Green Heat Finance Taskforce minutes: January 2024

Minutes of the meeting held on 31 January 2023.

Attendees and apologies

  • Patrick Harvie MSP – Minister for Zero Carbon Buildings, (Meeting Chair) 
  • Emma Harvey-Smith, Programme Director, Green Finance Institute (GFI)  
  • Simon Horner, Director, Strategy and Public Affairs, GFI; 
  • Dr Ian Cochran – Edinburgh Uni. Business School / Institute for Climate Economics  
  • Dr Gemma Bone Dodds – Director – Insights and Policy, Scottish National Investment Bank (SNIB)  (virtually) 
  • Kirsty Hamilton OBE – Independent 
  • Helen Melone – Senior Policy Manager Scottish Renewables  (virtually) 
  • Simon McWhirter – Deputy CEO, UK Green Building Council Scotland 
  • Rufus Grantham – Independent  
  • Ben Rose, Director of Public Policy and Communications, Scottish Financial Enterprise;  (virtually) 
  • Lewis Shand Smith, Chair, Energy Consumers Commission;  (virtually) 


  • Jon Turner, Chief Executive, Link Group Ltd.  
  • Peter Freer, Director, Debt Capital Markets, Head of Scottish Office, Allia C&C 
  • Richard Orr, Head of Energy and Regeneration, River Clyde Homes 
  • John Marr, Devolved Government & Social Housing, UK Finance 


  • Catherine Williams – SG, Deputy Director for Heat in Buildings Delivery 
  • Amy Tickell – SG, Head of Heat Networks and Investment Unit  (virtually)  


  • Karl Reilly – SG, Heat in Buildings Future Finance Team Leader  
  • Toby Tucker – SFT / GHFT Secretariat 
  • Michelle Rayneard – SG, Heat in Buildings Future Finance Team 
  • Rajiv Naik – SG, Heat in Buildings Future Finance Team 
  • Sarah Buchanan– SG, Private Secretary to Minister for Zero Carbon Buildings 

Items and actions

Welcome and apologies

The Chair welcomed members to the 13th meeting of the Green Heat Finance Taskforce (GHFT).  Apologies had been received from: Sara Thiam (Prosper & Co-Chair); Andy Kerr (Climate KIC); and David Steen (UKGBC). 

The Minister recorded his thanks on behalf of the Taskforce to Eddie McAvinchey for his valued input on behalf of the SNIB to the workings of the Taskforce over the last couple of years. 

Summary note and actions points from previous meeting, including member notification of any conflicts of interest 

All members confirmed that they were content with the minute of, and actions arising from 29 November 2023 meeting.  No conflicts of interest were raised. 

Secretariat Update – Scottish Government 

Following a brief update by the Minister on progress with the Heat in Buildings Bill Consultations, Secretariat outlined initial thinking around the structure of the Taskforce’s Part 2 Report and invited members to discuss.  Points raised included:

  • the treatment of area-based models should be carefully considered, and they will need to be well defined as they will cover a much broader range than other proposed themes.  This can include social housing, heat networks and individual property level action
  • the role of government in comparison to the private sector should be discussed, including the need for a business case for a project to demonstrate a return for government
  • while government can play several roles, budget constraints will impose limits on the levels of Scottish Government funding, so it will be important for the report to recognise that, potentially even making a recommendation around building productive relationships with others
  • acknowledging that the role for the private sector should be discussed in a way that counters any negative preconceived ideas linked to the legacy of PFI
  • making the transition to clean heat is a multi-decade endeavor and financing options will therefore need to be set out in a way that is resilient to changing political landscapes  
  • there could be merit in recommendations explaining why an action is not currently happening and how the recommendations will help unlock progress. This might also include clearly defining the role for different parties around each recommendation

Action 1

All Taskforce members to provide further feedback to Secretariat on the key messages and potential recommendations for the Part 2 report. 

Financing Social Housing Retrofit 

Before beginning the substantive agenda item around financing social housing retrofit, John Marr introduced the work of UK Finance and noted:

  • UK Finance’s Net Zero Homes: Time for a reset report (2022) provides a framework for its policy and advocacy work around property retrofit
  • social housing retrofit was one area of interest for UK Finance and it is familiar with the challenges faced by Registered Social Landlords (RSLs) around funding and delivering retrofit works
  • there are investors looking to invest in heat, although there is not one single solution to provide a template for doing so

It was noted that while this is the first time the Taskforce had considered social housing specifically, a workshop involving Richard Orr and Peter Freer, amongst others, was held last May with outputs fed back to the Taskforce.  

Presentation 1: Social housing perspectives on Registered Social Landlords

There followed a presentation by Jon Turner, Chief Executive, Link Group Ltd. Points noted by Jon included:  

  • must recognise the scale of opportunity: 600,000 homes and top 10 RSLs have a third of these so potential of a few organisations to make a large impact.  However, financing options have not changed much over the past 15 years, with the big challenge being around how to generate a new revenue stream (and therefore monetise the benefits of retrofit works)
  • RSLs have sheltered tenants from the impacts of inflation, with rent increases below inflation despite costs continuing to rise.  Social housing rent does not, therefore, cover all costs with the gap traditionally covered by grant funding, although this approach breaks down if larger unexpected costs arise
  • social housing lost out on significant funding streams through EU funding (via EIB) and this has not been fully replaced in post-Brexit landscape
  • the opportunity here is to help generate investment from organisations through government funding leverage, which can then be re-invested
  • RSLs are very connected to and engaged with their local communities

Presentation 2: Interactions and sequencing for scalable models

There followed a presentation by Richard Orr, Head of Energy and Regeneration, River Clyde Homes. Points noted included:

  • a legacy of right-to-buy policy is that RSLs are often dealing with blocks of flats with multiple owners (and some empty properties).  A design solution which is specific to individual communities is therefore needed
  • River Clyde Homes is working with HACT (a charity of the social housing sector) on a retrofit carbon credit approach which would provide a new revenue stream to support financing retrofit work
  • coordinated planning is important to help RSLs determine the most suitable mix between fabric upgrades and connecting to heat networks.  A timeline for heat network development is essential to this
  • RSLs must strike a balance between objectives which do not always align, for example, to provide low-cost housing or to maximise emissions reductions
  • procurement approach – if all RSLs procure together, procurement can happen at scale.  Many RSLs and cooperatives across the country either are not talking about this or do not have the capacity to do this.  There is a need to consider the financing model alongside the delivery model.

Presentation 3: Potential options and models for leveraging private financing

There followed a presentation by Peter Freer, Director, Debt Capital Markets, Allia C&C. Points noted included:

  • outlining the challenges facing housing associations, particularly the lack of income return on investment in retrofit works. Two different financing models were outlined
  • expanding the Charitable Bond currently used for new build affordable housing to allow investment in retrofit works.  This could establish a Special Purpose Vehicle (SPV) to attract funding from different private sources as well as government and then provide loans to RSLs to undertake retrofit work 
  • an off-balance sheet model being explored could involve an SPV attracting finance in the same way as for a Charitable Bond, but then directly financing retrofitting work and recovering costs over time through levying a service change of RSLs.  The off-balance sheet model would be significantly more complex to set up and operate
  • a working group to explore the options further and suggest how and where to potentially test either model could move this from theorical to operational ideas

Members made the following points during the ensuing group discussion:

  • there is potential for the social housing sector to be a catalyst for whole areas and place-based models with RSLs trusted community voices
  • whether an on or off-balance model is used, there must be a method for generating new income or ultimately the model will fail (e.g. capturing the energy savings from clean heat to provide an income stream)
  • River Clyde Homes use of an ESCO (Energy Service Company) for delivery could potentially be replicated in other areas with community consultation key to success in building trust
  • must recognise the complexity of these models, particularly off-balance sheet options – do RSLs have the skills and experience to be able to adopt such a model?  What about governance risk?  The Regulator will need to be involved
  • this echoed experience from development of the London Green Finance Fund, where access to technical advice was important.
  • it was noted that local authorities have ring-fenced social housing budgets so differently funded to RSLs, however, a very similar funding model could be used
  • importance of aligning delivery model (SPV/ESCO) with funding model (off or on balance sheet) and essential to be able to generate income
  • what is the role of the public sector in this?  Is it more about the galvanising and the setting up, therefore playing an enabling role for private finance to come in?  The government could de-risk projects by underwriting or offering a returnable grant which can then be recycled
  • any solutions will take time to put in place and achieve.  Conversations must continue to develop sequencing and timing

Next Meeting and Any Other Business 

It was noted that the next Taskforce meeting would be held in Saint Andrew’s House on 6 March 2024 and would be chaired by the Sara Thiam.  It was proposed that this meeting would be focused upon a draft of the Part 2 report.  Members were also encouraged to proactively contact Secretariat to input to the Part 2 Report. 

The Minister thanked members and closed the meeting. 

Action 2  

Secretariat to get in touch with members of Taskforce regarding key messages and themes to cover in the Part 2 Report

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