Building regulations 2025 - new non-domestic buildings: energy standard improvements - modelling report
Research output to identify and assess potential improvements in energy and emissions performance for non-domestic buildings constructed in Scotland set via Section 6 of the Scottish Building Standards (energy). This was to inform the setting of targets within the next set of energy standards.
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5. Objective IV: Cost/benefit analysis to support business and regulatory impact assessments
Based on the build/fuel mix, capital and lifetime costs, benefits and transition period defined in Section 4.3.1, the national costs and benefits for the low, medium and high cases compared with continuation of the existing 2021 standards are shown in Table 112. The analysis is based on the HM Treasury Green Book standards and the accompanying supplementary guidance on the valuation of energy use. Relevant assumptions include:
- Energy savings are valued at the variable rate in accordance with the supplementary Green Book guidance. This is appropriate for social analysis and assumes that the retail energy savings enjoyed by the consumer occupying an energy efficient building does not fully reflect the social benefit.
- The appraisal period for estimating the impact of the policy is 10 years with a consistent build rate and mix in each year equivalent to that forecast for 2026. We assume a 60-year building life from the year of construction resulting in a total model period of 70 years.
- A discount rate of 3.5% has been used for the first 30 years of building life and 3% for subsequent years.
- Construction, energy and carbon prices are in all brought to 2025 prices and to a 2025 present value year with a 2026 policy implementation year.
| Metric | Option 1: Section 6 2025 ‘Low standard’ | Option 2: Section 6 2025 ‘Medium standard’ | Option 3: Section 6 2025 ‘High standard’ |
|---|---|---|---|
| Energy savings (£M) | -6 | 216 | 255 |
| Incremental costs for construction, maintenance and replacement (£M) | -9 | 264 | 604 |
| Total financial benefit/(cost) (£M) | 2 | (48) | (349) |
| Carbon savings - traded (£M) | -1 | 14 | 18 |
| Total carbon savings (£m) | -1 | 14 | 18 |
| Air quality savings (£m) | 0 | 1 | 1 |
| Net benefit/(cost) (£m) | 2 | (33) | (330) |
| Amount of electricity saved (GWh) | (320) | 8,681 | 9,836 |
| Amount of CO2 saved - traded (MtCO2) | (0.002) | 0.062 | 0.082 |
| Cost effectiveness – traded (£/tCO2) | (1,014) | (758) | (4,225) |
The results show that the low standard option has a net benefit both in financial terms and after the value of carbon and air quality benefits are considered, however this option does not result in carbon reductions in comparison to the current policy position. Option 2 and 3 both result in higher costs in both direct financial terms and once the value of carbon savings are taken into account.