Overview
Part 1 – Heat Networks Licenses
Introductory
Section 1: Meaning of “heat network”
4.Subsection (1) defines a “heat network” for the purposes of this Act as a district heat network or a communal heating system and makes clear that the source of production of thermal energy forms part of the heat network (subsection (4)).
5.Subsection (2) provides that district heat network is a network by which thermal energy is distributed from one or more sources of production to more than one building. Subsection (3) provides that a communal heating system is a system by which thermal energy is distributed from one or more sources of production to one building comprising more than one building unit.
6.Subsections (5) and (6) provide definitions of “thermal energy” and “building unit”.
7.Subsection (7) allows the Scottish Ministers by regulations to modify or further define the meaning of “heat network”, “district heat network”, “communal heating system” or “thermal energy”.
Section 2: Requirement for heat networks licence
8.Subsection (1) prohibits any person from supplying thermal energy to a building through a heat network unless the person holds a “heat networks licence” (defined in subsection (5)). A person who contravenes subsection (1) commits an offence (subsection (2)). Subsection (3) provides for a reasonable excuse defence in relation to the offence in subsection (2). Subsection (4) provides that a person who commits such an offence can be prosecuted either on summary complaint or on indictment and is liable to a fine, which on summary conviction may not exceed the statutory maximum. The statutory maximum is set out in the Criminal Procedure (Scotland) Act 1995, as amended, and is currently set at £10,000 (see section 225(8) of that Act, as read with the definition of “statutory maximum” in schedule 1 of the Interpretation and Legislative Reform (Scotland) Act 2010).
Section 3: Exemptions from requirement for heat networks licence
9.Subsection (1) allows the Scottish Ministers by regulations to make exemptions from the requirement to hold a heat networks licence in certain circumstances or in relation to heat networks of a certain description.
10.Under subsection (2) the Scottish Ministers can direct that the requirement to hold a heat networks licence does not apply to a particular person, to persons of a specified description, or to heat networks of a specified description. A direction made by the Scottish Ministers must be issued in writing, published in such manner as they consider appropriate (subsection (3)) and may be revised or revoked (subsection (5)). An exemption may be granted (by regulations or by a direction) either indefinitely, or for a specified period, and either unconditionally, or subject to conditions (subsection (4)).
11.Regulations or a direction granted under this section may make different provision for different areas (subsection (7)).
Section 4: Meaning of “licensing authority”
12.This section defines “licensing authority” as the Scottish Ministers or such other persons as the Scottish Ministers may designate as the licensing authority by regulations.
Heat networks licence applications
Section 5: Heat networks licence applications
13.Any person may apply for a heat networks licence (subsection (1)).
14.Subsection (3) provides that the licensing authority may grant an application only if it is satisfied that the applicant has the ability to perform the activities authorised by the licence and, when making such an assessment, it must have regard to the matters set out in subsection (4), namely the applicant’s knowledge, expertise and experience, the applicant’s ability to operate a heat network in a manner that minimises greenhouse gas emissions, takes account of the just transition principles (within the meaning of section 35C of the Climate Change (Scotland) Act 2009), contributes to meeting Scotland’s fuel poverty targets and such other matters as may be specified by the Scottish Ministers by regulations.
15.The licensing authority must issue the licence to the applicant as soon as practicable after it is granted (subsection (5)).
16.Subsection (6) provides that in the event that the licensing authority proposes to refuse a licence application, it must notify the applicant of its intention and state the reasons why it proposes to refuse the application. The notice must specify the period within which the applicant may make representations to the licensing authority regarding the proposed refusal and such period must be not less than 28 days from the date on which notice was given.
17.The licensing authority must also notify the applicant of its decision to refuse an application as soon as is practicable (subsection (7)).
Conditions of heat networks licence
Section 6: Heat networks licence standard conditions
18.Subsection (1) allows the licensing authority to determine the conditions of a licence, which are referred to as the “standard conditions” (subsection (2)).
19.Subsection (3) provides that the standard conditions may include conditions that apply to all licences or to licences of a particular description. Standard conditions may include conditions that do not apply to a particular heat networks licence or a heat networks licence of a particular description and may provide for the coming into effect and suspension of the standard conditions in such manner and in such circumstances as specified in the standard conditions. Standard conditions may also include conditions relating to the standards of service to be provided by the person holding a heat networks licence.
20.Each heat networks licence incorporates the standard conditions that are relevant to it (subsection (4)). However, the licensing authority may exclude or modify any of the standard conditions on a case by case basis (subsection (5)). Before making any modification, notice of the proposed modification must be given to the applicant stating the reasons why the modification is proposed. The notice must also specify the period, being not less than 28 days from the date on which the notice was given, within which the applicant may make representations to the licensing authority (subsections (6) and (7)).
21.The licensing authority must have regard to the matters set out in subsection (8) when determining the standard conditions namely, the interests of users of thermal energy supplied by means of a heat network, the reduction of greenhouse gas emissions from the operation of heat networks, the use by heat networks of thermal energy generated from renewable sources and waste heat or cold (defined under subsection (9)).
Section 7: Heat networks licence standard conditions: supplementary
22.The licensing authority must publish the standard conditions (subsection (1)). The licensing authority must review the standard conditions from time to time and may modify the standard conditions and make modifications to the conditions of any heat network licence the licensing authority considers appropriate as a result of the modification of the standard conditions (subsection (2)).
23.Before the licensing authority makes any modifications to the standard conditions or the conditions of a heat networks licence, it must give notice of the proposed modification to every licence holder that would be affected by the modification and publish the notice. The notice must state the reasons why the modification is proposed. The notice must also specify the period, being not less than 28 days from the date on which the notice was given, within which the applicant may make representations to the licensing authority (subsection (4)). Where the standard conditions are modified, the licensing authority must publish the standard conditions as modified (subsection (5))
Section 8: Heat networks licence special conditions
24.The licensing authority may include in a heat networks licence any special conditions, in addition to the standard conditions, it considers appropriate. The licensing authority may provide in a licence that a special condition has effect, ceases to have effect or may be modified, as it considers appropriate.
Duration of heat networks licence
Section 9: Period of effect of heat networks licence
25.Section 9 provides that a heat networks licence has effect on the date specified in the licence and will continue to have effect until the licence is revoked by the licensing authority or is surrendered by the person holding the licence in accordance with the conditions of the licence.
Modification of heat networks licence
Section 10: Modification of heat networks licence
26.The licensing authority may modify a heat networks licence following an application by a licence holder, or on the licensing authority’s own initiative (subsections (1) and (2)). Before modifying a heat networks licence, the licensing authority must give notice to the licence holder of the proposed modification (subsection (4)). The notice must state the reasons why the modification is proposed. The notice must also specify the period, being not less than 28 days from the date on which the notice was given, within which the applicant may make representations to the licensing authority (subsection (5)). Where a licence is modified, a copy of the modified licence should be sent to the licence holder (subsection (6)).
27.Under section 7, the licensing authority is able to modify the conditions of a heat networks licence that it considers appropriate in consequence of any changes to the standard conditions. Section 10 does not apply to such modifications.
Revocation of heat networks licence
Section 11: Revocation of heat networks licence
28.Subsection (1) provides that the licensing authority may revoke a licence issued by it if the licence holder no longer has the ability to perform the activities authorised by the licence, or has failed to comply with a condition of the licence.
29.Subsection (2) provides that in deciding whether a licence holder no longer has the ability to perform the activities authorised by the licence, the licensing authority must have regard to the applicant’s knowledge, expertise and experience, the applicant’s ability to operate a heat network in a manner that minimises greenhouse gas emissions, takes account of the just transition principles (within the meaning of section 35C of the Climate Change (Scotland) Act 2009), contributes to meeting Scotland’s fuel poverty targets and such other matters as may be specified by the Scottish Ministers by regulations. It does not matter whether or not the licence holder has failed to comply with a terms of the licence.
30.The licensing authority may not revoke a licence unless satisfied it is reasonable to do so having regard to the terms of the licence, the responsibilities of the licence holder to final customers and any other matters the authority considers relevant (subsection (3)). Before revoking a heat networks licence, the licensing authority must give notice to the licence holder of the proposed revocation (subsection (4)). The notice must state the reasons why the revocation is proposed. The notice must also specify the period, being not less than 28 days from the date on which the notice was given, within which the applicant may make representations to the licensing authority (subsection (5)).
31.The licensing authority may revoke a heat networks licence by giving notice of revocation to the licence holder specifying the reasons for revocation and the date from which the revocation is to have effect (subsections (6) and (7)).
32.Subsection (8) enables the Scottish Ministers by regulations to make further procedural provision in connection with revocation of a heat networks licence.
Section 12: Appeals against revocation of heat networks licence
33.Section 12 enables the Scottish Ministers, by regulations, to set out an appeals process for appeals against revocation of heat networks licences. Subsection (2) sets out what matters such regulations may make provision for. Subsection (3) enables regulations under subsection (1) to modify any enactment.
Miscellaneous
Section 13: Form and manner etc. of applications under Part 1
34.The Scottish Ministers may determine the form and manner in which a heat networks licence application and a heat networks modification application must be made as well as the information that must be included with these applications (subsection (1)). Any determination must be published (subsection (2)). The licensing authority does not have to consider a heat networks licence application (or licence modification application) that does not comply with a requirement determined by the Scottish Ministers (subsection (3)).
Section 14: Regulations about determining applications under Part 1
35.The Scottish Ministers may by regulations make provision about the procedure to be followed by the licensing authority in determining a heat networks licence application (or licence application modification) as well as the notification and publication of applications and determinations made in relation to it.
Section 15: Guidance for licensing authority
36.The Scottish Ministers may issue guidance to the licensing authority about the exercise of its functions under Part 1 of the Act, including guidance on how it may assess a licence holder’s ability to perform the activities authorised by the licence. Subsection (2) specifies what matters may in particular be included in the guidance. Subsection (3) requires the licensing authority to have regard to any such guidance in exercising its functions. Any such guidance must be published by the Scottish Ministers in a manner they consider appropriate (subsection (4)).
Section 16: Register of heat networks licences
37.Subsection (1) provides that the licensing authority must prepare and maintain a register of heat networks licences. The register must contain prescribed information (specified in subsection (2)) relating to heat networks licences, including the name and address of the licence holder, the terms of the licence, the date on which the licence took effect, the date on which the licence ceased to have effect (if revoked or surrendered) and such other information as the Scottish Ministers may specify by regulations (subsection (3)). The licensing authority must make arrangements to enable members of the public to inspect the register free of charge (subsection (4)).
Section 17: Interpretation of Part 1
38.Section 17 provides various definitions for terms used in Part 1 of the Act.
