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Local Heat and Energy Efficiency Strategies (LHEES): phase 1 pilots - technical evaluation

Findings from the technical evaluation of the first phase of LHEES pilots, in which 12 local authorities participated between September 2017 and March 2018.


3. Socio-economic assessment

3.1. Socio-economic assessment conducted in the pilot

Of the councils participating in the LHEES pilot, support for socio-economic assessment of options was provided for Glasgow and Highland.

Under a separate consultancy contract with the Scottish Government, though across very similar timescales (April-December 2018), the Carbon Trust has been developing draft methodologies for socio-economic assessments; one methodology for LHEES and another for the consenting process for proposed district heating developments.

The Carbon Trust developed the draft methodology for LHEES concurrently with providing support to Glasgow and Highland in the application of the methodology during their pilot LHEES programmes. This allowed the initial iterations of the draft methodology to be tested and refined in practical 'real world' settings. Slightly different 'work in progress' versions of the methodology were used with Glasgow and Highland. With Glasgow in particular, where the consultancy engagement occurred in the spring of 2018, it was an earlier, less well developed version of the methodology which was utilised, and this process helped to inform some refinements to the methodology and the criteria, impacts and indicators on which it focuses.

3.2. Multi-Criteria Analysis

The purpose of conducting a socio-economic assessment is to identify and analyse the direct and indirect impacts of a given strategic intervention, relative to its closest alternative. In contrast to technical and financial analyses, socio-economic analysis estimates the impacts of a project or programme beyond those directly involved in the formulation and negotiation of the content and scope of what is being delivered. In particular, socio-economic assessments of energy projects allow consideration of impacts on fuel poverty and decarbonisation on a like-for-like basis with financial and technical viability assessments.

Multi-Criteria Analysis (MCA) has been identified as the most appropriate method for appraising the socio-economic impacts of LHEES.

MCA can be defined as a socio-economic decision-making tool that establishes preferences based on an explicit set of pre-defined objectives. All impacts are assessed, whether they can be monetised or not, through the development of a scoring system. This translates into a final value which can be used to rank and identify the most attractive intervention(s).

The benefit of adopting the MCA approach for socio-economic analysis stems from its ability to consider appropriately a wide variety of project impacts and outcomes, which can then readily be taken into consideration by decision-makers. The MCA methodology offers a formal approach yet with greater flexibility than other forms of socio-economic assessment. It allows either a single preferred option or a list of potential options to be appraised and prioritised by consideration of a range of different expected impacts, some of which can be monetised and some of which cannot, drawing on a diversity of numerical data and qualitative assessments.

A key outcome from the pilots was the development of the criteria that would be used for the socio-economic analysis. The key to determining the criteria is to develop measures that directly relate to the aims and objectives of LHEES whilst also having clear indicators that enable quantitative assessment.

The table below shows the criteria, impacts and indicators used in the pilot studies where socio-economic analysis was undertaken. Further guidance is provided on the Scottish Government web-site[1].

Criteria Impact Indicator
Carbon emissions (30% weighting) Carbon emissions GHG Emissions (tonnes CO2e)
Fuel poverty (30% weighting) Fuel poverty Risk of fuel poverty within an area
Change in unit cost of heat (£ per kw)
Change in average EPC rating
Financial (8% weighting) Project costs Capital costs
Operation & Maintenance costs
Fuel costs (£)
Local economic impacts (8% weighting) Jobs supported Number of jobs supported
Skills Skills supported and developed
Regeneration Regeneration level
Local environmental impacts (8% weighting) Air quality Volume of pollutants (tonnes of nitrous oxide, particulate matter, sulphur oxide and ammonia)
Noise Change in noise level (decibel)
Built environment & local heritage Quality of built environment
Biodiversity & ecosystem services Proportion of green field sites / woodland/ wild habitat
Social (8% weighting) Health and wellbeing Improved thermal comfort
Time available Time available to work
Community Proportion of recreational community space
Consumer acceptance Acceptance of proposed intervention
Resilience (8% weighting) Local energy security Reduction in imported fuel - national vs international sourcing of fuel
Alignment with current regulation Meets current legislation / regulatory requirements
Energy demand Reduction in demand

Table 3-1 - Criteria, Impacts and Indicators used for LHEES pilots

3.3. Methodology

3.3.1. Identification of projects / opportunities

The first step was to identify the projects / opportunities for consideration in the socio-economic analysis. These should be selected by the responsible council and can be informed by the analysis and options appraisal work described elsewhere in this report.

3.3.2. Data preparation

A project owner is needed to take responsibility for ensuring that there is sufficient understanding of and data about each project proposed for inclusion in the MCA process for LHEES. If the project owner is clearly identified from an early stage they can oversee the development of the project and ensure that, as far as possible, this development process addresses the requirements for the data needed to feed in to the MCA.

For the pilot process, the Carbon Trust was heavily involved in this data preparation but it would be anticipated that in future LHEES this would be an activity led from within the council.

3.3.3. Workshop

Following preparation of the project / opportunity list to be considered and compilation / development of the required supporting data, the next step is to hold a workshop to score the different projects / opportunities against the framework presented in Table 3-1. The workshop presents an opportunity not just to inform a selection decision in an auditable and robust manner but also to ensure that stakeholders from across the council have the opportunity to contribute and get involved. Therefore, it is very important to the success of the process that the right people are invited and that sufficient notice is provided to maximise attendance.

3.3.4. Write-up and results

The outputs from the workshop are documented as a record of the meeting. This provides a semi-quantitative audit trail for project / opportunity prioritisation and, due to the involvement of multiple stakeholders, obtains and records buy-in for the outcomes from beyond the immediate LHEES project team.

For both Glasgow and Highland councils, the socio-economic analysis process was well received and considered to be of significant value. We feel that the process should be a key tool that is made available to, and recommended to be used, councils preparing LHEES.

Contact

Email: emily.creamer@gov.scot

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