in Council owned properties.

The future economic opportunities are huge if we choose to seize them.

The ambition for Scotland

The Scottish Government wants to ramp up the supply of district heat from providing 1.4% of heat today to 9% (7TWh) by 2035.

The Committee for Climate Change suggests that district heating could supply 18% of homes by 2050 and provide 42% of commercial heat. The Scottish Council Local Heat and Energy Efficiency Plans are even more ambitious. Glasgow has identified 46% of its homes within potential heat network zones (covering 75% of the city’s heat demand), Edinburgh 30%, and East Lothian an ambitious 80% using waste heat from Dunbar’s energy from waste plant and cement works.

There are those who argue against the disruption of digging up streets to lay district heat pipes, but we can learn from the Danes how they manage to do it efficiently, as well as from existing UK utilities operators such as the contractors who recently installed a fibre optic cable in my home street with minimal disruption.

If we can get this right the Heat Networks Industry Council estimates £60bn investment is required, creating 30,000 jobs.

The Building Blocks - how do we get there?

For the next three years there will be continued steady growth in district heating, focused on locations where there is access to cheaper electricity or waste heat. For example, where an energy centre can access private wire electricity from a nearby wind turbine, or using the waste heat from energy from waste plants or data centres.

In the medium-term, large-scale heat networks will be built, but only when all the following ‘building blocks’ are in place:

• The Scottish Government fully implements the secondary legislation from the Heat Networks (Scotland) Act 2021 on permits, licences, consents and consumer protection. This includes new regulations to increase the certainty that buildings will connect to new heat networks, which will reduce the risk for developers.

• Local authorities map their Heat Network Zones, consult and inform customers within those areas. Each authority chooses a delivery model to develop and deliver district heat and will then pull in private investors and apply for public grants to progress construction.

• Grants are stable and long-term and focus on building critical infrastructure and providing incentives for customers to join new networks.

• Implementation will accelerate if new windfarms, UK electricity market reform and rebalanced levies reduce the price of electricity relative to gas.

My vision for District Heat in Scotland

We can gain inspiration from what the Danes have achieved. A mass roll out of district heating can cut Scotland’s carbon emissions, create skilled jobs, create opportunities for local companies, and produce cost effective heat for consumers. We can move away from our current reliance on importing gas from overseas at fluctuating prices.

By 2030, Scotland could look like this:

Leading councils working with private developers to build heat networks in cities at scale. These networks use heat pumps, geothermal and connect to waste heat from industry, wastewater and data centres. Some connect direct to off-shore and on-shore wind turbines. These inter-connected schemes avoid the need for expensive back-up boilers.

Energy centres, combined with large hot water storage, access cheap electricity tariffs and in return provide flexible services to help to balance the local electricity grid.

Smaller heat networks are being built in suburbs where there are pockets of heat demand, perhaps using shared boreholes to operate ground source heat pumps.  Rural schemes too, connected to community-owned wind turbines.

The scale and ambition of these projects is encouraging companies to invest in the people skills and expertise to build these networks. New skilled jobs created. Construction costs falling as certainty and economies of scale kick in.

Homeowners and commercial property owners are queuing up to connect to district heating because it supplies reliable heat at a consistent and affordable price, it is safer, and it avoids having to pay for and maintain gas boilers.

Once the building blocks are ALL in place, then Scotland will rapidly roll out district heat across its main cities, and in certain rural areas. This will create an economic boom in skilled construction jobs, professional consultancy and the wider supply chain.