Delivering affordable warmth in rural Scotland: action plan

Chapter 8 - Economic and community development impacts

There are real and significant economic and community development benefits that should flow to remote, rural economies from:

• bringing fuel bills down to the national average;
• increasing the involvement of local (rather than national) energy efficiency and fuel poverty service providers and supply chain businesses; and
• enabling community energy providers to overcome the National Grid infrastructure constraints, which curtail their ability to derive maximum economic spin-off benefits (by way of increasing local business and job opportunities and/or making cheap, locally-generated electricity available to their communities, not least their more vulnerable members).

The Task Force believes that Government decisions about investing public money in programmes to tackle rural fuel poverty should also be viewed and measured alongside their capacity to deliver wider social and economic benefits to communities and economies. Though based, first and foremost, on improving the affordable warmth and resulting health and social care outcomes for vulnerable households, careful account should also be taken of their capacity to deliver economic spin-off and other local benefits. The Scottish Government should further consider the holistic contribution the public investment is likely to make towards improving the overall social and economic well-being of the rural or remote area concerned.

In addition, innovative 'Smart Grid' solutions, like the NINES (Northern Isles New Energy Solutions) project in Shetland and the ACCESS (Assisting Communities to Connect to Electrical Sustainable Sources) on the Isle of Mull, show how present National Grid infrastructure constraints can be circumvented to the benefit of all concerned. In simple terms, these projects are based on replacing old and inefficient storage heaters and hot water tanks in peoples' homes with much more efficient ones so that cheaper energy generated from locally-owned and controlled renewable sources, like run-of-the-river hydro electric or tidal power turbines, can be directly accessed, stored and used by surrounding local households. The local distribution system is made possible by the introduction of two-way, smart technology information exchange systems which allow for the real time matching of local electricity generation and demand at a local distribution network level.

Critical actions which should be taken are as follows.

8.1 UK Govt and SG to recognise that implementing policies which reduce rural fuel poverty also increase rural disposable incomes and prosperity and stimulate additional economic activity and job creation, thus delivering solid, rural economy and community development benefits that cover several of Scotland's National Outcomes.

8.2 SG and UK Govt to work together to deliver a supportive and stable policy framework that enables the development of local energy projects that tackle fuel poverty. Funding of in-depth support (both technical and capacity building) from Scotland's Development Agencies should also be supported. Delivering affordable warmth projects in rural communities is a very significant infrastructure development that justifies considerable planning and investment decisions by training and development agencies and should therefore feature in the review currently taking place on these agencies respective roles in Scotland.

8.3 Ofgem to investigate and set out resolutions to the National Grid infrastructure constraints, which are delaying and preventing rural communities from deriving and maximising local social and economic benefits, including lower energy bills, from their community controlled renewable assets.

8.4 In so far as practicable, SG to supplement its existing support schemes, Community and Renewable Energy Scheme ( CARES) and Local Energy Challenge Fund to direct energy suppliers to fund and work with community-controlled renewable energy providers to develop and roll out new initiatives (like the ACCESS project in Mull and the NINES project in Shetland) which effectively circumvent the network constraints and which enable communities to derive, and pass on to local consumers, the full social and economic benefits of the cheaper 'surplus' energy which they generate locally from renewable sources.

8.5 SG and UK Govt / BEIS to ensure all affordable warmth/fuel poverty funding programmes for rural areas should have a minimum contracted life cycle of 5 years in order to encourage and enable smaller local contractors to invest in the training and accreditation required to deliver the outcomes and, thereby, to maximise the local economic benefits to be derived from the public investment made and, in the process, up-skill the local labour force and help population retention.