Consultation on Scotland's Energy Efficiency Programme

The Scottish Government’s HEEPS: Area Based Scheme continues to be a success within North Ayrshire, allowing fuel poor homes to improve their thermal efficiency through the installation of external wall insulation. Over £5.9 million of external grant funding has been allocated to the Council for insulation of domestic properties between 2014-2017. This funding is used to deliver External Wall Insulation (EWI), which has been installed in over 1,100 of our most fuel poor households in North Ayrshire to provide increased thermal comfort and reduced fuel bills, saving over 3,000 tonnes of carbon. The access to the interest free loans through the HEEPS: Loan scheme to assist with payment of the owner’s contribution has been well utilised in the area. Being able to use both HEEPS:ABS and ECO funding together has allowed for a reduction in required contribution, and in some case assisted with delivering a whole-house approach to improving efficiency (through the inclusion of loft insulation where appropriate).
North Ayrshire Council is one of three ‘pathfinder’ projects working with the Scottish Futures Trust to develop Energy Performance Contracts. The contract will enable energy efficiency based capital investment in 14 non-domestic Council buildings, using the revenue savings generated to pay back the capital investment. This model works well on a ‘spend to save’ basis.
Grant funding of £15k for assistance with developing an investment grade feasibility study was secured from Resource Efficient Scotland’s Local Carbon Infrastructure Transition Programme, which will enable North Ayrshire to achieve its first district heating proposal. The access to available funding and expert resource has allowed for a robust feasibility study to be produced, and the technical support has complemented the Council’s current knowledge base.

Timescales for design, funding application and delivery of HEEPS:ABS can be restrictive. This was also the case for the SEEP pilot projects. Longer timescales and advanced commitment to funding would be welcomed for any future programmes. This would aid identification of housing stock, investigation into the feasibility of innovative projects, increase funding leverage and provide consistency and assurance for procurement. At project delivery level, refused access to domestic properties can cause delays in works, therefore further engagement strategies could be put in place to improve levels of uptake. Carrying out a whole-house programme of works should minimise disruption to tenants and residents.
Securing buy in from commercial business can be difficult due to financial constraints, however this could be investigated through increased financial incentives and regulation.

The financial and personnel resources available to deliver SEEP projects is unknown at this stage which hinders forward resource planning. Given the different domestic and non-domestic property types present across all local authority areas, a standard approach to assessing energy efficiency would require a level of enhanced assessment to include non-typical property types.
SEEP pilot projects have shown that more prescriptive guidance is required, as significant internal resource is invested to design and submit bids for projects, only for them to be declined, with limited feedback.
The Council agrees with the additional challenges outlined in the consultation document, and would welcome guidance on plans to overcome these, in particular the perceived apathy towards energy efficiency and resulting poor uptake of schemes and energy improvements.

In order for Scotland’s buildings to be near zero carbon by 2050, in a way that is socially and economically sustainable, we must achieve energy demand reduction and heat decarbonisation. Currently building regulations are such that new builds will be energy efficient by design, therefore consideration on how to achieve near zero carbon for existing buildings is key to achieving the target. Demand reduction is the main priority from now until 2025, after which there will be clear decision on the future of gas in the UK, including the development of hydrogen as a complementary or alternative fuel source, and carbon capture and storage as a means for mitigating climate change.
Secure, reliable and affordable energy supply is fundamental to achieving and sustaining economic growth across Scotland. By engaging with deliver partners such as local authorities, Home Energy Scotland, Resource Efficient Scotland, and supporting communities to delivery local energy systems, it will be possible to achieve these objectives and realise the wider social, economic and environmental benefits to public, private and commercial sectors.

SEEP is seen to be a complex and highly coordinated programme, with resource needed to develop each element. It would be reasonable to assume any milestones would be in line with existing targets, for example, all social housing properties to meet the EESSH standard by 2020 (no social property will have an energy efficiency rating of lower than a 'C' or 'D', depending on its built form.) The proposed annual energy statements for monitoring performance of Scotland’s Energy Strategy, could be used to report statistical information on SEEP performance, and highlight any need for additional measures to be supported to achieve the 2050 target.

The Council agrees with the acknowledgement that standards, regulation and financial incentives are required to encourage and support uptake of energy efficiency and low carbon heat technologies, across all sectors. The regulations and standards set for social housing are robust, and are seen to influence the private sector also with the newly considered minimum energy efficiency standards. Complementary to this, the non-domestic sector now supports energy efficiency standards for properties greater than 1000m². The regulations should be applied from the full deployment phase of SEEP, and run throughout, being updated should new technology call for it. A significant level of planning and support would be required for the private domestic sector, both in information and financial terms, so that people understand new obligations, and have the time to plan for them (including financially). Similarly, for local businesses, regulations would need to be well communicated, with financial support made readily available for those who qualified for it.

As the minimum energy efficiency standards, and Section 63 of Climate Change Act for non-domestic properties, are in line with Energy Performance of Buildings Directive rules for triggering the production of an EPC at point of sale or change of tenancy, this should be used as a trigger across the programme. The use of a backstop date would also be appropriate, allowing for a soft introduction to improvements, sufficient time to create an action plan and set milestones to achieve the end target.

Financial incentives have helped increase take up of energy efficiency measure in the domestic sector, further elevating fuel poverty through HEEPS: ABS and the preceding Universal Home Insulation Scheme. Providing access to funding offers residents, communities and local businesses options to engage with energy efficiency for their properties, an area which may not have been a priority for them beforehand. For North Ayrshire Council, access to funding allowed for an investment grade feasibility study to be carried out for our first ever district heating scheme, helping to support the Scottish Government’s heat decarbonisation plans. Supporting areas which are off grid to invest in renewable heat, in an affordable manner, would also be welcomed by the Council.
A reduction in business rates could be seen as an incentive for SMEs to perform well in energy efficiency. It would be recommended that the reduction be capped, and tested in the developmental stage of SEEP.

Using the existing EPC assessment seems to be an efficient and trusted methodology to assess a buildings energy efficiency and heat decarbonisation improvements, also holding all data on a central register. But it is not a perfect solution, so options should be available to enhance the assessment if a building meets certain ‘hard to treat’ criteria. The model of the minimum energy efficiency standards assessment proposed for the private rented sector could also be considered.
It may be prudent to have an assessment methodology for a small range of situations e.g. EPC based assessment for buildings, area-based assessment for considering future energy supply, but there would need to be a level of consistency in approach to maintain parity.

The current HEEPS programmes have proven to be of great assistance with supporting residents to take up energy efficiency measures. It is suggested that this type of funding continues, allowing for interest free loans to be made available and grant funding for those who are eligible (deemed to be in fuel poverty). In order to encourage and assist SME to take up energy efficiency and low carbon heating measures, financial assistance should continue to be made available (Resource Efficient Scotland’s SME Loans) coupled with an ongoing fiscal incentive (e.g. reduced business rates). Non-domestic properties would benefit from continue Salix loan fund, we would welcome the continuation of LCITP and Local Energy Challenge Fund.

The success of European ‘green’ finance is reported as being as the result of a long-term and consistent programme. By engaging with private sector during the design phase of SEEP, the programme can be directed in such a way as to embed ownership from the private investors.
Having loans which are interest free or at a lower interest rate than a commercial loan, would incentivise take up. Having a government backed loan scheme may also provide re-assurance to the public.

Resource Efficient Scotland’s SME, CEEF (no longer running), Salix loan fund, LCITP and Local Energy Challenge Fund are all successful schemes. The SEEP Pathfinder Fund has been beneficial to engage local authorities in thinking about the type of projects currently feasible in their area.
The RHI and FIT incentives were a huge success and a welcome support to facilitate the installation of biomass and solar PV in North Ayrshire. The reduction in tariffs has proved a barrier for future installations.

The Council believes that by making initial general advice readily available and easily accessible, in plain English, and offering face to face discussions, or home visits to households and building owners, SEEP should be a success. Offering an advocacy service to those most vulnerable (to work on their behalf with utility suppliers), and making certain the energy assessment is credible, by a certified and knowledgeable assessor, we can increase trust and confidence in the process. Resource Efficient Scotland and Home Energy Scotland’s resources and expertise should be used to help make the right decision for the building, or home, and provide financial advice tailored to the occupier. By making provision of a follow up service (if required) to ensure new technology is understood and being used optimally (e.g. smart meters, heating controls, and renewable technology) the whole-house approach to energy efficiency and low carbon heat provision will be a success.

Advice currently provided by national (Resource Efficient Scotland, Home Energy Scotland) and local (North Ayrshire’s Local Energy Advice Forum – LEAF), currently provide sound advice to residents and building owners. There may be a need to increase the level of advice and advocacy offered, and increase resources, given the increase in measures developed through SEEP.

When a utility company was installing a smart meter, could they pass these over the HES, or would there be a data protection issue. HES or RES could then provide the property with details of SEEP.
The HEEPS: ABS roll out could include smart meter installation if the ECO provider and property supplier are the same.

Schemes which are led by a local authority are deemed to be trusted, however this will be a complex programme and although endorsed by the Scottish Government and Local Authority, will require independent verification where appropriate. By following the recommendations from the ‘Each Home Counts Review’, and creating a quality mark, consumer charter and code of practice, SEEP would have a robust delivery mechanism and become a trusted brand over time.
In terms of risk, it is important to acknowledge lessons learned from the Green Deal project.

There may be a requirement to establish an oversight body, specifically for the delivery of SEEP. The oversight body would uphold the regulations detailed for each aspect of the programme, and administer the recommendations for the ‘Each Home Counts Review.’

The Council agree that the findings from the report would be a sound platform to build a consumer protection framework. This would be a complex process due to the nature of the programme, but we believe it would provide the basis of a robust framework to support consumers.

The development of SEEP will increase the need for skilled assessors and tradespeople to deliver a range of energy efficiency and low carbon heat measures. The Council will continue to support local business development through their account managed TEAM North Ayrshire approach – providing information on funding and training events. Also, improvements to vocational education will help in the longer term. Resource Efficient Scotland will play a key role in supporting SME’s. There will be a role for local authority procurement to play, to encourage competitive tender submissions from local suppliers. Would it be possible for Scottish Procurement to create a framework of certified installers for geographical areas, so as to secure deliverability and specialised knowledge (e.g. rural areas) across Scotland?

If, for example as in the LHEES, a single company has the rights to a district heat network, there may be opportunity for additional community benefit, over and above the reduced heating costs and increased cohesion of community. Increased jobs to a community offers additional benefits such as community regeneration, economic growth, positive metal and physical well-being, and reduced instances of fuel poverty.

The Scottish Government should engage with companies as soon as possible, to ascertain the level of upskilling required and associated costs. Financial incentives to support academia, apprenticeships and certified training would be welcomed. Targeting rural and remote areas has significant challenges, however engaging with community organisations and upskilling local businesses would be beneficial to overcome these issues.

There will be additional training and certification processes, perhaps supporting educational institutions to train students. It would be more beneficial to understand the technical detail of the work proposed, in order to plan the appropriate increase in skills base.

Overall SEEP design and development should be led by Scottish Government in order to fully align with current national programmes and progress towards achieving the Climate Change targets. And yet, local authorities have a duty to lead by example, supporting local business and communities to become more environmentally, socially and economically sustainable. Therefore we suggest the deployment of SEEP is led by local authorities. The success of the HEEPS: ABS further indicates that local authorities are best placed to coordinate localised projects and lead the community by example. The local ‘on the ground’ knowledge and potential to support local supply chains, elevate fuel poverty and reduce carbon emission further support the role local authorities have to play in SEEP. However we recognise that there will be significant resource implications for local authorities overseeing the delivery of SEEP.

Area based schemes have proved effective in North Ayrshire, allowing for large numbers of domestic properties to be insulated at a reduced cost (due to economies of scale) and increased confidence to take up the offer due to positive feedback from neighbours.
However, the area based scheme can have a detrimental effect on the areas not included in the chosen HEEPS: ABS project. It is important to provide an additional service to those not captured in the area based scheme.
For non-domestic properties, an area based scheme does help to reduce costs, e.g. on our islands.
A whole system approach, such as with the NDEE, would be an appropriate approach to properties out with an area based scheme, carrying out all energy efficiency and heat decarbonisation measures at the same time, preventing the need to revisit the building.
There has been some debate over the use of geographical areas, rather than local authority boundaries, to focus SEEP (and district heating networks) and we would welcome further investigation into this concept.

Local delivery will still have to be to the national standard, which will require certification and adherence to a code of conduct. Set the standard nationally and support all sectors to achieve the standard, through information, training, finance and accountability.

There is a need to align all local targets with the National Target, in order for the National Target to be achieved. However all local authority areas are made up of different landscapes, some with greater renewable energy potential than others, some more densely populated and more suited to district heating networks, others with a higher than average industrial presence. It would be unrealistic to assume all local authorities could contribute in an equal way. Interim targets could be set for local authorities. Perhaps, the Scottish Government could suggest a target, giving the local authority the opportunity to investigate and design a strategy to achieve the target. This dialogue between local authority (and stakeholders) and Scottish Government would allow the target to be altered (increase or decrease) and be as realistic, and equally aspiring as possible. The Scottish Government would then be able to collate all targets to ensure compliance with the overarching Climate Change targets. An annual progress report to Scottish Government could be provided, updating the Government of movement towards the interim and final targets.

The Sustainable Scotland Network (SSN) have been an invaluable intermediary between local authorities and Scottish Government, in terms of sustainability. The Public Bodies Climate Change Reporting Duties is an area where support is provided to local authorities by SSN to produce robust reports which are submitted to the Scottish Government, to influence future policy, with feedback provided to local authorities from SSN.
Also, as in the HEEPS: ABS, there is a dedicated Scottish Government officer who has sound knowledge of the programme specific to the local authority. A similar set up may be required for SEEP, with dedicated officers assigned to regions. In a local authority, design and delivery of local SEEP will involve cross service and multi-agency participation.

A baseline for each local authority would be required, using currently available EPC data and acknowledging where data is missing. A form of benchmarking would be useful, to evaluate performance fairly. An annual progress report providing an update on the increase in efficiency or decarbonisation of heat, using the EPC assessment and data should be provided, which could include actions for the year ahead. It could also be a platform to detail the targets, milestones, who is responsible in the local authority, indicator sources. We would suggest building on the Public Bodies Climate Change Reporting platform, however this may become too complex give the level of detail required.