Scotland's Energy Efficiency Programme: consultation analysis

Situation report - the current landscape

47. The consultation document outlines the Scottish Government's ( SG) commitment to reducing emissions from across Scotland by 42% by 2020 and at least 80% by 2050. It sets out the background to Scotland's Energy Efficiency Programme ( SEEP) and the programme of work to be taken forward in order to ensure that SEEP is effective in supporting a low carbon energy system and also in tackling fuel poverty.

48. Chapter 2 makes clear that SEEP is not starting from scratch and that it will build on and learn from existing schemes. The chapter provides an overview of the state of the building stock at present and outlines the existing policy landscape. It also summarises the findings of a series of pre-consultation stakeholder workshops which considered what currently works and where improvements could be made.

What currently works well

49. In relation to what currently works well, the following schemes, initiatives and approaches were identified by pre-consultation workshop stakeholders as helping support and drive improvement. These were detailed in the consultation document:

• the provision of free and impartial advice;
• the Social Housing Quality Standard ( SHQS) and the Energy Efficiency Standard for Social Housing ( EESSH), which have helped to raise standards in social housing;
• publically-funded loan schemes that are helping to provide finance for able-to-pay households and businesses to invest in energy efficiency measures;
• Energy Performance Certificates ( EPCs), which have helped raise awareness of the energy efficiency of buildings since their introduction;
• the Renewable Heat Incentive ( RHI) and associated Scottish support which has helped to support the uptake of renewable heat;
• area-based schemes backed by appropriate levels of funding, which help to direct investment to where it is most needed, unlock previously stalled improvements, and lever in additional investment; and
• advice, support and quality assurance, helping to protect households and businesses from high energy bills.

Question 1.1: Thinking about current Government schemes and the delivery landscape, we would welcome stakeholders' views on what currently works well, including aspects of existing schemes that should be retained?

Summary of main themes:

• The importance of local authority involvement, delivery and partnership working was emphasised by many respondents as these are seen as being the most effective approach for delivering energy efficiency improvements and identifying those in fuel poverty.
• The need for flexibility was supported by several respondents, with the need to allow for local approaches designed to suit local areas being commented on.
• The Home Energy Efficiency Programme: Area-Based Schemes ( HEEPS: ABS) were supported by a broad range of respondents.
• There was broad support for the funding schemes on offer, including for schemes offering interest-free loans and grants. However, a number of respondents offered views on how they could be improved, including the need for long-term resourcing and simplification of the landscape of support on offer.
• The provision of support, advice and information from some specific schemes such as Home Energy Scotland and Resource Efficient Scotland were identified as working well.

50. Comments on this question came from 78 respondents, across all respondent groups.

51. Many of these respondents mentioned the same schemes, initiatives and approaches that had been identified by pre-consultation workshop stakeholders, as listed in the consultation document and outlined above, as working well.

52. There was particular support for the Home Energy Efficiency Programmes for Scotland: Area-Based Schemes ( HEEPS: ABS). Respondents, across most groups but particularly local government respondents, welcomed this approach. One local government respondent, for example, said:

"The current HEEPS: ABS approach has been effective in enabling resources to be targeted at priority areas, across tenure, to tackle harder to treat housing. In particular, HEEPS has funded works to be carried out in multi-tenure blocks, enabling the local authority to address asset condition issues which were challenging due to property ownership."

53. The importance of local authority involvement, delivery and partnership working was commented on by respondents, who felt that a local approach, with schemes designed to suit local areas, is most effective in both delivering energy efficiency programmes and in identifying those in fuel poverty. Respondents commented that local approaches can help ensure resources are targeted where they are most needed. Several respondents cautioned on [national] programmes being too prescriptive, commenting on the need for flexibility, with particular reference to the need to allow for local approaches. For example, one local government respondent said: "Future schemes need to not be too prescriptive but focus on setting the criteria for funding to allow local design of schemes to meet local circumstances".

54. Funding was another key theme with respondents, from various groups, welcoming schemes providing grants and interest-free loans. However, a small number commented on the need for guaranteed long term resourcing. For example, a respondent from the building / insulation group commented: "[...] if allocations are set over a longer period, that will allow delivery partners to have confidence in moving forward with SEEP projects".

55. Several respondents commented on the effectiveness of interest free loans, particularly in comparison to schemes with higher interest. A smaller number of respondents commented on interest free loans for Registered Social Landlords ( RSL) in particular. The Low Carbon Infrastructure Transition Programme ( LCITP) was also cited as effective by a small number of respondents. One energy industry respondent commented:

"We believe that schemes which provide either interest free loans or capital grant funding achieve the most impact with regards to the Scottish Government energy targets. This is evident through schemes such as CEEF (Central Energy Efficiency Fund) and LCITP (Low Carbon Infrastructure Transition Programme). However, schemes such as DHLF (District Heating Loan Fund) and REIF (Renewable Energy Investment Fund) are less advantageous due to their high interest and short payback criteria not aligning with the implementation of innovative, renewable energy technologies."

56. Whilst there was broad support for funding and loan schemes, there was some concern over the number of schemes in operation as well criteria that may exclude some technologies, consumers or businesses, as well as the complexity of the criteria more generally.

57. A local government respondent gave a specific example:

"Officers consider that SEEF [Salix Energy Efficiency Fund] funding (prior to SALIX) previously worked really well and the funding processes were efficient and effective. SALIX is a little more bureaucratic than SEEF, and there are also quite a few stipulations and criteria - for example it cannot fund Solar Panels due to the RHI ..."

58. The Renewable Heat Incentive scheme ( RHI) was one of the schemes identified by several respondents as particularly effective, popular, well supported and well promoted. Comments came from respondents across most groups, but particularly from the energy industry, with the RHI seen as effective in driving investment and encouraging the use of renewable heat technologies.

59. There was a comment, from an energy industry respondent, that the non-domestic RHI needs to be reviewed to accommodate other low carbon technologies such as stationary fuel cells. In addition, a local government respondent commented that the reductions to the RHI rate now make it a less attractive incentive.

60. In relation to standards, a small number (particularly from local government and the third sector / NGO groups) identified the Energy Efficiency Standard for Social Housing ( EESSH) as a programme that works well and wanted to see it retained. There were, however, some suggestions and these included:

• Reinstatement of a social housing energy efficiency scheme as an alternative mechanism for social landlords to gain direct access to funding rather than having to rely on indirect funding via the Home Energy Efficiency Programme for Scotland ( HEEPS) through their local authority.
• That EESSH should be retained but that targets should be reviewed to align with decarbonisation targets or with "some emphasis on more renewable technologies or heat storage technologies where feasible" (local government).

61. A smaller number also cited the Scottish Housing Quality Standard ( SHQS) as a key driver in improving the energy efficiency ratings of social rented stock.

62. The provision of support, advice and information from some existing schemes were also cited by several respondents across a range of groups, as valuable. Those mentioned most frequently included:

• Home Energy Scotland, and specifically its independent and impartial helpline and online resources that help connect people with funding, practical assistance and guidance. Respondents positively commented that it provides a 'one stop shop' service, is integrated with local schemes, and includes expertise in dealing with traditional buildings.
• Warmer Homes Scotland, which was seen as beneficial for vulnerable households with respondents noting its customer satisfaction record.
• Resource Efficient Scotland and funding from the Local Carbon Infrastructure Transition Programme, including provision of expert advice to the public sector on energy and water conservation, and waste management practices.

63. Several respondents requested that schemes focus on the needs of the user, providing individual, tailored support as well as customer protection. Linked to this, a small number, from various groups, also suggested that a focus on behaviour change with solutions being based on people's needs rather than being measures-driven.

64. Energy Performance Certificates ( EPCs) were seen by respondents as beneficial and a good way to measure progress, although there were a number of suggestions for improvements; comments on EPCs are detailed in the section of this report relating to question 7.

65. There were a small number of comments that there is a lack of data or information on how, for example, pilot schemes are performing and so it is not yet possible to form an opinion. For example, one respondent, from the academic group, suggested there should be: "an in-depth assessment of the current state of play of investment in energy efficiency ( EE) - and how individuals are financing these projects", commenting that similar assessments have been undertaken in other European countries.

Main delivery challenges

66. A range of challenges were identified by pre-consultation workshop stakeholders and detailed in the consultation document. These were:

• grant application deadlines are challenging to meet and often do not align with one another; timescales for delivering district heating and energy efficiency projects can differ making it challenging to coordinate works; and short-term budgets constrain programming of longer-term works;
• lack of long-term certainty of outcome and of the support that is on offer, which creates inertia and impedes social norming;
• lack of interest among building owners in making improvements and/or lack of understanding of running costs and potential savings, means there is low appetite to take out loans or use their own resources to invest in energy efficiency and low carbon heat improvements;
• a tendency for grant schemes and caps to dictate the solution and/or offer a limited number of measures, which may not be the best way to achieve the outcomes desired, and can hinder innovation;
• significant mistrust about the promotion and installation of energy efficiency measures and examples of poor workmanship that are now causing problems. In some instances this now requires replacement and remediation work and has contributed to damaging the reputation of energy efficiency more generally;
• concerns around EPC-based building assessments, which do not account for building conditions, are based on modelled (rather than actual) values, and do not favour low carbon heat - as well as more general concerns about the quality of the assessment itself;
• poor building conditions which can prevent energy efficiency and heat supply works;
• low carbon heat technologies are not a direct replacement for gas boilers, they may require extra space and require works to internal heat distribution systems e.g. radiators; and
• behaviours can offset any savings by inefficient use of building and heat systems, so also need to provide advice and information to change occupant behaviours.

Question 1.2: Thinking about current Government schemes and the delivery landscape, we would welcome stakeholders' views on what are the main delivery challenges faced at present and how might these be overcome?

Summary of main themes:

• The number and complexity of schemes and programmes available, including different funding routes and eligibility criteria that can create confusion for property owners. Respondents suggested that a single scheme would be less confusing.
• The flexibility of funding schemes and application deadlines were seen as challenging. Local Government respondents noted that short funding timescales can make planning and delivery difficult.
• The use of different acronyms, many containing " EEPS" was seen as confusing.
• Issues around capacity, especially at local authority level, to deliver SEEP.
• Availability and length of funding; that short funding timescales can make both planning and delivery difficult.
• The need for quality and quality assurance was noted by several respondents, with a particular emphasis on the need for clear quality guidelines and independent quality assurance to ensure quality does not decline as installations increase.
• A major theme was consumer-related issues including the need to raise awareness, increase engagement and raise levels of consumer confidence.
• A lack of capacity and skills was highlighted as an area of concern with specific reference to both delivery capacity (to install measures) and in local authorities to develop and deliver schemes.

67. Comments on this question came from 74 respondents, across all respondent groups.

68. Once again, most of the challenges identified by respondents match those detailed in the consultation document and outlined above. In particular, issues around certainty of funding, length of funding and timescales for delivery were identified by respondents.

69. A main theme (which was also mentioned in some responses to the previous question) appeared in responses across most groups, although it was not prevalent in responses from the energy industry or building / insulation groups. This concerned the number and complexity of schemes and programmes available. Comments included:

• The need to not complicate the landscape further by adding new programmes to those already in existence.
• Confusion caused by different acronyms; especially as many containing the letters ' EEPS'.
• That having different eligibility or other criteria across different schemes causes confusion. A very small number of respondents did, however, comment on the need for different schemes for domestic and non-domestic properties.

70. Respondents suggested that for households a single scheme would be less confusing and should, therefore, increase uptake. Whereas for industry respondents commented that there is a need for closer alignment of standards or streamlining of the policy landscape (including rules and timescales) in order to reduce complexity and business costs.

71. The following comment, from a third sector / NGO respondent, is a typical example:

"People are really confused by the plethora of different funding schemes, and the short-term nature of most of them. It appears to be a lottery and so a sense of unfairness creeps in … with the Green Deal Finance Company being just the most prominent of these … which makes prudent punters wary of even taking first inquiring steps."

72. Allied to this, there were also a small number of comments on the many different funding streams and timescales in operation. Comments, each from one of two respondents, included:

• That a lack of flexibility in some funding mechanisms can mean projects are not delivered.
• That grant application deadlines can be demanding ( HEEPS and SEEP were mentioned) and can lead to duplication of effort.
• That funding streams should not be technology-specific.

73. Length of funding was also an issue for some respondents, particularly from local government, with comments that short funding timescales can make both planning and delivery difficult or that one year programmes are not sufficient for all projects. Respondents would welcome longer timescales and advanced commitment to funding.

74. Quality and quality assurance of installations was another key theme, mentioned by several respondents across respondent groups. Respondents noted that as the number of installations increase, care will need to be taken that quality does not decline. Respondents commented that there is a need for independent quality assurance and clear guidelines for quality control. A small number mentioned quality alongside funding timescales, saying that short funding timescales introduce pressures which can lead to lower quality.

75. There were also comments on poor workmanship with a small number of respondents referencing findings in the 'Each Home Counts' review that "there have been too many instances of poor quality installations. These have been made by companies who do not have the skills, quality standards or core values required to operate responsibly in the market" (energy industry). These respondents recommended that SEEP be aligned with the recommendations of the review.

76. Allied to this, a small number mentioned the need to focus on building maintenance as well as energy efficiency. For example, a respondent from the building / insulation groups said:

"building maintenance and energy efficiency are interconnected, yet there is little offer from Government on the former. Indeed, to install energy efficiency measures in a building may, in some circumstance, cause more harm than good; for example, installing loft installation in a damp roof, can cause more harm than good."

77. Another theme, from many respondents across most groups, covered consumer related issues, with smaller numbers commenting on a variety of factors. These included the need for awareness raising, with comments suggesting that awareness of existing programmes and of the support available could be improved.

78. Several respondents, from various groups, also commented on the need to improve consumer confidence, including developing consumer confidence in a range of issues such as advice services, delivery schemes and energy ratings, as well as in new technologies.

79. The need for a focus on consumer engagement to help increase the understanding of energy efficiency measures to support increased uptake, featured in a small number of responses, as did the need to understand consumer behaviour in order to support change to ensure a more efficient use of heating systems.

80. Financial issues related to consumer engagement included some concern over the effect on uptake within the 'able-to-pay' group as, a small number commented, this group may be hard to engage unless there is specific encouragement and that incentives are available. A small number also commented on issues around the property market, specifically that this group may not see the value of energy efficiency improvements as there is not yet a follow-through to property values.

81. While some responses to the previous question mentioned advice and support as working well, at this question several respondents, across various groups, stressed the need for better access to, and quality, of advice. A small number of these comments related to behaviour change advice. For example, a housing respondent commented:

"After-advice once material changes are made is crucial in order for the new products or potential of the property to be maximised. Advice on switching, advice on controls, advice on use of ventilation, use of curtains and shutters etc, is a low cost effective way to help people out of fuel poverty".

82. Another theme within responses, mainly from those outwith industry-related respondent groups, related to a lack of capacity and/or skills to deliver programmes. Some commented on a lack of skills or manpower within the industry itself to supply or install modern energy efficiency measures. Others, from various groups, mentioned a lack of capacity within local authorities to lead, develop and/or deliver schemes, including the capacity to engage with partners and other stakeholders.

83. Other issues raised by small numbers of respondents, included:

• Delivery challenges for remote and rural areas in particular, as well as a lack of local delivery options in general.
• The need for better, more up to date data and information on energy efficiency, and particularly on the outcomes from pilot schemes.
• The need for a holistic approach encompassing both domestic and non-domestic engagement.
• Issues around the costs of retrofitting. For example a lack of funding for social landlords to retrofit their properties or the general high costs to home owners of retrofitting.
• Issues around communal buildings such as stone built tenements, including, for example, ways to find workable and affordable measures to improve their energy efficiency.
• The need for a more progressive planning system and for better planning guidance to support and enable energy efficiency improvements.
• The need to look at new technologies and the need to 'future-proof' any improvements.

84. Several respondents also commented on issues around EPC modelling. These are described in more detail in the section relating to question 7.