Scotland’s clean heat revolution is about to reach its tipping point

By Jan Reid, Clean Heat Team Leader at Scottish Enterprise

Scotland cannot achieve its ambitious net zero targets unless we make fundamental changes to the way we heat our homes and buildings. The Heat in Buildings Bill for Scotland will have a transformational impact on our already vibrant clean heat sector. It will increase demand for low carbon heat solutions, drive new innovation, create new market opportunities, and accelerate a clean heat revolution that is already well underway across Scotland.?

In 2019, the Scottish Government declared a global climate emergency and announced that Scotland must reach net zero emissions by 2045. The transition to fossil free sources of heat will play a critical part in achieving these targets – as things stand the emissions from heating systems are the third largest cause of greenhouse gas in Scotland. Simply put, we need to successfully deliver the single biggest revolution in how we heat our homes and buildings since the 1960’s. Scotland cannot position itself as a net zero world leader if we do not address our current dependence on carbon intensive heat sources.

Having worked closely with a wide variety of innovative and ambitious companies during my time at Scottish Enterprise, I believe that we have the capability, drive, and passion to build on our success so far and further establish Scotland as a world leader in clean heat.

Scotland is leading the way?

It’s been incredibly exciting to see the development of new technology solutions that can dramatically reduce the carbon footprint of our heating systems. Take heat networks and heat pumps for example. Although heat networks aren’t necessarily considered a new technology, there are examples across Scotland of pioneering heat network projects where renewable energy sources are being utilised to generate heat as opposed to traditional coal and gas.

West Dunbartonshire’s 4th Generation District Heating Network and Energy Centre at Queens’ Quay uses water from the River Clyde to generate heat which is then distributed to customers through an underground district heating pipe network. While the 5th generation heating and cooling district heating network at the Clyde Gateway site in Glasgow’s east end will utilise heat from a wastewater plant and localised heat pumps, along with other renewable sources such as geothermal mine water. Additionally, research is underway at the nearby UK Geoenergy Observatory in Glasgow to determine the potential of geothermal mine water as both a source of heat and a form of heat storage.

Heat pumps are another example of a well-established clean heat product which continues to be disrupted by new waves of innovation. In December 2023, Livingston-based Mitsubishi Electric launched the R290 air-source heat pump which uses propane – a natural substance - as a refrigerant. The propane not only reduces embodied carbon, it also improves performance, resulting in a high-temperature heat pump that can very much compete with a gas boiler in the amount of heat it provides.

Scotland is also leading the way in developing new solutions which make it easier to integrate heat pumps with other low carbon domestic technology. Livingston-based Boxergy for example, offer the installation of fully integrated renewable solutions which integrate solar PV systems, hot water storage and heat pumps, all managed by intelligent controllers.

Accelerating our journey towards decarbonisation

These innovations are being driven in part by increasing demand for clean heat technology across Scotland. Recent statistics show that heat pump sales are growing, with a 24% increase in installed air sourced heat pumps in 2023, which equates to an ￡87 million market. The reality however is that around 79% of households in Scotland still rely on gas central heating, and it is estimated that 2.6 million domestic properties will need to enhance their energy efficiency standards.

This means that we still have some way to go before we turn clean heat from a ‘nice to have’ to a ‘must have’ – which is why the Scottish Government is developing a comprehensive package of regulations to increase energy efficiency and promote a full transition to fossil free sources of heat.

I believe that the latest proposals put forward for consultation – the Heat in Buildings Bill - are the most ambitious we’ve seen yet, and could have a truly transformational impact on the clean heat sector in Scotland.

A pipeline of opportunity on the horizon

The proposals will require homeowners and private landlords to upgrade the energy efficiency of their properties and shift to a clean heating system.

Key takeaways from the consultation include the following:

1. The use of polluting heating systems will be prohibited after 2045.
2. Those purchasing a home or commercial property must end their use of a polluting heating system within a “specified timescale”.
3. Private rented landlords must ensure their properties meet a “minimum energy efficiency standard” by 2028; with a deadline of 2033 for most homeowners.
4. All public buildings to use clean heat by 2038.

Although the proposals are still at the consultation stage, it’s easy to see the transformative impact this could have for businesses in Scotland; and for all of us in our homes.

Once the Heat in Buildings Bill has been passed and secondary regulation completed, it is expected that from 2027 there would be a marked but steady increase from the 6,000 heat pumps currently being installed each year in Scotland.

The new regulations will also drive increased demand for energy efficiency and clean heat solutions for the new build market, as well as public and third sector housing. There are 240,000 social houses and 23,000 public sector estate buildings across Scotland that need addressed with retrofit and clean heating solutions.?

This can also present an opportunity for those with transferrable expertise from the oil and gas sectors – from welding and pipe joining, to project management and the capability to prefabricate structures.?Market adaptation will also create growth further down the supply chain, where qualified and trained installers will play a key role in the future growth of the clean heating sector. It has been estimated by heat pump manufacturer, Vaillant, that an additional 40,000 installers will be required across the UK by 2028 (as of 2023 there were 1,500 MCS registered contractors across the UK.)??

In short, we could be looking at a regulatory intervention that triggers the single biggest revolution in homes and buildings since the 1960s, one that creates a pipeline of opportunity for companies that can offer building energy efficiency and decarbonised heat solutions.

Helping businesses set up for market growth?

Scottish Enterprise has a key role to play in making sure as many businesses as possible across Scotland take full advantage of the transformational opportunities in clean heat, both domestically and international, and whether they are already in the sector or not.

Through our combination of business support services and advice, our access to funding and investment, and our industry networks at home and overseas, we can help your business take advantage of the enormous economic opportunities within clean heat and across all the energy transition markets.

Our Clean Heat Expert Support programme can help Scottish companies that want to create new products or services, or otherwise diversify into the clean heat market. Our industry specialists can help companies of all sizes and types, from a variety of sectors. It offers up to three days of consultancy with an industry expert who will assess your current areas of operation, capabilities, and ambitions, and create a report for your outlining opportunities for your business and specific areas where you can take action.

The Green Heat Innovation Support Programme supports innovation and capital investment that will accelerate the roll out and adoption of green heating solutions and associated products. If you can develop green heat solutions or have ideas to boost manufacturing or R&D in this area, submit an expression of interest to the ￡17.6 million programme. Funding will be available to companies across Scotland until March 2026 and can be accessed in various ways, including grant funding, feasibility studies and EU funding.

Next steps

Our business support programmes across energy continue to evolve, so stay up-to-date with the latest by signing up for our email updates.

If you’d like to find out more about the support available to your business, get in touch with us or visit our?website.

?

?