Heat in Buildings Strategy: what does it mean for the low carbon heat industry?

Good morning, everybody, my name is Gareth Fenney and I head up the heat strategy in the Scottish Government.

We've been quite busy over the last few months working on the Draft Heat in Buildings Strategy, which is very much focussing on that big decarbonisation challenge that we face was and responding to the strength and climate change targets and requiring that Scotland to reach Net Zero by 2045.

With the very stretching, interim target to 2020 and 2040 to kind of drive action and drive emission reduction.

Firstly, thanks to Scottish Enterprise for hosting the event today. Hopefully there'll be some good discussion, I look forward to hearing from Charlie and Andrew and that kind of reflection on the draft strategy.

I'm not going to delve into too much detail to see the next slide. I'm going to just give you a very quick whistle stop tour of the strategy. It's 185 pages long and it contains over 100 actions. I think over 70 consultation questions that we're very much keen to get responses to.

So, I'm not expecting you all to have read the whole strategy cover to cover at this point in time. I'll do my best to set out what the ambition is here in Scotland, in terms of heat decarbonisation and just have a look at where we are now where we need to get to with a focus on 2030.

Then have a quick talk through the strategy before touching on some of the opportunities that I know other speakers on the panel will touch on today.

So, right now, we've seen good progress made on energy efficiency improvements though, about 45% of homes achieve a good energy efficiency rating equivalent to EPC Band C which was in 2019.

But we've got a long way to go, and you will see on that slide that the majority of properties or domestic properties have an energy efficiency rating of either Band C or D, and we need to see that steadily improved. Over the next decade or so, with the large majority falling into Band C by the end of 2020.

For nondomestic it's a different story, relatively poor energy performance, with over 40%, achieving that very bottom rating of G. So, we need to see big strides to improve that nondomestic side in terms of its energy performance over the next two decades.

In terms of where all of our heat comes from now, I think everyone on the call today will be familiar. Gas is where we get the bulk of all heat from, natural gas delivered through the mains gas network.

It supplies the majority of heat to Scotland's homes; I think it's over 80% of homes use natural gas - mains connected natural gas in Scotland.

Electricity is the second most used fuel source, in Scotland today for providing heating in homes. That’s largely through traditional storage heaters, but we're seeing an increasing number of heat pumps being installed as well. Then we kind of move into to kind of the other heating fuels that are used to heating oil. We've got a growing number of properties connected to the network and we have smaller numbers using kind of LPG and solid fuel and some using biomass.

Nondomestic properties, about 50% already use electricity. So, the challenge looks a bit different. A lot of those you use HVAC, or heat ventilation and air conditioning systems, powered using electricity. Also, hybrid systems as well in that space, so there is a big transformation needed over the next decade or two decades, if you look out to where we need to be by 2040.

The first bullet there, is the endpoint, where we need to get with emissions needing to be significantly reduced, and virtually removed, from heating our homes and buildings in Scotland.

So, a gradual and rapid decline over the next 20 years. Toward that 2045 ambition of, there zero emission heating systems in most property, and energy demand is reduced by across the building stock.

An interim step by 2030, we need to see quite significant progress. Emissions from heating need to fall by about 68% against 2020 levels. So, what does that actually mean? In practice, we need significant progress towards achieving EPC Band C, and that’s a significant majority of home meeting EPC Band C by 2030 and then by 2035 all homes meeting that where they are able to. We need all homes or majority of homes off the gas networks of those using heating oil, LPG, and the lieks to be using zero emission system which is about 170,000 homes.

Which is a fairly large number for early progress of off gas grid buildings. The next big challenge, and this is the biggest challenge, is moving at about one million homes, off the gas network too often means natural gas onto zero emission equivalent alternative.

So, heat pumps, heat networks, or seeing a proportion of homes and buildings using hydrogen as a replacement for natural gas. We need about 50,000 nondomestic properties being converted.

In terms of one million homes, that's about 50% of those buildings connected to the gas network. Currently, we have about two point five million homes in Scotland and there's about 200,000 nondomestic buildings.

So, that's about a quarter of the nondomestic building stock to move across to zero emission heating systems over the next decade.

Alongside all of that, we also need to see an increase blending and use the bio-gasses and hydrogen in the gas networks to just start to reduce the emissions intensity of the gas network - that's being used to supply the majority of our heat it today.

Just a quick look at what we need the deployment rates to be and what are some of the strategic technologies that we're focusing on it over the next decade or so? So, the cost-effective pathway will require lots of different technologies deployed in different places, really tailored towards local circumstances.

In the near term, we need to focus on tried and tested technologies that are no and low regrets. So, very much focusing on energy efficiency. Which is step one in the fabric first approach is very important. We need to focus on heat pumps, in off-gas areas, and seeing an increasing rate of deployment of heat pumps to build off the gas network.

We also need to see an increasing deployment of heat pumps in non-gas areas. Ideally away from areas that are most likely to receive a hydrogen conversion in the future, so we do need to see that strategic compliant approach. Also, we need to see the expansion and development of heat networks, where they make commercial and socioeconomic sense across Scotland. Largely in areas where there is higher heat density.

The Heat Networks' Scotland Bill passed through Parliament 2 weeks ago, which starts to lay the groundwork for the accelerated deployment of heat network.

In Scotland, in terms of the deployment profile, we're starting from quite a low base, about 3000 emission heating systems. So, heat pumps and the like our air installs per annum in Scotland, so 3000 per annum at the moment. However, we need to see that kind of grow rapidly. Doubling per annum up to about 64,000 per year and about 2025, and then it needs to continue to grow and ramp up thereafter. To meet the climate change targets, it really needs to drive beyond the current boiler replacement rates.

It needs to go to over about 200,000 inclination per annum in the late 2020s to early 2030. So, a very ambitious to try to do we have growth. We don't have all the answers in terms of how we can unlock them, how it can be supported, and that's what we're hoping to get feedback on as we consult on Draft Strategy.

I haven't checked out any great detail, all the different aspects of the strategy. As I said, trust is 185 pages in length, contains over 100 actions and there are over 70 consultation questions.

While that strategy is comprehensive and long, it's really a discussion piece that it starts to begin that dialog that we need to have about where we need to take the transformation of our homes and buildings to make them net zero, thereby ensuring they meet those net zero targets.

It doesn't have all the answers. It sets out where we need to see movement in the direction of travel and in those areas of uncertainty where we need to strengthen the evidence base and that's a process for how we'll take those decisions. The strategy focuses on where we are today, and where we need to get to you by the end of 2030. It's loaded to all the action that can be taken in the next five years, with a view to updating and revising that strategy in the middle of the decade. So that's the time horizon of the strategy.

It's been published for consultation. It's open for consultation until the 30th April, and then it will be finalized by the incoming administration following the Scottish Parliament election in May. Then hopefully, a final version of published, towards the end of this year. But that will be a decision for a future government.

Just to take a look at the heat and building strategy itself, and what it contains. It really sets out across a number of chapters, different actions and different pathways that we need to be pursuing. I've spoken about the technological side and the ambition and the challenge. But really the coloured text on the slide here is as all the other chapters in that abstract: people, place, energy networks, investment, looks at the regulatory framework, and how that happens to be built up, and, finally economic opportunity and how do we capture that, and then it sets out what we need to do in terms of working with the UK Government. I'll just touch on a few of these quickly.

In terms of people and place, they are both recognised as an important issue in the strategy. I think one of the biggest challenges that we're going to have in achieving and delivering this transformation of our building stock is changing public attitudes and awareness. People are very familiar with the heating systems that they have at the moment.

They work, and they're relatively cheap to operate. So, there's going to be a big PR exercise in terms of changing attitudes, and I'm raising awareness of these alternative systems.

Is also really important in terms of how we plan and organize this transition. We're proposing that we should have local heat and energy efficiency strategies in place right across Scotland. Covering every local authority area that really set out what is the primary heat supply option for any given area in Scotland and that could help drive delivery on the ground and help homeowners and property owners make decisions about the future of the heating system, and about the improvement that they need to meet.

The planning exercise again, will be very important for bringing people along on this journey with us and it should have a very strong community engagement aspect. Also, a real opportunity to engage the suppliers in this space, as well, to make sure that the supply chains ready and ready to respond once delivery.

Energy networks are going to be very important in all of this. Right now, I guess we have the two energy networks, electricity networks and the gas networks. Depending on which route we go down, it's likely to be a mixed route. We're going to need to see significant investment in those networks for electrification and the role of heat pumps.

For example, we're going to need to see significant strengthening of the electricity grid to support the additional demand, that is going to be placed on those networks. Likewise for the hydrogen pathways and areas that receive hydrogen than in the future, need to see significant investment in the gas grid network, to enable that to happen.

On energy networks, we also need to see the growth of heat network so, district meeting, where it makes sense in Scotland and that will have an interconnection with both the electricity network and potentially the gas networks, depending on how they all are powered.

This is a very significant amount of investment required. We've estimated to be in excess of £33 billion over the next 25 years, a huge amount of money. That really is just to cover the capital costs of the measures themselves, the energy efficiency measures and the replacement heating systems so that 33 billion acts exclude the cost to upgrade cost of the network.

So, a significant investment opportunity in this space that a real challenge and how this is all funded and financed. The strategy set that it can't all be paid for out of the Scottish Government's budget and wanting to look at other mechanisms for how this can be funded and financed. It is very important we support people to make this transition as well.

That take us into the long-term market framework, this needs to be sustainable for the long term and we will be establishing a green finance taskforce to look at the different options for how to transition from where we are now to where we need to be in the future.

So, again, we'll be looking at various parts of the system; where the money comes from, how it's delivered to kind of the customers, and how they access that finance, and how that kind of interact with the supply chain as well to enable that delivery.

The regulatory framework, and this is really the biggie, and this is a tough area in how we do this in a way that raises the bar for everybody. But also protects those least able to make the transition. The draft strategy sets out ministers’ commitment to regulate for energy efficiency, and heat. It commits ministers to regulating and introduce a minimum energy efficiency standard across all tenures and building types. Starting from about 2024 with the compliance date of 2035, and it will be introduced at various trigger point. 

These are the point of rental or point of sale, which is the one that we most commonly talk about. It also identified a few other trigger points that we will consult on energy pool. So, that's the energy efficiency side.

The draft strategy also commits to regulates aging. So, heat supply side changes. So, a requirement to install a zero emission teaching system. Currently, heat is a devolved power, but we're not able to touch reserved areas. So, we can't regulate the gas networks, or the electricity networks.

We're looking at how best we can regulate in this space to require that transformation to happen at the building level. Using power that exist under the Climate Change Act or under building standards, for example.

The intention there is to start in the mid-2020s, possibly with a focus in the off-gas buildings, and then stepping out into wider buildings thereafter and, again, with a compliant date set for 2040, or even 2045. We are looking at various trigger points for how those minimum zero emission heat standards could come into play as well. Again, sale of a property, rental of a property, but also, end of life is a heating system, for example. So, looking at the full range of options, that will be subject to much more consultation over the coming two years.

I'll just very briefly touch on the economic opportunity. I think ministers are very keen to realise, how we can kind of lock in this opportunity, and how we can really maximise the benefits here in Scotland. 

There's a lot here for the Scottish government to do and equally a lot in here that the UK government needs to do to start to unlock some of some of this and that's the right across the UK as much as it is in Scotland.

So, things in that space include working with us on that regulatory framework working with us on the longer-term understanding market mechanism. Also, this is asks in the strategy around rebalancing energy, prices to the electricity and gas prices so they are more comparable. So, we can start to unlock electrical heating options, and make them more attractive customer proposition.

The scale of investment in Scotland alone is significant across GB, or the UK. It will be hundreds of billions of pounds to transform the way we heat our homes and buildings. We've estimated in Scotland alone that the job opportunities will be significant we've estimated that about 24,000 jobs per annum could be supported in the rollout of energy efficiency and zero emission heating. Some of those will be re-skilling and re-training and transitioning roles from other sectors, you know, oil, gas, and more. But there are real opportunities here in terms of support for jobs, particularly as we race through the next two decades transforming the number of buildings that needs to be transition to zero emission.

So real opportunities for Scotland, in terms of knowledge and services, and the expertise that we have here, that we can export elsewhere, in the UK, or further afield. There are also going to products for manufacture and export as well. There's also the European market as well. Many of our European neighbours are facing a similar challenge in terms of decarbonising the building stock.

So, there's real opportunity here, particularly with Scotland pushing ahead and leading in terms of this challenge. We are not necessarily ahead in terms of where we are, but we are certainly moving in terms of where we need to get to, and really setting out a plan of action in this space. Certainly, within the UK.

So, that really brings me to close, hopefully that was a very quick overview of the ambition and opportunity here and kind of where we need to get to, and a very quick tour of the Draft Heat in Building Strategy. As I say open until the 30th of April. Please do feedback, if you're able to. If you have comments like to kind of get the evidence into us. If you do have any questions please drop us a line, my e-mail address is on the slide. I'll stop there but thank you all very much.

Hi, everyone. Thanks very much for the invite to talk today. We are a Scottish based company that is actually the world leader in a new field, which is the storage of heat using latent storage materials, phase change materials, in a very practical way. I just want to intersect what we do with the low carbon heat part of the heat and building strategy.

So, we were created just about 15 years ago, with a very clear mission, which I think aligns very well, with what the Heat in Building Strategy is trying to tackle.

We were driven out of concerns about global warming, as it was called at the time, climate change now. Sea level rise, energy, security, fuel poverty was a very important one for us. It was kind of a mission that we acquired during our journey, from our strong engagement with housing associations, and local authorities. I think is great to see that right in the heart of the Heat in Buildings Strategy. 

If we can't solve this in a way, that brings everybody with us, and actually improve, everybody's lives, well, we're doing it wrong, and we should find a better way.

What we decided were the key problems to solve, were; to increase the amount of renewable energy going into heat, and to cut out as much as possible the burning on demand fossil energy. 

We realized that actually, you need a lot of thermal energy storage to do that. It is all very well to have lots of electric batteries, and they're very good, but you also need a lot of heat batteries, and that's what we're all about. 

Making it inexpensive is also important and one of the things we've done really, well is develop a world leading technology with the University of Edinburgh. A technology that: has the highest level of cycles of anything available in the market actually can do more than 10,000 cycles with no degradation of capacity, and that's a certified result. Internal testing says we can go above 40,000 cycles, so that's a 50-year licensed product. 

We make them in Scotland, we not only develop them here in Scotland. We actually make them in Scotland today in East Lothian with a factory that's producing up to 20,000 heat batteries per year. I'll explain what a heat battery in a moment, and that is scalable to 50,000 units per year from the same premises with three shifts. 

We're now starting to plan a much larger factory with a half a million, heat battery per year capacity. That would match quite well with the current ambition, for the decarbonisation of Scotland's building stock. It would support 200,000 per year heat pump deployment, if each of them had a heat battery. I'm guessing some of them will probably still have hot water tanks, but many of them, I think, we'll have heat batteries for the reasons you'll see in this.

Also, it will help us to support a global market, with 43 million hot water tank sales per year.

In fact, we were fairly ambitious, and very much like many other disruptive technologies, we believe we're going to fully disrupt this market with a better, more compact, higher energy efficiency product that's really well designed for new build and regeneration. 

We are already working at scale across the world. We are already supplying projects all across the UK and Ireland. We also have significant sales in the Netherlands, France, China, Korea, and Russia. We have a £50 million order book out to 2025 and we are very well covered by patents. 

This year, our first Licenses factory is opening in Korea. Which is not with our capital, that is with the capital of our licensed partner, a company called Sentium. They will be supplying Sunamp products to the Korean market as well as, the wider, RCDP, the new economic partnership that exists in that part of the world.

So, what is a heat battery? It's a very compact store of thermal energy. It can displace a hot water cylinder. It can also provide the equivalent of night storage heaters, running a central heating system that you'd recognise a wet heating system, or a hydraulic heating system with standard radiators. 

It's not just capable of doing that, it is doing that today. In terms of the system benefits, these are very good for charging when the wind blows and that's going to be the largest source I think, of energy into the Scottish heating system going forward. Whether that's through one vector, electricity and then heat pumps. Another vector electricity through resistance into things like night storage heaters and heat batteries that are electrically heated, or whether it's conversion to hydrogen.

I believe the hydrogen piece remains to be seen, whether it would be developed at scale and speed. But we know Gareth pointed out earlier that heat pumps can be made to work today, and electric resistance heating works today.

So, can it be low cost? And the answer is it can be low cost. We're seeing competitors on the market - an example would be OVO or Octopus Energy bringing forward and even in fact, in Scotland companies like People's Energy in Musselburgh.

They are bringing forward low cost, local energy tariffs, that harness that local wind energy but they also deliver demand response services to the grid and that actually reduces the total cost of grid upgrade. Optimally, of course, we would always charge with heat pumps and by storing heat we can now deliver copious amounts of hot water on demand and central heating at any time.

They are also very helpful to district heating. They can expand the storage in the central plant, and they can also deliver distributed storage in every home and either of those ways is useful. They can support the hydrogen boiler and fuel cell options as these come to market. Also, what we found was that compactness makes previously unattainable things real.

This is a project that we did in Sunderland – seven towers all of which had combi boilers in very narrow spaces to provide any kind of replacement system. Kensa installed a Shared ground-loop - 364 of their shoe box, heat pumps. But the heat battery was the key enabler, without it, there would be no, where to put the energy storage. Why do you need energy storage? Well, you want to have hot water, previously combi boiler delivered it. Now you need something else and what you need is either a hot water cylinder, but there wasn't any room, or a heat battery.

So, this solution enables completely new ways of decarbonising, and that's been so successful. It's already replicated significantly in Leeds and we're hoping to replicate it soon in Scotland. We think it's a huge opportunity to apply it to Scotland's decarbonisation, of both existing and new housing.

The question is, do you agree? Tell Scottish Government what you think. Do your reply to this Heat in Building Strategy consultation. I know it's daunting, 185 pages, 70 odd questions. But it's really important. This is probably a once in a lifetime opportunity to really help set the strategy in place and the right way.

We also save energy by reducing waste - heat batteries can be up to a megawatt hour per year per home, more efficient in terms of the use of thermal energy for the same amount of hot water delivered. They, save one thousand kilowatt hours compared with existing cylinder. We estimate that is up to £400 million and up to 2,500 gigawatt hours per year that can be saved. Again, have your say about this through the consultation.

We can also support much more classic air source heat pump installations. For example, we are doing a project with Daiken, Highland Council in Fort William. In which we are providing the equivalent of the hot water cylinder. 

As you can see on the right slide with West Highland Housing Association, we're going after much more ambitious proposition, which is in the standard cylinder covered. We fit the equivalent of 1,100 litres of hot water, in the same space as a 250 litres cylinder. 

We couple that to heat pumps, in a way that allows us to time shift heating. What that allows us to do is to access low-cost off-peak time of use tariffs. Later, it will be connected to the wind energy in the area. In that way, we can say between 45 and 60% of the heating costs for an off-gas grid home and deliver a 59% reduction in carbon emissions. 

Of course, as the grid decarbonises progressively, that advantage will continue to rise, which is, I think, extremely important. It helped the Housing Association meet their energy efficiency rating targets. So, we think it's a huge opportunity to accelerate heat pump rollout in Scotland.

We work with a lot of heat pump manufacturers across the world. I'm delighted to say that Mitsubishi Electric already makes heat pumps in Scotland. Do we think we could attract some of the others, maybe several of the others to come and locate in Scotland? We think there's a huge opportunity there, perhaps co-located with heat battery manufacturing. I’d like to see more heat pump manufacturers in Scotland.

Finally, I'd like to introduce you to a solution from the Netherlands.

On the left-hand picture, it's actually quite hard to see where the heat pumps are. They're behind the numbers, 10 and 8, embedded in a module, like the one you see on the right. Which includes both an LG heat pump and Sunamp heat batteries.

That's going to roll out with the public-private partnership initially to 10,000 properties per year, retrofit, in a very clean and elegant way, that makes it super simple to fit.

I think that's really important, because I think skills are going to be the most significant and difficult things to get right here. We need to provide the easiest possible pathways to take people, who have conventionally been fitting gas boilers, and give them an easy way to fit heat pump and heat battery-based solutions. 

Thanks very much.

Good morning, everyone and thank you for the introduction and to Scottish Enterprise for arranging this session today. We have had two great presentations from Gareth and from Andrew, setting the context for what is clearly a huge topic the Heat in Buildings Strategy.

I'm Charlie Drysdale. I work in SSE Enterprises heat project development team, and I’m responsible for Scotland, currently sitting at home in the sunny cloudy (ish) today, kingdom of Fyfe.

I don't think it's too much of an exaggeration to say that how we manage the heat and our buildings moving forward gets to the core of one of societies fundamental challenges. It is the pitching of higher carbon, more polluting fossil fuels, which are lower cost and ingrained into all of our lives against these lower-carbon, cleaner, but less familiar and generally, more expensive alternatives.

In the backdrop of significant fuel poverty challenges, how we address climate change and its implications on everyone, especially those in hardship, is clearly not straightforward. As at present, 6.5% of Scotland's homes and workplaces are heated by renewable and low carbon sources. With homes and workplaces accounting for 21% of Scotland's total greenhouse gas emissions.

It's clearly a far-reaching topic - we welcome what is a hugely ambitious draft strategy from the Scottish government – we have to applaud Gareth and the rest of his team behind it. However, we're not surprised to see, as others have said, and as Marianne Faithfull described yesterday, it runs to and epic 185 pages. 

Clearly, I don't have time to run through a significant portion of this, or even just the questions, at 70 instead than the 10 minutes that we have I’ve picked out, what we believe, to be some of the key sections most relevant to businesses like ours. 

I'm going to start with an overview of where we sit in all this, look at some key quotes from the Heat in Building Strategy, and break down some of the sections, and pick out some of the key sections that, we think are most important to us, ending on some final thoughts.

Just to set the scene of where we sit in all this, quick overview of SSE Group, the dark blue representing the different parts of SSE business, there is a clear split between the regulated unregulated parts of the business, and I can't speak for these entities.

I also can't speak for the retail business, which was sold to OVO late in 2019. I sit an SSE enterprise. This is becoming SSE Energy Solutions later this year and we're focused on delivering decentralised and distributed energy solutions. We are responsible for the investment into these areas; heat clearly being a core part of this, particular district heat networks, of which we currently operate 18 across the UK.

Just some facts on the group if I can draw your attention to the top left. It's obviously very exciting to be a principal partner at COP26 this year. It's a huge opportunity for Scotland. When the eyes of the world will be on Glasgow, talking about exactly the topics we're discussing today.

I won't go into detail on the rest of this, but just to pick out one in the centre at the top there - we're investing almost £4 million every day over the next few years in strategic decarbonisation projects. At the moment, the majority of these are in renewable electricity generation. But with the right heat policy drivers, we believe it should be possible to see similar levels for heat in the coming years, which is why the Heat and Building Strategy is so key.

So, onto the strategy itself, as I've said, I don't really have time to even touch surface here.

I just wanted to flag a few key quotes to help fix the mind, and to outline some of the content. So rapidly, scaling up the deployment of zero emissions heating systems is clearly key. We agree that the technologies being singled out, which are already both making a significant contribution in UK and across the world, at the moment, are very important. This is heat pumps and heat networks.

Fundamentally, we need to address this on a journey that protects those in or at risk of fuel poverty - I think we can all agree with this. To facilitate the step change required however, this is about, as Gareth alluded to, it's about increasing public engagement.

This is absolutely critical, and we need to change public attitudes. This will require significant PR, exercise character.

Just on the investment to the Scottish Government, making one point £1.6 billion available. However, also pointing out that just to convert buildings stock will cost £33 billion.

Others on this webinar have already flagged the scale of the investment required, but there's clearly a significant gap here and the public sector cannot cover this alone. So, what can we, the private sector communities do to support this?

Just to break into some of the key sections, now, then the first couple of chapters look at that and a bit of an introduction and then it looks at pathways.

Clearly, this is about securing a just transition. We can all agree with this, and it goes without saying, I'll talk a bit more about this later. And Gareth is already touched on EPCs in homes improving, nondomestic not so much, as can be seen from one of the few graphics that are found in the strategy itself.

So, we welcome the reform of EPCs. This is a process that's absolutely fundamental for it, to be fit for purpose to drive forward the zero carbon objectives. The devil's in the detail here. The EPCs do you have the potential to be a really, really important tool, to help homeowners and businesses, to better navigate the journey, to zero emissions, as they already are elsewhere in the world. Which we should look at, and feedback to the Scottish government.

One quote in this section is that ‘By 2030, we would like to see 20% volume of the gas in the gas grid to be green gas.’ whilst also stating that an interim target is to reduce carbon emissions by 75% over the same period.

This quote here is obviously leaving potentially, 80% of high carbon, brown gas in the majority of homes and businesses, which would obviously go against that interim target. So, that, you have to ask ourselves. Is this really getting us towards our 2045 targets? Again, somebody we need to feed back.

Lastly, in this section, industrial processes aren't covered. Does this miss an opportunity? I'd encourage everyone to seat back on its use on this. Significant heat is used here, and there's also waste or spare heat available. So, they need to be integrated, really. If we're looking at the full solution for this issue.

Chapter 2 looks more pathway.

Looking at the risks, these are some of the questions coming in here. Looking at the risks of unintended consequences from the pathway laid out and the assessment of strategic technologies.

Clearly from where we sit, we very much welcome heat pumps and zero emissions zones, beings flagged to play a key role. However, the significant opportunities within this such as waste, and spare heat, I've already mentioned geothermal mine workings, for example. This is where local heat and energy efficiency strategies will be so important, more on that later.

Again, we think hydrogen probably needs better qualification.

It's hugely important to have clarity and honesty about hydrogen's role. I don't want to go into too much detail it’s sufficient to say we fully support hydrogen in the right places but to focus on it in the wrong places – where there's no clear route to zero carbon could stifle progress towards more compatible low or zero carbon sources of heat.

Clearly, we welcome the interim targets. Challenges around electrification, though, is it just needs to be cost effective. At the moment, it is significantly more expensive than gas. So, we think about consumer for affordability and the commercial viability of this.

Chapter 3 looks at people.

So, as we have already mentioned the transition to net zero is going to transform the society, and the manner will be crucial. What can we do to engage the people of Scotland? It's about bringing communities with us. This is where zoning and LHEES is so important. And of course, EPCs.

We need to have more honest conversations about the costs and the challenges of decarbonisation. Clearly low-cost brown gas can't play the same part as it does in a zero carbon Scotland of the future. the public needs to be armed and prepared with that knowledge.

There needs to be a combination of carrots and sticks. But they do need to be simple, making the most of intervention points, for example, on the sale, or lease of the properties to encourage and enforce these changes. Those least able to pay needs to be supported through this.

We obviously fully support the sufficient protection of customers and consumers here and as founding members of the heat trust, it would be good to see similar levels of protection ingrained into this process. Clearly the challenges around devolved powers need to be overcome here.

The last quote from this section is a just transition, puts people, communities and places the heart of our approach to climate change action. So, I thought it was worth just flagging the SSE released its own, just transition stress to your plan, late last year. The first company to do so.

It's entirely aligned with the heat and building strategy.

I'm not going to go through it all, but you can see, this is about the transition into a net zero world and the transition out of a high carbon world. Focusing on green jobs, consumer fairness, the operation of these assets, and supporting people and communities on this journey.

So, we fully agree with everything, and the heat building strategy aligns with this. Both the quote, the transition can realize green jobs, a better environment, and a healthy economy that supports our well-being are commitments I think everyone can get behind.

Chapters 4 and 5 are about place and our energy networks. It's about bringing communities along the journey. Place based deployment. Not as passengers.

Community buy-in and ownership models are essential alongside the public and the private sector investment that's required, and they only to be knitted together to heat zoning. This is about doing the right thing in the right places. Aligned with EPCs. We've touched on and LHEES are so central to the success of this strategy. Public sector needing to act as key anchors within heat zones.

The connection should be encouraged and enabled through suitable buildings. Having the right resources for these LHEES are so fundamental, I can't stress this enough. This is a key driver to facilitate the right change and local authorities need the right resources to deliver these alongside the private sector or this journey will fail.

One interesting quote in this section I want to flag is that ‘…happens in a planned way so that piecemeal deployment of heat pumps and heat networks does not undermine the socio-economic case for converting parts of the guest network to 100% hydrogen in the future.’

This could lead to some confusion and inaction as we fully support avoiding piecemeal deployment where zoning and LHEES are so important but suggesting that none of this should happen on areas of the gas grid, which are also so appropriate for the technologies that are mentioned here, does potentially leave us with confusion and inaction.

Lastly, here, we obviously fully support the potential for heat networks, Scottish Renewables Piping Hot Report, released last year, gives significant information on the opportunity for heat networks to be rolled out in Scotland to do look this up and get in touch with us if you'd like to discuss any more on that clearly.

Chapter 6, it's about kickstarting this investment.

What are our views on how we can use funding to leverage and encourage the private sector? This is the Scottish Government's funding. This is about encouraging the right business models that lead to the right allocation of risk.

Clearly in order to do this though, we need clarity on the funding success, there's a lot of them which are which are expiring in the relatively near future. So how can we create business models that lean on these types of funding successes without having clarity on them in advance?

It gives us limited support for the direction, as to wholesale changes, that we need to all be taking in the next 1 to 3 years. A lot in the strategies focused on the timeframe further out than that. So, we do need to have more direction in the near term.

Green heat networks have been given 90% relief for non-domestic rates - only until 2024. This is something we need direction in the long term on. As business models will be taking account of infrastructure that last significantly longer than that.

Chapter 7 is about long-term clarity on demand and on risks. How do we encourage these investments? 

We've touched on an example there about rates. They need to be clear for the lifetime of these investments. Can we get creative with households? Could EPCs be linked to green mortgages, for example? Heat as a service is another model that's coming out. We need to enable businesses and customers to realise the benefits, as well as the cost to all this, again, carrots and sticks. So, they need to be simple.

We need to take into account the cost of all of these measures and be honest about them.

Chapter 8 on the regulatory framework and about the timeframes laid out for that.

It's light on non-domestic, and again, there's uncertainties around hydrogen. So, how can the supply chain make decisions in the short-term, can see the theme to the response that will be having here. one of the graphs as well I just draw your attention to, is about the environmental and social obligation costs on the right-hand side and pink.

You can see a significant impact on the cost of electricity bills at the moment than there is on gas. We need to see a fairer split of these.

Chapter 9 is on the economic opportunity.

Sustainable, high-quality jobs, supporting the supply chain across Scotland. The opportunity here can't be understated. It's absolutely huge for the people of Scotland However, we do need visibility of regulation and a clear direction on the technologies as we move forward.

The upskilling of the workforce will be absolutely fundamental to this.

Last but by no means least, it's working with the UK government.

There are many reasons to do that have been outlined in the strategy. Whatever your political persuasion are though, the majority of the supply chain do work, north, and south of the border. So, joining up on this only serves to reduce costs and time for absolutely everyone.

The bottom there is a graphic focusing on key technologies that Gareth introduced. Obviously, we clearly support all of these.

OK, we can all take a breath now, I've only covered 11 of the questions out of the 70, and I've missed a huge amount of very important topics. But I just want to leave you with a final quote.

From the strategy ‘By 2045, emissions of greenhouse gasses from heating, our homes and buildings, will have all, but disappeared with demand for energy reduced and space, and water heating provided by zero emissions alternatives’. 

So, the big question for all of us, is does this strategy get us there. I can't stress enough the importance of the strategy for all of us. And I'd really encourage you to have a read through it and respond to those questions which spark your conscience.

Thank you very much.

Jonny: Where do you see hydrogen being introduced into the natural gas network? She asks if it's coastal areas, ports, or other areas. So, I'll just direct that to Gareth to kick us off.

Gareth: So, that's a very good question, and I think one of the pieces of work that we've commissioned to do in the draft strategies, is to start to look at a strategic piece, to look at where those opportunities might be across Scotland.

There are some developing projects at the moment. There is work going on in Fyfe a new hydrogen network. That kind of proof of concept being developed. So, I don't think we can say with any great uncertainty at the moment where there is hydrogen network, there are opportunities there for those.

It might be an area of trade power or there might be in areas where there I do think infrastructure that might be able to be redeployed. So, I think lots of different options in that space and we need to do much more kind of strategic planning to identify where those opportunities might be.

Jonny: Do you believe that the present contractor and subcontractor chain is competent at handling the increased commissioning best practice of the new Heat Network code to do which believes that supply chain has sufficient capability to deliver that?

Charlie: Really good question, and a really important point. I think a lot of us would agree that the answer to that at the moment, would be no, there needs to be a significant amount of training and development and upskilling of the workforce that needs to happen. But I don't think we should necessarily see that as a negative thing. 

That's a huge opportunity for all of us as we transition from those higher carbon jobs that a lot of people working at the moment, but help facilitate that transition into those low carbon jobs, on this journey we all need to take.

So, it's a real challenge. It's a really important part. There is a section on that in the heat and building strategy and a lot of companies in the sector, through the likes of the Heat Networks Industry Council, the Heat Academy, for example - are very focused on what needs to be done to upskill the existing workforce, but in a very positive way, it's a huge opportunity.

Jonny: Fitting smart controls to the 250,000 homes that have existing storage heaters can be done quickly and cheaply and helps keeps consumers who are twice as likely to be at fuel poverty.

Andrew: I love smart controls, actually quite like storage heaters, but they do use more electricity and electricity capacity limits are going to be an important part of this.

So, if you can have the same benefits with time shifting, that you get with storage heaters, but you get the, coefficient, the performance of a heat pump and you can move the heat pump electricity draw into the times of best capacity availability. I think you get a better win, overall, but it's a great idea, better controls for the moment.

Having said that, in projects that we've done, where we've replaced my storage features, we've seen the cost of operation for the customer go down by about 50%.

It does make a difference to switch the heat pumps if it's possible. OK. 

Jonny: Do you have a view on how to shift public attitudes to investments in fabric first? In order for fabric first approaches to be seen as of similar value to the installation of a new kitchen or bathroom?

Gareth: That's a very good question, and I think it, it's almost a holy grail, isn’t it?

Changing customer and consumer perspective who investing in fabric is seen as important if not more important than new kitchens and bathrooms, but I think if we could crack that nut we would be kind of halfway there in terms of where we need to get to do. I don't have an answer really to what that is.

In the various pieces of work that we've done over the years in the Scottish Government with lots of different mechanisms are considered. I think, regulation is probably one of the biggest drivers, because that will start to bite on property prices as well, and you might be a kind of a green bonus or brown discount start to creep in.

So, I think that will start to incentivise and drive consumer behaviour in that space. Other things that have been identified in the patent include non-domestic rate or council tax that they've been signalled by various stakeholders in this space over the years.

One of the actions in the draft strategy is to look at how we can better use of local tax to incentives some of these behaviours, but, again, we're not sure what that would look like. So, lots of opportunity in this space. But I think that's one tricky thing to crack, but changing public attitudes, and leading the way, we're going to drive the investment that we see.

Charlie: I could just add to that, just very briefly. We select the opportunity the EPCs have - Energy Performance Certificates - and that could be a huge opportunity to answer exactly this question, to make them more worthwhile, and more valuable to homeowners.

Jonny: Given the UK Government is going full steam ahead on its EPC action plan. What’s the plan for measuring the real cerebral performance of properties to make sure that properties meet the energy demand targets in practice, rather than in a theoretical EPC calculation?

Charlie: I can't talk to the intricacies of how they're calculated technically, at the moment, or give advice on that. 

There's obviously a lot of work that needs to be done on EPCs to make them not only take account of all these different aspects but make them more visible for homeowners so they can understand them. So, it's about balancing these technical calculations in detail with information that homeowners can understand and use effectively. So, I'd encourage you to sit back and ask those questions directly.

Andrew: I would say that energy Performance Certificates and their calculation methodology are basically broken. The practitioners in the field can see that same property can be b

visited by 2 or 3 people and have completely different EPC results and this isn't OK.

Scottish Government should bite the bullet Delegate and do its own thing, and do it right maybe use passive house methodology. But we're not getting it right at the moment. If we don't get this foundation right we don't have a strategy.