Energy Efficient Scotland: consultation analysis

Non-Domestic Sector Overview

The consultation paper sets out the Scottish Government's intention to build on current regulations for non-domestic buildings with a phased expansion over 20 years, so that all buildings are covered by the regulations by 2040. The Scottish Government also proposes that the current triggers should be reviewed to provide a level of assessment and improvement activity that can be spread out over the period of the Energy Efficient Scotland Programme.

The consultation paper suggests that setting one standard that would apply to all buildings may not offer the most practical and equitable approach to improvement because of the wide variety of building types and purposes in the non-domestic sector. The Scottish Government's proposal is to move towards a benchmarking system where the performance of a building is assessed against a 'notional building' specification to identify 'what good looks like' for that building. The intention is to investigate the extent to which this specification may have to vary, in response to important building characteristics (such as type and construction).

The number of respondents answering questions on the non-domestic sector was lower than for the domestic sector, both in terms of those answering the closed question and those who made further comments.

Question 18 - Are there specific building characteristics you consider should be included in research to ensure that future improvement targets reflect the diverse nature of our non-domestic building stock?

Responses to Question 18 by respondent type are set out in Table 4 below.

Table 4: Question 18 - Responses by type of respondent.

	Yes	No	Don't know	Not answered	Total
Organisations:
Academic	3				3
Building component manufacturers/services	6		3	4	13
Energy related private sector	7		2	8	17
Housing Association				1	1
Local Authority	17		2	3	22
Other			1	1	2
Private landlord or property management	2		2	4	8
Professional or representative body	4		1	7	12
Public sector or body – other	2		1	1	4
SG delivery agent			1	1	2
Third sector			2	8	10
Total organisations	41		15	38	94
Individuals	9	3	14	10	36
All respondents	50	3	29	48	130

A majority of respondents thought that there were specific building characteristics that should be included in research to ensure that future improvement targets reflect non-domestic stock diversity. Organisational respondents were more likely to take this view than individual respondents.

A small number of respondents confirmed the view that a 'one size fits all' approach to benchmarking would not be appropriate.

The small number of respondents who supported the inclusion of building characteristics in research did so with the qualification that given the diversity of the non-domestic building stock and its use, building characteristics alone would be insufficient to inform the research. They cited other factors that should be included such as the purpose, type and extent of occupancy of the building and its actual energy use. Some other respondents, including a number of Local Authority and Individual respondents, appeared to see such factors as coming within the definition of building characteristics.

The issue is related to building categories rather than characteristics i.e. buildings can be categorised as public, commercial, retail, industrial i.e. The characteristics of the building will reflect the way they were designed.
Private landlord or property management respondent

The analysis presented below presents each of the main issues raised by respondents in turn.

Age and historic value of buildings

Some respondents, from across a broad range of respondent types, commented on the age, listing or historic value of a building and that a building's listing and architectural value, along with the requirements of being in a conservation area should be taken into account. It was noted that these could affect or limit the extent of improvements that can be made.

Other comments, in each case made by a small number of respondents, focused on the energy efficiency of listed, older or hard-to-treat buildings and were that improvement costs can be higher depending on construction type, or that older buildings may be less likely to be connected to national gas grids. It was thought that research should focus on identifying pragmatic, viable and affordable solutions for older, listed and historic buildings, including those which have been added to in the past and are of mixed age. Other comments were that:

• Older buildings may become unlettable or face demolition if it is not financially viable to improve them to the specified standard, and that this could have an adverse effect on the character of some areas.
• Producing benchmarks and standard methods of treatment could help reduce improvement costs.

Design, purpose and use

Some respondents, including a number of Local Authority respondents, raised issues about the importance of considering the design, purpose or use of a building. It was noted that similar types of buildings, such as warehouses, can be put to different types of use. It was also noted that some buildings, such as schools and libraries, can be multi-functional and that these variations can produce different patterns of energy consumption and can affect the types of improvements that may be appropriate. Specifically, it was noted that energy use will reflect the operating hours.

Other issues that respondents thought any research should cover, in each case raised by one or a small number of respondents, were:

• The categorisation of non-domestic buildings by sector, use or location.
• Treatment of multi-function buildings, for example a building that comprises both office accommodation and warehousing, in respect of energy performance assessment and improvement targets.
• The potential future use of a building.
• Understanding benchmarks and what can or cannot be achieved across the sector.

An alternative view was that attempting classification could prove costly and largely fruitless, and the focus should be on energy consumption per square metre.

Occupancy and occupant behaviours

Some respondents, including a number of Local Authority respondents, argued that any research needs to consider the occupancy of a building or occupant behaviours. Further comments were that not only the current, but also the potential future uses of buildings should be considered. It was reported that specific operations or behaviours, such as high energy-use lab work, use of refrigeration equipment, or illuminating external areas for night operations, can only explain energy use at a point in time. It was suggested that a building with a poor EPC rating can produce good Display Energy Certificate (DEC) performance.

Other issues which respondents wanted to be considered, in each case highlighted by one or a small number of respondents, were:

• Frequency of use, including whether there are seasonal variations in that use.
• That some buildings, such as castles or museums, may be only partly occupied or heated.
• Density of use, both overall and within parts of buildings.

Physical characteristics and attributes

A small number of respondents, including Local Authority respondents, commented on the varied nature of construction in the non-domestic stock, its diverse characteristics, and the need for this variety to be considered as part of future research. Specific proposals were that the following should be considered:

• Construction type, method and materials, including whether a tenement building is of solid wall construction.
• The ability of construction materials to handle moisture and their vulnerability to decay.
• The presence of asbestos.
• Building size, form and shape, site position and orientation.
• Geographical position within the country.
• Thermal mass of the building and the potential for improvement.
• Ability of buildings to harness passive energy, solar gain and solar shading.
• Heating, including heating controls and fuel type.
• Hot water systems.
• Ventilation, including ventilation controls, and cooling.
• Lighting, including lighting controls.
• Openings and performance of glazing.
• Local availability of different fuels.

Other comments were that the research should consider the potential for harnessing energy or heat to benefit district heating, and also that there should be a focus on the least energy efficient and most widely used construction types in order to maximise net improvement in efficiency and to reduce energy consumption and emissions.

Other issues to be covered by research

There was a range of other issues that one or a small number of respondents wished to be considered. These were:

• Affordability issues, including for buildings at the low value end of the non-domestic stock with rents currently reflecting that value. There could be particular issues for charities and social enterprises.
• Cost-effectiveness, including taking the anticipated operational life of a building into account.
• Technological change, including how technology is impacting on energy use and demand within buildings, and how understanding of conditions suited to particular low carbon and energy efficiency technologies can be improved.
• The impact of building maintenance on energy efficiency and consumption.

Other comments were that research will need to engage with large businesses operating sites across the UK, and also with those dealing in internationally-traded property portfolios.

Question 19 - What are your views on the way calculated energy use from building assessments are presented and/or benchmarked?

As for Question 18, some respondents stressed the need for methods of assessing and benchmarking energy use to reflect the diversity of non-domestic buildings. This was highlighted by a broad range of respondent types.

Views on assessing energy performance against a notional building specification were mixed, with a small number supporting the approach because it could enable more accurate and better aligned assessments for different types of buildings. A small number of others raised concerns, such as the need to recognise different conditions, not only between Scotland and other parts of the UK, but also across Scotland:

To allow effective comparison of different types of buildings, energy benchmarks must be updated regularly. This should be carried out at a national level to ensure the information is relevant. Benchmarks for the whole of the UK do not take into account the increased requirement for heating in Scottish properties and can skew resultant energy ratings.
Local Authority respondent

Other issues raised, in each case by one respondent:

• Certain construction types and methods may be unfairly treated, and some locations and local climates may not be catered for adequately.
• Limited access to certain fuel types may not be taken into sufficient account.
• Improvement recommendations that are not sufficiently tailored to a property may be unachievable.
• Improvement recommendations may not include the most up-to-date technology.
• More onerous benchmarking standards and any required improvements would not add commercial value.

As at previous questions, some respondents made specific references to EPCs, such as that they model energy use while actual energy consumption is more useful for assessment and benchmarking. This was referred to by a broad range of respondents. Further comments were:

• EPCs do not account for occupant behaviours and variations in use. It was argued that specific energy consuming processes within buildings should be sub-metered.
• EPCs lack a balance between carbon weighting and actual energy use and do not reflect true carbon gains achieved by switching entirely to renewable electricity sources.

One or a small number of respondents suggested changes required:

• There should be access to the full calculations behind an EPC rating.
• Consideration should be given to introducing a minimum energy efficiency standard based on the EPC, similar that that in England and Wales.
• The validity period for EPCs should be reduced and a new assessment required when changes to a building would impact on its EPC rating.
• EPC reports should take a less generic approach around low-carbon technologies, including reflecting current costs.
• EPC recommendations should encourage more multi-measure improvements which reduce potential future retrofit costs.

Alternatively, it was suggested that EPCs may provide an uncomplicated route for future benchmarking of non-domestic buildings, including because they allow for the concept of notional buildings.

The work on benchmarking non-domestic buildings being undertaken through the Scottish Energy Officer Network (SEON) was highlighted, and it was felt that this work could help inform development of a future approach to benchmarking. This was raised by a small number of Local Authority respondents in particular. Other proposals were that one of the following approaches could be considered:

• The Leadership in Energy and Environmental Design approach used in the USA.
• The Building Research Establishment Environmental Assessment Method.
• The Energy Assessment and Reporting Methodology (TM22) from the Chartered Institution of Building Services Engineers.

It was also proposed that any future benchmarking approaches should be piloted.

Some respondents, including a small number of Local Authority respondents, supported the use of DECs for non-domestic buildings, including because they capture actual energy use through metered energy consumption and avoid the limitations of the standard assumptions. In terms of the frequency with which DECs could be produced, proposals were either annually in all cases, or annually for the largest buildings, but only every five years for other buildings. However, it was also felt that the costs associated with annual updates should be taken into consideration. In terms of the DECs themselves, it was recommended that they should:

• Support a range of policy objectives, for example reducing CO₂ and supporting skills development and employment in supply chains.
• Capture data on surplus heat and recognise any renewable energy generation.
• Be available to view online.

Finally, a small number of respondents argued that energy suppliers should be obliged to prepare annual energy consumption data to assist national benchmarking, rather than rely on building owners collecting this information.

Question 20 - What are your views on the proposed planned work to review improvement targets?

Some respondents, from across a broad range of respondent types, expressed their support for the review of improvement targets, noting the Scottish Government's proposals for the review. It was hoped that the review will help in setting realistic targets, providing predictions for future energy savings, and producing data on real energy savings:

Benchmarking against actual building performance including accounting for usage profiles will improve confidence in the overall approach to the delivery of energy efficiency works and help to predict and achieve more realistic energy savings, rather than using less specific modelling which has led to failed expectations not being met in some cases.
Local Authority respondent

There were a range of suggestions about topics or issues that any review should cover, focusing on the scope, impact and resource implications of targets. Other issues that one or a small number of respondents wished to be considered were:

• Funding and support for businesses to meet the new standard. One proposal was for backstop dates set according to the level of support to be provided.
• A simplified regime, aligned with existing EPC requirements, for buildings that are smaller than 100m².
• Involving building owners and occupiers in the development of any incentives and penalties.

In terms of any targets themselves, comments were that they should be technically feasible and cost-effective, and should reflect the individual circumstances of the building. Specifically, it was noted that fire stations account for around 2% of publicly owned buildings and should have a unique benchmark which would help maximise savings.

Other comments about targets, in each case raised by one respondent:

• Given the future Streamlined Energy and Carbon Reporting requirements and proposed introduction of energy intensity metrics, targets should be consistent with UK legislation.
• Targets should be kept under review to take account of advances in technology.
• Targets should be reviewed in the mid-2020s, including looking at the performance of low carbon heat supply and building fabric improvements.

In terms of the overall approach:

• Some forms of exception may still be required, including for any residual stock of hard-to-improve buildings. Specifically, it was thought that linking being able to defer improvements to evidence of annually adjusted consumption should be considered.
• Policies should reward organisations that invest in decarbonising their energy supply.
• Building owners must be given sufficient time to incorporate compliance with targets into their capital investment cycles.

Question 21 - What are your views on our proposals for phasing the regulations from 2020?

Some respondents, from across a broad range of respondent types, gave their support to the proposals for the phasing of regulations from 2020. Further comments were that the approach allows time to secure funding for improvements and for markets and supply chains to develop. It was also noted that the timescales are in line with those for Local Heat and Energy Efficiency Strategies (LHEES).

Although offering broad support, respondents highlighted issues that they wished to see addressed or changes they were looking for. A number of these related to timescales:

• As part of the phasing, interim targets could be set to help drive developments in the supply chain and reduce the likelihood of slippage against the long-term target. This was a frequently raised issue and came from a broad range of respondents. It was also suggested that phasing of regulations from 2020 should spread demand on the supply chain and provide sufficient time for it to gear up.
• Final timescales and backstop dates must allow sufficient time for businesses to plan for and reach compliance, and there must be sufficient information and support for those that need it.
• More clarity is required on the phasing and timelines.

Comments about alternative timescales were that harmonising long-term efficiency target dates at 2040 for both non-domestic and domestic property would provide consistency, and could be helpful when dealing with blocks of mixed domestic and non-domestic stock. Other proposals, in each case raised by one or a small number of respondents, were:

• A 2019 start date to coincide with EPC renewals for some larger buildings, or that those EPCs should be extended until plans are finalised.
• Running a wide-scale information programme aimed at all business types and phasing regulation from 2025.
• Requiring all buildings to reach the long-term standard before 2040 with early notice of backstop dates.

In terms of building characteristics that respondents wished to be taken into account:

• Buildings over 1000m² should be given more time in the phasing of regulations. More generally, there was support for phasing based on floor size.
• That larger buildings should be easier to assess and upgrade and could offer the greatest savings. There was also a comment that larger buildings are usually owned by larger companies with the resources to carry out and monitor energy efficiency measures. It was felt that addressing the largest first would give owners of smaller properties more time to prepare.
• Increasing the targets for new build could reduce the need for future retrofit.

Other issues that respondents wanted to highlight were that:

• The views of industry representatives need to be considered.
• The experiences of other countries should be looked at.
• Robust monitoring and effective enforcement will be required if timescales are to be met.
• Local Authorities already face staffing and funding challenges and the staffing and other resource implications need to be considered.

Not all respondents agreed with the proposals. Some, including a small number of individual respondents, suggested they were unrealistic or that further detail was required.

The Programme for industrial users of energy

The consultation paper notes the Scottish Government's belief that initiatives to support investment in the energy efficiency of buildings should be aligned and joined-up, where possible, with advice and support to reduce energy consumed on sites as a whole. In collaboration with industrial representatives, work is being carried out to align measures to invest in the energy efficiency of existing operations with the Energy Efficient Scotland Programme.

Question 22 - Should advice and support to invest in the energy efficiency of industrial or manufacturing buildings align with wider advice and support on how to reduce energy consumed for productive processes?

Responses to Question 22 by respondent type are set out in Table 5 below.

Table 5: Question 22 - Responses by type of respondent.

	Yes	No	Don't know	Not answered	Total
Organisations:
Academic			3		3
Building component manufacturers/services	5		3	5	13
Energy related private sector	4		2	11	17
Housing Association				1	1
Local Authority	14		5	3	22
Other			1	1	2
Private landlord or property management	1	1	2	4	8
Professional or representative body	2		1	9	12
Public sector or body – other	1		1	2	4
SG delivery agent			1	1	2
Third sector	1			9	10
Total organisations	28	1	19	46	94
Individuals	14	1	10	11	36
All respondents	42	2	29	57	130

A majority of respondents who answered the question thought advice and support to invest in the energy efficiency of industrial or manufacturing buildings should be aligned with wider advice and support on how to reduce energy consumed for productive processes.

Respondents identified a range of benefits that could stem from aligning advice and support to invest in the energy efficiency of industrial or manufacturing buildings with wider advice and support on how to reduce energy consumed for productive processes. Suggestions for the approach, raised by one or a small number of respondents:

• Encourage energy efficiency, reduced energy use and emissions, and allow businesses to make cost savings. This was raised by Local Authority respondents in particular.
• Assist with identifying where surplus heat or energy could be captured, including to support district heating schemes. This was also raised by Local Authority respondents in particular.
• Present government with an opportunity to facilitate knowledge exchange between sectors and to highlight examples of innovation.
• Allow joint consideration of building clusters and efficiency technologies.

Other comments focused on areas of existing practice that could be built on, or types of organisations that could play a role. Points raised:

• LHEES pilot projects could assist in aligning advice and support and testing how the approach could work in practice.
• Some Local Authorities already collaborate with partners to assist local businesses in accessing a variety of expertise and financial support.
• Universities should be given a greater role.

In terms of the range of advice and support needed, comments from one or a small number of respondents were:

• Many manufacturing and industrial processes require very specialist expertise to assess cost-effective energy reduction and emission reductions improvements. This is different from the expertise for assessing and advising on improvements to buildings.
• It may be necessary to involve several different advisers in an assessment. This could be challenging and impact on cost-effectiveness.
• Alternatively, it would be possible to provide aligned advice and support to manufacturing and industrial enterprises through a single source.

Respondents also identified topics about which information would be required or welcomed. These were: information on planned extensions to lower carbon gas infrastructure in Scotland, energy performance contracting, and the contribution digitalisation can make.

Small numbers of respondents also highlighted issues for consideration if taking the proposal forward, such as:

• The approach should be based on evidence gathered at national level so that advice and support can be delivered consistently across the country.
• The focus should be on providing information on timescales and dates rather than aligning areas of advice.
• Consideration should be given to whether combined asset portfolios of non-domestic buildings situated at a single location would provide sufficient scale to allow packages of bespoke support and advice, with such packages forming part of future LHEES.
• Priority should be given to efficiency improvements to buildings to ensure they contribute to the Energy Efficient Scotland Programme as early as possible.

Other comments focused on additional or alternative areas of work to be addressed:

• At the local level all policies and strategies should consider energy efficiency.
• An energy saving campaign to motivate energy efficiency actions and improvement by businesses is required.
• Communities should be able to obtain details of their collective energy use and generation.

In terms of types of support, comments were that there should be no financial support or investment through Energy Efficient Scotland for profit-making processes, and that energy audits should be free for Small and Medium-sized Enterprises.

Only a small number of respondents who disagreed went on to make a further comment, with points raised that businesses will access any advice they need themselves and that alignment could impact on operating costs for businesses in Scotland.

Public Sector Buildings

The consultation paper notes that the public sector is already an exemplar when it comes to energy efficiency and low carbon infrastructure. In addition to providing support to procure energy efficiency retrofit work, the Scottish Government is working to establish an accurate non-domestic baseline on energy efficiency and, as part of that, will look to gather information on the energy efficiency of stock across the public sector.

Question 23 - What more could the Scottish Government do to encourage the public sector to accelerate energy efficiency across their building stock?

General comments were that the public sector should be an exemplar for progress on energy efficiency, including supporting public sector targets going beyond EU requirements. Specifically, it was argued that LHEES can be utilised to support energy efficiency improvement in the public sector non-domestic stock.

Funding, resourcing and procuring improvements to public sector buildings

The issue of capital funding and resourcing for Local Authorities to drive acceleration of energy efficiency improvements in the non-domestic public buildings stock was raised frequently and by a broad range of respondents. There was specific reference to grant funding to Local Authorities.

In terms of approaches that work well or should be expanded, ideas were: the Central Energy Efficiency Fund; Low Carbon Infrastructure Transition Programme; Salix loans; and the Non-Domestic Energy Efficiency (NDEE) Framework for procuring energy efficiency services.

However, respondents also pointed to changes they would like to see and which they thought could help accelerate energy efficiency improvements across the public sector. These were each raised by one or a small number of respondents:

• Combining current funding streams and programmes.
• Providing assistance to facilitate match funding.
• Making access to, and the application process for, funding easier and less resource intensive.
• Encouraging a shared approach to procurement across the public sector.
• Increasing the availability of interest free funding.
• Increasing the use of ring-fenced revolving investment funds across the public sector.
• Providing Local Authorities with revenue funding to cover staff resources for overseeing implementation of projects and for staffing energy teams.

Specific proposals regarding new approaches which could be considered:

• Broadening the eligibility for Salix loans and increasing payback periods.
• Making loans to Local Authorities from the Public Works Loan Board or on terms that mirror the Board's rates.

Targets, regulation, incentives and sanctions

Some respondents, from across a broad range of respondent types, thought that the public sector needs to be given clear targets to help accelerate progress, commenting that there should be mandatory improvement targets for the public non-domestic stock.

…we think this is a missed opportunity. The energy performance of public sector buildings is directly in the control of the Government. If other sectors, including the domestic sector, will have a mandatory requirement – at the very least, we think the public sector should also be mandated to act too.
Building component manufacturers or services respondent

Specific proposals as to how any approach should work, in each case put forward by a small number of respondents, were:

• Rewarding the best performing organisations and/or introducing sanctions for poor performers. A specific idea was that reductions in energy consumption by public sector organisations could be rewarded through a full or partial refund of the Climate Change Levy on their gas and electricity invoices.
• Publicising annual performance and progress targets, placing organisations in bandings according to energy efficiency. Also, publishing performance league tables.
• Introducing DECs for all public sector buildings.

Skills, learning and information sharing

The benefits of supporting knowledge exchange, skills development, and increasing the awareness of public sector organisations and their staff were highlighted by a small number of respondents, with specific actions such as:

• The Scottish Government running an awareness raising campaign providing information on national and international good practice. Specifically, raising awareness and understanding of NDEE and Salix.
• Supporting best practice learning networks.
• Setting up a dedicated information centre.
• Developing a public sector organisation 'energy map' highlighting opportunities for joint-working, for example on district heating schemes.
• Supporting apprenticeship schemes to build capacity in the energy efficiency services sector and for upskilling current assessors and training new assessors.

Question 24 - What more could the Scottish Government do to encourage the public sector to accelerate heat decarbonisation across their building stock?

Some of the comments submitted at this question raised similar themes to those presented at Question 23. The analysis presented here covers new issues raised at this question.

General comments were that fabric improvements should precede decarbonisation of heating. One or a small number of respondents also identified issues which, if addressed, could help accelerate heat decarbonisation:

• Supply issues need to be tackled. It was suggested that consideration be given to the availability of low carbon energy sources across the country, including the cost-effectiveness of extending gas supply networks to enable more connections to new lower carbon supplies.
• More private sector businesses need to be encouraged to connect to district heat networks.
• New public offices should not have air conditioning.
• How public sector buildings can act as anchor loads to enable new heat networks should be considered.
• There should be more engagement with supply side stakeholders in developing any policy.
• The carbon impact of other activities associated with buildings such as car parking and links to public transport should be taken into account.

It was also reported that current gas prices can make progressing decarbonisation of gas-heated sites difficult to justify financially.

Proposals for how the public sector could be encouraged or supported to accelerate heat decarbonisation often focused on funding:

• Providing 'feasibility to finish' technical and design assistance and guidance. Local Authority respondents more frequently highlighted this need.
• Providing help to meet capital costs of district heating schemes, and subsidies related to installation of low carbon technologies.
• The NDEE framework offering longer payback, including through whole-life loan funding or grants.
• Extending one-year draw down periods for grant funding on schemes.
• Reducing EST district heating loan scheme interest rates.
• Continuing or expanding feed-in tariffs and the Renewable Heat Incentive.
• Creating a national energy company charged with assisting with delivery, maintenance and operation of low carbon heat schemes.
• Introducing a carbon tax.

There was also a call for the Scottish Government to discuss reduced VAT rates for Combined Heat and Power schemes with the UK Government and to consider further exceptions for non-domestic business rates.

Other comments focused on encouraging learning and innovation and were that the Scottish Government should support a programme of demonstration projects on how public sector buildings can act as hubs, feeding excess energy into local heat networks.