Scotland has an ambitious target to reduce its greenhouse gas emissions by 42% by 2020. To support this, the Government published yesterday proposals for a fivefold increase in the use of renewable heat and district heating.

In Scotland, most heating is supplied on an individual building basis, but many European countries have heat networks that supply towns or whole cities. This results in lower carbon emissions and cheaper heating but requires upfront and long-term investment in infrastructure.

The Scottish Government is also assigning £250 million to tackle fuel poverty and improve domestic energy efficiency. An additional 40,000 homes are to be supplied with low carbon heat using heat networks and communal heating by 2020. This will deliver 1.5 TW hours of heat per year.

To help achieve this goal the Government is increasing funding for District Heating Loans Fund by over £4 million, bringing the total to £8 million available over the next two years.

There are 112 operational district heating networks already in existence in the country, supplying about 10,000 homes and a range of public, commercial and industrial buildings. A survey by the Energy Saving Trust revealed that they supply about 100 MW of heat, about half of which is renewable, mainly biomass.

In the UK as a whole, an assessment made in 2009 concluded that, in the right conditions, heat networks could supply up to 14% of the UK's heat demand. It showed district heating to be a cost-effective and viable alternative to individual renewable technologies because of the advantages of scale. Examples in England can be found in Sheffield, Nottingham and London.

Clearly, Scotland sees that large-scale heat networks in its towns and cities is the way to go for a low carbon future that tackles fuel poverty. It cites as an example Cube Housing Association’s district heating network at Wyndford Estate in Glasgow, which replaced high cost electrical systems in multi-storey blocks, with something that is easier to control for tenants and cheaper.

Another success story has been in Aberdeen where an independent, not-for-profit energy services company was set up in 2002 and has set up three projects which supplies 2000 homes in 22 multi-storey apartment blocks and 11 public buildings. Carbon emissions from the buildings have been reduced by 45% and a typical fuel costs to tenants by up to 50% compared to the previous heating system.

Multi-storey tower blocks connected to Aberdeen Heat and Power's heat network.

Multi-storey tower blocks connected to Aberdeen Heat and Power's heat network.

The company has now set up a subsidiary to enable it to supply commercial customers in the city centre through a heat network extension funded by the Scottish government.

One advantage of installing a distributed heat network is that it allows future upgrades or changes to the heat supply to happen without disrupting individual consumers connected to the network. New technologies or currently and tapped resources could be captured and connected to the system.

The key challenge facing those who want to install district heating systems is finding significant capital to make the initial investment.

The cost can be bought down by first targeting homes in high density areas, particularly those heated by electricity in multi-storey apartment blocks. Many of these residents are in fuel poverty and already several large-scale social housing district heating schemes of this nature have been installed in Aberdeen, Glasgow, Edinburgh and Dundee.

The public sector has an important role to play in developing heat networks and heat supply. This is not just confined to municipal authorities, but to the NHS as well, which is rolling out district heating in its own estates on a site-by-site basis.

Universities such as that in Edinburgh also find district heating appealing. Edinburgh University has invested about £12 million in three gas-fired combined heat and power plants and district heating networks. One of them replaced a 15 year old steam system connecting 14 buildings. Although the network cost £7 million to install, it is saving around £0.5 million a year in energy costs at current prices.

This provides a clue to the successful financing of such schemes: repayments of loans are made on the basis of savings on energy costs over the years of operation.

Heat Network Partnership for Scotland

Financial support for district heating is available in Scotland from a number of sources including the District Heating Loan Fund, Warm Homes, the Renewable Energy Investment Fund and the Green Investment Bank.

The Scottish government has established a Heat Network Partnership for Scotland (see plan to the right: click on the image for a larger version). This will coordinate support for district heating development across agencies. This is beginning its work by compiling a Heat Map of Scotland that will identify projects and opportunities for the application and scale to reduce costs.

District heating pipework being laid for the Commonwealth Games Village in Glasgow.

District heating pipework being laid for the Commonwealth Games Village in Glasgow.

One of the largest potential projects in the pipeline will be in Glasgow city centre, which is being planned in partnership with the Green Investment Bank, Strathclyde University, the City Council and other partners. Schemes on other campuses around the country are also being considered, as well as heat networks for large-scale industrial complexes such as Grangemouth, where the potential for using surplus process heat exists.

The report and targets have been welcomed by the Combined Heat and Power Association (CHPA). Its director, Tim Rotheray, said: "District heating is one of the most cost effective methods for tackling fuel poverty, making it an important tool to help the nearly one-third of Scottish households classed as 'fuel-poor'. These ambitious targets will be vital for attracting the additional investment needed to benefit the thousands of families across Scotland that struggle to pay their heating bills."