Insight

The Critical Role of Heat Decarbonisation

Scotland’s path to net zero depends heavily on decarbonising heat; heating accounts for more than a third of the nation’s emissions and is deeply embedded in the way buildings are designed, built, and operated. The Clean Heat 2025 conference in March made clear that this challenge is no longer a technical problem to be solved, but a delivery problem to be addressed.

The conversation has moved decisively from high-level ambition to the practical realities of large-scale implementation. As a consultancy advising on net zero strategy across the built environment, we see this shift as a pivotal moment. Clean heat is now a system transformation issue, with local, national, and commercial stakeholders each needing to move faster and in alignment to achieve Scotland’s clean heat goals and ambitions.

Policy Alignment and Technological Maturity

For years, Scotland’s heat transition was marked by debate over technologies and pathways: hydrogen heating, continued use of gas with offsets, or full electrification. Today, that landscape is clearer with combinations of heat pumps, energy efficiency upgrades, and district heating now widely accepted as the most viable route to decarbonisation. As highlighted at Clean Heat 2025, these technologies are proven, scalable, and already delivering significant benefits in the field. For example, modelling presented at the conference showed that replacing a gas boiler with a heat pump can reduce gas demand by over 80%. In homes equipped with heat pumps, solar PV, battery storage, and utilising smart tariffs, energy bills can fall by more than half. These are not hypothetical outcomes but real results from real projects.

What remains essential, however, is ensuring that regulation, pricing, and market incentives keep pace. Without reform of electricity pricing, greater financial support for households, and clear standards across the sector, uptake will suffer, and targets will be missed – for context, the Scottish Heat in Building’s Strategy (2021) set out targets of a 68% reduction in emissions from buildings and a provisional target of 22% of heat in buildings to be supplied by renewable sources by 2030. However, a revised Heat in Buildings Bill stops short of legally requiring homeowners and businesses to replace their heating systems by 2045, as outlined in the 2021 version – this Bill is to be brought forward for consideration by the Scottish Parliament later in 2025.

Strategic Planning at Local Authority Level

One of the most encouraging developments in Scotland’s clean heat transition is the maturity of local planning through Local Heat and Energy Efficiency Strategies (LHEES). These long-term frameworks are providing local authorities with a structured approach to decarbonising heat across their building stock.

Across Scotland, LHEES are identifying priority zones, investment opportunities, and retrofit needs. In North Lanarkshire, for example, roughly 70,000 homes are already suitable for heat pumps. In both North Ayrshire and Angus, over half of all properties are suitable for heat pump installation, whilst in West Lothian, several areas, including Bathgate and East Calder, have large numbers of properties that are suitable for a heat pump. This amounts to several thousands of retrofit-ready homes. In the Scottish Borders, 28 potential heat network zones with over 600 GWh/y of combined annual heat demand have been identified for heat network development. This demonstrates the viability and widespread installation opportunities that exist right now for heat pumps and heat networks across Scotland’s local authorities.

LHEES give local authorities and their delivery partners a valuable blueprint for targeted action. However, turning strategy into delivery requires dedicated resource, upfront capital, and effective project governance. Many councils face capacity constraints that limit their ability to move from planning to implementation. Addressing this delivery gap is now an urgent priority if the installation opportunities are to be realised and, more crucially, our net zero goals achieved.

System Integration and Innovation Pathways

Alongside core infrastructure like heat pumps and heat networks, a new wave of innovation is helping to create more integrated, consumer-friendly solutions. Projects such as SHIELD (Smart Heat and Intelligent Energy in Low-Income Districts) are combining solar PV, battery storage, and smart controls to deliver low-cost, zero-carbon heat to social housing residents. Through SHIELD, low-income households could cut their energy bills by 40%.

Similar to SHIELD, Octopus Energy’s Zero Bills Homes integrated solution aims to reduce or even eliminate energy bills by aligning hardware with software and intelligent controls. Octopus Energy’s solution combines solar panels, heat pump, and a battery with a smart software to deliver “zero bills” for customers. The company is aiming to build 100,000 “zero bills” homes by 2030, partnering with a range of housing developers, and is available for existing home upgrades.

Crucially, these innovations are not just technological but system-level interventions that blend energy, housing, and finance. Their potential lies in their scalability and ability to serve vulnerable or off-grid communities. Embedding these approaches into mainstream delivery will help ensure the transition is not only low-carbon, but equitable.

Enabling Delivery: Investment, Partnerships, and Governance

Despite clear progress in planning and technology, the delivery challenge remains significant. Glasgow City Council, alone, estimates that achieving its net zero goals will require over £40 billion in investment. As part of this investment, Glasgow’s LHEES is estimated to require £10–15 billion to implement. If delivered successfully, it could reduce emissions by up to one-third, mirroring the share of the city’s emissions that comes from heating. According to the council, district heating offers the most cost-effective route to decarbonising heat at scale. However, delivery at this level demands more than a technical plan; it requires a robust investment vehicle capable of mobilising capital. This, in turn, relies on structured partnerships with the private sector to finance and accelerate project delivery.

At a national level, the role of the National Energy System Operator (NESO) and its Regional Energy Strategic Plans (RESP) will be critical. These frameworks are designed to provide consistent planning assumptions, identify strategic investment needs, and ensure that local delivery aligns with national priorities. If executed effectively, they will give developers and investors the confidence to move at scale within a framework that covers multi-level governance coordination, system planning, and regulatory oversight ensuring that actions at local and regional levels feed into national strategy.

From Pilots to Scaled Delivery

Scotland has moved beyond the phase of proving what works. The clean heat transition is now about scaling known solutions, accelerating project delivery, and unlocking investment. Policy is aligning; planning tools are in place; and the technologies are ready. However, with Scotland’s net zero target deadline of 2045 just two decades away, the pace of delivery must increase dramatically. That will require bold coordination, new forms of public-private partnership, and faster access to capital.

As a strategy consultancy deeply embedded in the net zero agenda of Scotland, we believe the organisations that act now – those who bridge planning and execution, who understand both technical feasibility and delivery complexity – will shape Scotland’s energy future.

Clean Heat 2025 confirmed that the pieces are coming together but rapid acceleration of rollout must take place now to ensure we achieve our clean heat goals and net zero targets.