Information

Energy Efficient Scotland programme: analysis of delivery mechanism

Report exploring how best to oversee the delivery of our programme to improve energy efficiency and promote low carbon heating in Scotland's homes and buildings.


6 Business Needs for Energy Efficient Scotland

6.1 Key points

HM Treasury guidance on the business case for programmes states that the Strategic Case should include an analysis of “the organisation’s business needs in terms of the improvements and changes that are required for the programme to fulfil its agreed spending objectives.”[34]

This chapter summarises the current drivers and delivery options that are in place to deliver against the targets and proposals set out in EES, and identifies where improvements and changes are needed to meet these proposals. More detail around specific areas of EES delivery is set out in annex 2.

6.2 Needs by sector

The table below summarises the challenges in different sectors, the mechanisms in place to deliver, and the improvements and changes that are required:

Table 6: Summary of challenges and mechanisms by sector

Sector

Scale of challenge

Current mechanisms

Changes/improvement required

Domestic (general)

  • 1.58m homes to be improved (an average of 66,000 homes per year).
  • After ‘early adopters’ install measures, other property owners will be harder to engage with.
  • Different parts of domestic market face different challenges.
  • N/A.
  • SHR to monitor performance and compliance with EESSH2, including minimum standard of EPC D from 2025.

Table 6 (cont): Summary of challenges and mechanisms by sector

Sector

Scale of challenge

Current mechanisms

Changes/improvement required

Social rented

  • Ambitious target of maximising number of homes at EPC B by 2032
  • Existing delivery strategies have successfully engaged landlords.
  • Scottish Housing Quality Standard (SHQS) and EESH.
  • Monitoring of progress by Scottish Housing Regulator.
  • Agency to enforce non-letting of homes at EPC D and below.
  • EPC B will require installation of renewable, low carbon energy systems: additional incentives will be required for social landlords to go beyond minimum standards.

Owner-occupied/private rented

  • Energy efficiency lower than social rented sector.
  • In rented sector, the costs of poor energy efficiency fall on the tenant rather than the landlord (who will be responsible for energy efficiency improvements).
  • No minimum standards to date: minimum standard for private rented landlords will be introduced in 2020, with mandatory action by 2030 if insufficient progress.
  • Means of monitoring and enforcing minimum standards that are introduced.
  • Need to engage house owners in order to achieve targets.
  • For rented homes, targeted communications for landlords will be necessary to make them aware of incentives on offer.
  • Holistic approach to minimise disruption around installation of measures.

Table 6 (cont): Summary of challenges and mechanisms by sector

Sector

Scale of challenge

Current mechanisms

Changes/improvement required

Fuel poor

  • In 2016, 649,000 households in fuel poverty.
  • Fuel poor households to EPC B by 2040.
  • However, there are other factors than energy efficiency which drive fuel poverty.
  • Warmer Homes Scotland installs measures in fuel poor households. At current annual installation rates, only 16% of fuel poor households will be reached by 2040.
  • Significant escalation in Warmer Homes Scotland.
  • Robust monitoring framework which identifies all drivers of fuel poverty.
  • Campaign to raise awareness of available funds, and more flexibility around funding rules.

Non-domestic

  • EPC data only available for 15% of non-domestic buildings.
  • Likely that huge improvements will be required.
  • Various funding schemes available, although uptake has been poor.
  • Few regulations that focus on industrial energy efficiency.
  • Enforcement required to stimulate action and drive progress.
  • Central focal point to drive awareness and uptake.

Supply chain

  • Substantial, diverse market required for energy efficiency products and services.
  • Many supply chain participants think energy efficiency sector is ‘in decline’.
  • Greater coordination between supply chain and consumers to understand future demand.
  • Accessibility of contracts to SMEs.
  • Promote opportunities for collaboration on district heating projects.

6.3 Needs across cross cutting policy areas

This section summarises the need for change in areas that cut across all sectors of the Scottish building stock.

Table 7: Cross cutting policy areas

Area

Why it is important

What needs to be done

Customer engagement

  • Increasing engagement and customer ‘pull’ will be critical to success of EES.
  • Identify actions to encourage uptake of energy efficiency measures.
  • Develop specific approaches for different ‘archetypes’ of householder.
  • Discuss complexities of retrofit so they are understood by householders.

Protection and quality assurance

  • To boost confidence in the programme and secure investment, EES must be a trusted and well respected brand.
  • The delivery of high quality services is key to this
  • A significant proportion of recent energy efficiency work did not meet installation standards[35]
  • Greater clarity and guidance around the requirements that suppliers need to meet to work under the EES brand.
  • Clearer guidance for consumers on what they should expect from suppliers;
  • A more consistent and fair redress process for consumers with a single point of contact;
  • An overarching standards guidance for all installation types and technologies that is updated in line with best practice, with clearer information on potential unintended consequences; and
  • Increased supplier accountability through greater oversight and increased technical monitoring and auditing of installations and sanctions for poor performance.

Table 7 (cont): Cross cutting policy areas

Area

Why it is important

What needs to be done

Monitoring and data

  • Progress against consumption baselines will need to be measured to justify spending of public money and to identify areas for prioritisation.
  • Establish a baseline dataset for the non-domestic sector.
  • Increase frequency of EPC assessments to ensure accurate dataset is available.
  • Designation of responsibility for reporting and monitoring.
  • Make data available to stakeholders e.g. Local Authorities to develop delivery strategies, and ensure that it is clearly signposted and validated.

Local Authority interaction

  • Foundation of EES will be design and implementation of LHEES by Local Authorities, however many Local Authorities face limited resources.
  • Support Local Authorities and build their capacity.
  • Facilitate coordination between Local Authorities e.g. around cross-boundary issues.

6.4 Emerging themes

From the analysis above, it appears there are several areas within the existing arrangements in which a strategic change could enhance the delivery of energy efficiency improvements and facilitate the step-change required to meet EES objectives. Table 8 below draws on the coverage of the landscape in previous sections and highlights potential gaps which do not appear to be provided for in existing arrangements, either individually or collectively.

Table 8: A summary of the case for change

Theme

The change required

Enforcement

  • Ensure all buildings comply with minimum standards across all sectors in a timely manner to ensure EES targets are met.
  • Facilitate and remove restrictions for improvements across all sectors.
  • Ensure LHEES are developed and implemented in a timely manner.

Engagement and education

  • Greater uptake of available support with improvements made ahead of minimum standard deadlines.
  • Greater likelihood of consumers implementing improvements beyond minimum standards.
  • Owner-occupier more likely to make home improvements without the introduction of minimum standards.
  • Increase innovation by encouraging a move away from standard installation techniques.
  • Greater competition for public sector contracts, encouraging SMEs to invest in expanding their capacity.

Funding

  • Increased ability for holistic, whole-house improvements to reduce the need for multiple visits to achieve EES targets.
  • Installations in difficult-to-treat areas and building typologies to minimise divergences between modelled and actual performance improvements.
  • Minimise the potential for unintended consequences such as mould growth and health issues.
  • Remove funding restrictions to allow levers tackling fuel poverty to incorporate larger-scale energy efficiency improvements to reach EES targets for each home.

Monitoring and data

  • Regular monitoring to track the progress of improvements against targets across all sectors to justify funding allocation, support enforcement and identify high priority areas.
  • The ability to separate the impact of energy efficiency improvements on fuel poverty from other drivers.
  • Create a database of buildings which are exempt from EES targets Improve the consistency, coordination and availability of relevant data for all users.

Coordination and coherence

  • A greater awareness and uptake of levers through a central EES advisory body with an overview across all schemes and areas of EES.
  • Sharing of best practices and lessons learned between all 32 Local Authorities.
  • Increase collaboration between Local Authorities.
  • Facilitate and mediate conversations between stakeholders, including Local Authorities and the supply chain.

Capacity building

  • Increase the resource capacity of Local Authorities to develop and implement LHEES and responsibilities arising from the EES Programme, including planning.
  • Increase the technical support and expertise available to stakeholders, particularly Local Authorities.
  • Encourage investment in the Scottish supply chain to ensure there is enough capacity to deliver EES.

Quality assurance

  • Ensure there are consistent quality assurance standards and customer protection processes across all EES related schemes.
  • Have a greater overview of supplier performance to identify which suppliers are performing well and which ones aren’t.
  • Ensure that all products and services delivered under the EES brand are of a high quality.

Contact

Email: james.hemphill@gov.scot

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