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The act allows us to continue to review the target. I think that it is at least a fair possibility that we will review the target upwards rather than downwards but, if a future Government decides that heat networks have not been the success that I believe that they will be, it would be for it to come back to committee and Parliament and ask to review the target in the other direction. However, I think that there is a stronger likelihood that we will see greater progress. We should be throwing our weight behind the development of heat networks as one of the most effective ways to decarbonise Scotland.

I would encourage the member and others in the committee, if they have not yet taken the chance, to visit some of the heat networks that are already in operation, including some that are being expanded or redeveloped.

In essence, the networks are made up of highly insulated pipes that go under the ground and come from a central heat source. They might involve the deliberate generation of heat for the network, or they might use a waste heat source. At the moment, we are letting valuable warmth from some waste heat sources go to waste, and heat networks can bring that heat to the consumer.

With heat networks, individual businesses or households would not need to have their own boilers, except, potentially, as an emergency back-up. They might choose to have something in reserve, but their main heating needs—and, in some circumstances, cooling needs—would be met via the network.

That is correct. That is what generates a revenue stream for the network, which is what makes it an attractive proposition for investors. The experience with heat networks in this country—and, I think, in Denmark, where they are used the most extensively of any European country—is that they tend to be affordable and attractive for that reason, compared with individual consumption of gas or other fuels.

Heat networks are particularly viable and effective when they have a range of different heat consumers—not all domestic but some commercial, some industrial, and large public buildings, for example—and a range of heat sources. Some networks will have a heavy reliance on a single heat source or small number of heat sources. Existing networks will be under a duty to bring forward a plan to decarbonise if they have a polluting heat source.

However, over time, as we see the extensive development of heat networks, we are likely to see that viability become an incentive for any operator to diversify its heat sources. That might be by using banks of heat pumps. In the Glasgow area, it might be using the River Clyde as a heat source, as Queen’s Quay does. It could also include industrial sources of heat, such as waste heat and other options. The diversification of heat producers and heat consumers is one of the things that will make the networks more viable for the long term.

We believe that it is.

Sorry, I did not catch that.

It will come from a range of sources.

A range of discussions have taken place not only with individual potential investors—the Scottish Government has an investor panel that advises it—but through the green heat finance task force. As the committee knows, that has now been meeting for some significant time. Its first report will be due out very soon, alongside the imminent consultation on the heat in buildings proposals more generally. The expectation is that the first phase of that task force report will focus on individual approaches and that the second phase report will look at the more communal, area-based approaches, which might include greater focus on heat networks. A significant amount of work is happening in that area.

Yes. The legislation that was passed in the previous session of the Scottish Parliament to get the work under way was done before we knew that the United Kingdom Energy Act 2023 was coming, so we have taken account of some of the changes that took place in that. The committee will be very pleased to know that there were some areas where the Scottish and UK Governments were able to work together on useful changes to that energy legislation, in particular in dealing with some of the consumer protection issues. However, some other changes require us to perhaps reconsider some aspects of how we approach the implementation of the Scottish heat networks act. For example, in the light of the UK legislative changes, we will consider our approach to permitting and consenting and ensure that we have got the balance right. Over the course of time, there will no doubt be other legislative changes.

A critical thing that we are still awaiting from the UK Government is the rebalancing of electricity and gas prices. Whether the current UK Government makes good on that or whether we have to wait on a successor Government, we know that that is one of the critical issues that will spur not only the viability of decarbonisation of heat but its attractiveness. For example, as we decarbonise existing heat networks, some of them will shift over to using devices such as heat pumps as one of their energy sources. If those are using electricity rather than gas, that is great to decarbonise those existing networks, but the rebalancing of prices will be one of the things that are critical to making that viable and attractive to customers.

As I said, we have been exploring a number of different models for the development and operation. We think that it will be an attractive area for private investment, but we also know that there is a need for the public sector to give leadership, particularly at local level, where local authorities understand both the building stock and the energy resources that they can bring to bear. That is why they are leading on the development of LHEES. As I said, we have looked at a range of models, including direct municipal ownership and joint ventures.