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Consultation on heat & energy efficiency strategies, and regulation of district heating

Last updated: 18 Apr 2017

Consulting body:
Scottish Government
Period of consultation:
Runs from 28 January 2017 to 18 April 2017
CML action:
Response submitted

The Scottish Government has launched a consultation on Local Heat & Energy Efficiency Strategies (LHEES), and regulation of district heating.

District Heating involves the supply of heat and/or hot water from one source to a district or a group of buildings via a network of insulated pipes and associated plant.  Such systems tend, currently, to be powered by a biomass (wood pellet fuelled) plant or boiler. 

District heating and biomass plant present a range of challenges for mortgage lenders, including ownership of the plant/ equipment; leases of plant/ equipment and plant rooms; mortgageability of homes served by district heating; consumer choice; and consumer protection.  Regulation of district heating could provide some solutions to challenges such as these. 

In the consultation, government is seeking views on the role that regulation could play in both:

  • the planning at local level of heat decarbonisation and energy efficiency programmes within Scotland’s Energy Efficiency Programme (SEEP), which is due to begin from 2018 onwards, and
  • supporting the development of district heating in Scotland

The consultation document comprises two sections:

  • Section A consults on the role of Local Heat & Energy Efficiency Strategies (LHEES) in enabling local authorities to plan for energy demand reduction and heat decarbonisation of buildings across their area, in a phased approach to planning area-based delivery programmes to help achieve the national objectives of SEEP.
  • Section B consults on a regulatory framework for district heating, including: area-based zoning for district heating through LHEES; granting of concessions for district heating networks; licensing of district heating networks; connecting supply; surplus industrial heat, and consumer protection.

CML response

The consultation proposals could have potentially significant impacts on mortgage lenders and consumers, particularly as they envisage the possibility of building owners/ consumers being required or compelled to connect to a district heating system – this could clearly lead to conflict with lender and consumer interests. 

The proposals could also impact registered social landlord (RSL) providers and, indirectly, the interests of commercial funders to housing associations in Scotland. 

We will engage further with the Scottish Government as these proposals develop.

The full CML response can be downloaded below.