Energy Efficiency Standard for Social Housing Review Group minutes: August 2023

Attendees and apologies

• Amy Tickell, Scottish Government
• Angela Morgan, Harbour Homes Housing Association
• Bruce Cuthbertson, Tenant representative
• Callum Neil, Scottish Government
• Cassandra Dove, SFHA
• Ciara O'Connor, Scottish Government
• Dave Thomson, Aberdeenshire Council
• David Bookbinder, GWSF
• David Sim, Scottish Government
• Donald Weir, Glen Oaks Housing Association
• Grant Gilfillan, Shetland Council
• Gregor Wightman, Stirling Council
• Ian Dawson, Fife Council
• Janice Pauwels, Scottish Government
• John Smith, South Lanarkshire Council
• Graeme Bruce, Link Group
• Ken Gibb, University of Glasgow / CaCHE
• Lori McElroy, University of Strathclyde
• Mark McArthur, Energy Saving Trust
• Michael Cameron, Scottish Housing Regulator
• Neal Rafferty (Chair), Scottish Government
• Nick Clark, Ore Valley Housing Association
• Patrick Mason, Scottish Government
• Paul Leask, Hjaltland Housing Association
• Roddy Hamilton, Changeworks
• Stephen Devine, Wheatley
• Tony Cain, ALACHO

Apologies

• David Downie, Tenant representative
• Janice Pauwels, Scottish Government
• John Devine, NG Homes
• Mike Callaghan, COSLA
• Moses Jenkins, Historic Environment Scotland
• Sally Thomas, SFHA

Items and actions

• share the presentation slides from the meeting. Owner: Scottish Government. Date Due: September 2023
• share BRE report on developing the new metric for EPCs. Owner: Scottish Government. Date Due: September 2023
• reflect on feedback on the proposals and target setting for the consultation, and action where appropriate. (Detailed note of the feedback in the minutes.) Owner: Scottish Government. Date Due: October 2023
• provide suggestions on forums and other public engagement to promote the consultation. Owner: All group members. Date Due: November 2023
• provide answer to question on how many EPC D-G rated properties the SHNZHF been able to direct to ECO4 or GBIS support. Owner: Amy Tickell. Date Due: December 2023
• share report from GHFT. Owner: Scottish Government. Date Due: Once published

Welcome and introductions

List of attendees and apologies available.

Neal Rafferty welcomed everyone and thanked all for joining the meeting. The purpose of the meeting is to review where the Scottish Government is at with the EESSH2 review, the setting of the new standard, and consultation planning.

All were content with the review of the minutes and actions of the last meeting (January 2023). Lori McElroy shared links on mould modelling as discussed in the last meeting:

• moisture Flow modelling within the ESP-r integrated building performance simulation system
• development of a technique for the prediction/ alleviation of conditions leading to mould growth in houses

EESSH2 review update

Ciara O’Connor gave an update on the progress of the EESSH2 review to date:

• gypsy traveller sites brought in scope – the same standard is to apply 
• archetype research almost complete and report published soon, case study research kicking off with CXC and Changeworks
• social Housing Net Zero Heat Fund has been refreshed and there was a dedicated social housing workshop in May of the GHFT

Discussion on target setting

A target setting paper was circulated to the review group on 23 August, which was based on the fundamentals proposed by the review technical groups on a minimum fabric energy efficiency requirement and the installation of Zero Direct Emissions Heating (ZDEH) systems by a backstop date. 

COC invited thoughts and questions on using modelled data vs actual performance for energy efficiency in the new standard:

• Paul Leask noted it would be unrealistic to expect landlords to measure actual performance data in every individual property to assess compliance. However the target needs to be set in one particular version of SAP to avoid changing of goalposts
• Cassandra Dove agrees that modelled should be standard, but evidence based could be used for exceptions
• Graeme Bruce suggested there should be provision for other means such as PHPP. Air tightness is key and rdSAP poor at modelling this  
• LM noted that BRE are doing work with Strathclyde University on the next version of SAP, which will give a dynamic model. This is still theoretical but more accurate in the way it describes the building. Performance gap of SAP will be addressed over time. Combining modelled data with some actual performance could help improve this
• SAP is recognised UK wide
• NR summarised the consensus that there is a clear value in being able to use actual data, and that we should continue to explore and work towards this goal, but that modelled data remains the most suitable option for now

There was discussion on the possible additional requirement noted in the target setting paper of Mechanical Ventilation with Heat Recovery (MVHR) and air tightness tests:

• CD and Angela Morgan noted there would be supply chain and resourcing issues in obtaining air tightness tests
• GB also shared concerns over costs and resources for this. Sampling might be a more appropriate approach however all fabric retrofits should have a ventilation strategy as part of the solution
• PL agreed essential to have suitable ventilation strategy to prevent unintended consequences from increasing air tightness. Hjaltland Housing Association have had successful experience in installing MVHR. They are training their own air tightness testers. Issues with wind speeds and available suitable days for testing though
• consensus from the group is that ventilation is important however a more flexible approach is required
• Scottish Government to review this for the consultation

There was discussion on the possible additional requirement noted in the target setting paper of having a minimum standard e.g. retaining the EESSH2 minimum standard that a property can’t be relet unless it met EPC band D by 2025:

• CD raised concerns over what happens with properties that can’t be relet. Would there be financial support available for tenants in properties that can’t be improved and are expensive to heat
• Tony Cain noted there are complications in understanding sustainability of stock and concerns over obsolescence with EPC back stop
• David Bookbinder suggested blanket policies are not ideal and we that we can’t afford to lose homes from the social housing sector
• Ken Gibb noted there are issues with bringing acquisitions up to standard as these often come from private landlords disposing of their worst performing stock. Cost decisions around demolition should take account of carbon emissions
• PL concerned timescale of 2025 would be difficult to achieve due to workforce capacity, especially in remote and rural areas
• Dave Thomson noted with EESSH2 on hold, timescales have shifted for some landlords. Focus should be on how we get net zero. Why spend money to get to band D now, to then spend more money to achieve net zero
• Ian Dawson noted some listed buildings in their stock, where they are not able to install double glazing or insulation
• NR agreed we need review the backstop date and what exemptions there can be
• Scottish Government to include what the minimum standard will be in the consultation in more detail

The next discussion was on setting a range for the energy efficiency kWh/m2/year target, issues with the lower end of the range becoming the target and the 2033 date for achieving the target:

• Michael Cameron noted that, from the Regulator’s perspective, the lower end of the range would be target as this is what would achieve compliance
• GB concerned the lower end of the range would not meet fuel poverty targets when switching to electric heating systems
• PL noted landlords have their own plan in place to bring stock up to standard. Likely to install ZDEH system and energy efficiency upgrades at the same time. 2033 target will be challenging because of this
• DT suggested 2033 target not suitable as landlords should be looking at how they get all their stock to net zero, which takes a lot of time and cost. Whole house upgrades will be required. Why not 2045 target?
• COC noted 2033 is aligned with the proposals for private rented and owner occupied sectors. EESSH2 was to achieve EPC B by 2032. Improving energy efficiency earlier would reduce energy bills and improve fuel poverty rates
• TC noted that the target needs to be linked to financial capacity. Substantial physical changes to homes required - replacing hot water storage in homes could be an issue, as this is reducing available floor space for tenants. Need more voices of tenants as their rents will be paying for this. Also fuel poverty is the key issue of the social housing sector, not carbon. Net zero in social housing will make minimal difference to Scotland's carbon emissions as a whole
• replacing gas boilers with gas boilers is still the most cost effective option for landlords and tenants and least disruptive. It remains the best option for mitigating fuel poverty
• KG suggested impact assessments need to look at fuel poverty implications of the new standard. Post occupancy surveys are essential for different archetypes to see how well the changes work
• Roddy Hamilton noted that based on current costs, modelling Changeworks are doing finds that air source heat pumps would leave most social housing tenants in fuel poverty 
• DT agreed that achieving a just transition when replacing gas boilers with heat pumps will be difficult
• LM concerned around issues with telling people to operate systems differently in homes they have lived in for a number of years. We need to be aware of issues with requirements of change of behaviour
• Scottish Government to review timeline for new standard and interim targets

COC invited feedback on a list of measures being included in the consultation on proposals for the new standard. PL suggested a list of measures would give certainty the property is as energy efficient as it could be, provided the targets for u-values were included. This would deal with the issue of properties that can't reach the kWh/m2/year target.

COC invited thoughts from the group on the interim targets dates to achieve minimum percentage of ZDEH installations:

• DB noted interim targets on ZDEH could present issues with landlords planning on doing fabric improvements and heating upgrades at the same time. Need to be mindful of issues with landlords installing ZDEH systems in properties that have not had the required heating upgrades
• Bruce Cuthbertson noted that tenants are paying for upgrades now with annual rent increases but not seeing the benefit of this if landlords wait to install all measures at once. Benefit for tenants if landlords improve fabric sooner
• issues with supply chain means hitting interim targets would be unlikely
• TC noted issues around work force planning in the Local Authority sector. There are lots of gas fitters, including apprentices, they have a commitment to. We are a long way away from understanding how we build the maintenance workforce that we will need in the future
• LM raised concern over rural houses being left behind if a regional approach was adopted
• CD suggested the need for transitional protection in place for social tenants switching from gas to electricity sooner at higher costs, e.g. through a social energy tariff
• COC agreed it will be important to set targets that are achievable. The consultation will invite suggestions as well as what is bring proposed. The consultation will also invite thoughts on heat network connection being mandatory in certain circumstances
• Amy Tickell noted heat networks can play a role in reducing fuel poverty in social housing. There will be a regulatory regime put in place to ensure prices remain low in heat networks for the consumer and it will be important to ensure monopoly of heat networks is not to the detriment of the customer. The Scottish Government have commissioned a piece of work looking at delivery models for heat networks in Scotland, which will be shared once published

Update on consultation planning

David Sim provided an update on the consultation planning:

• currently developing final draft of consultation document
• aiming for ministerial sign off in October
• public engagement planned for November – members of the review group to provide suggestions for forums and other public engagement 
• the earliest collection year for ARC returns will be 2025/26, depending on when the standard is finalised

Stephen Devine noted time will be required for landlords to refresh data.

CD questioned if there would be a grace period for properties that currently comply but won’t under the new standard. The Scottish Government will look at whether this will be a potential issue and consider how to reflect in the standard guidance. 

Scottish Government funding and support

AT gave an update on funding and support available from the Scottish Government:

• Scottish Government looking at learnings from the Social Housing Net Zero Heat Fund (SHNZHF) and how these can be shared
• fabric first element of the SHNZHF to be extended from March 2024 to March 2026
• introducing average cap per property of £35,000 to ensure funding is reaching as many people as it can
• 11% uplift for rural projects and 22% uplift for remote areas to be applied
• 60% intervention rate for ZDEH funding. It is important to put focus on ZDEH as heat pumps are much more expensive than gas boilers – important to mitigate this
• refreshed application form due soon and more detailed guidance. More streamlined approach to allow quicker decision making
• the development fund will be relaunched to support smaller landlords undertake a range of development works

The question of uplifted funding for heritage buildings was raised. 

CD noted that some landlords were still looking at applying closer to the 2026 deadline due to the costs and time required to gather the relevant information and conduct the initial planning and feasibility assessment to get the project to the stage where they are able to submit an application.

Mark McArthur questioned have there been many EPC D-G rated properties and has the scheme been able to direct such properties to ECO4 or GBIS support? AT to provide an answer.

The Green Heat Finance Taskforce had a dedicated social housing workshop in May. They commissioned Scottish Futures Trust to explore and assess different financial models. The report will be published soon and shared with the review group.

CD noted the importance of ensuring the GHFT is connected with other workshops, e.g. Allia, to ensure work is not duplicated.

DB noted there is no lack of private finance but we need to understand what the right mix of grant and private funding is.

Update on EPC reform

Patrick Mason gave an update on the Scottish Government’s EPC reform:

• consultation currently live, responses encouraged
• regular catch ups with Elmhurst and other EPC providers have been held 
• proposed to retain cost rating to allow old EPCs to be compared with new EPCs 
• chasing SAP points on EPC ratings can have unintended consequences, so new EPCs will be more signposting rather than providing retrofit plans
• report from BRE concludes better to use average Scotland weather data to calculate the fabric metric. BRE report to be shared
• there is a question in the consultation on the validity period of EPCs, which could be reduced to 5 years

SD noted that some loans are linked to the EPC performance of properties. It will be important to frame reformed EPCs correctly with financial institutions to ensure there are no unintended financial consequences.

Any other business

No other business was raised.

NR brought the meeting to a close by thanking the members of the review group for their discussions and feedback throughout the meeting. Scottish Government officials will reflect on feedback on the proposals and target setting for the consultation, and action where appropriate. The slides from the presentations will also be shared. A copy of the consultation documents will be shared with the review group once they have received Ministerial sign off.