Energy Efficiency Standard for Social Housing (EESSH): guidance for social landlords (revised February 2019)

9 Funding the EESSH

9.1 Data on investment to date indicates that most of the funding for meeting the EESSH has come from landlords own resources. The Review Group highlighted a number of practical difficulties faced by landlords in obtaining funding for energy efficiency works, including:

• The resource implications attached to applying for, and complying with, the Energy Company Obligation (ECO) are not always justified in terms of returns. By comparison, the capital acceleration programme is more effective.
• In some remote areas there is a shortage of local contractors which limits competition.
• There is a need for longer term planning on funding programmes, including HEEPS. Assurance of longer term funding would aid financial planning for both social landlords and contractors, and crucially would also encourage investment in building skills in local areas.

9.2 The Review Group also highlighted examples of successful good practice including:

• Using a local contractor who takes on responsibility for ECO application thus reducing the burden on the social landlord, and similarly for the Renewable Heat Incentive (RHI) and feed-in tariffs. However, landlords may have to include the cost of this work in the tender.
• By using Home Energy Efficiency Programme for Scotland (HEEPS) loans including Area Based Schemes (ABS) funding, landlords could capitalise on ECO.
• In order to take advantage of ECO it is essential to be able to identify housing stock which matches the eligibility criteria.
• By working together, social landlords can capitalise on available funding. There is evidence of frameworks already in place where housing associations are using a collaborative approach. Good working relationships between RSLs and local authorities are also evident.

9.3 A variety of funding sources are available. One of the concerns is that funding sources are changing. Current funding sources (correct at February 2019) include:

• Climate Challenge Fund (CCF) Delivered by Keep Scotland Beautiful on behalf of the Scottish Government. CCF provides support to communities to take local action on the impacts of climate change.
• Energy Company Obligation (ECO) UK Government scheme placing an obligation on energy suppliers to meet fuel bill reduction targets for households that are vulnerable to experiencing fuel poverty. Funding available via energy companies for energy efficiency measures, subject to certain criteria.
• Help to Heat Subsidises gas connections for households that meet certain criteria relating to fuel poverty risk. This can include connections carried by independent gas transporters.
• Feed-in Tariffs Delivered by energy providers. Whoever owns the renewable system will be paid for any electricity generated and surplus electricity exported to the national grid. This scheme is set to close at the end of March 2019.
• Renewable Heat Incentive (RHI) Similar to the feed in tariffs however there are some important differences due to the fact there is no 'National Grid for Heat' and so importing and exporting heat is not relevant.
• Home Energy Efficiency Programmes for Scotland: Area Based Schemes (HEEPS:ABS) Delivered by the Scottish Government via local authorities. Provides funding to private sector households for installation of energy efficiency measures. Can be accessed by social landlords to help owners/private landlords in mixed tenure schemes.
• Community and Renewable Energy Scheme Delivered by Local Energy Scotland. Provides loan finance of up to £150k to not-for-profit community based organisations to cover pre-planning costs for any renewable project.
• District Heating Loan Fund Delivered by the Energy Savings Trust. Provides low interest unsecured loans up to £1 million (and sometimes above) on a commercial basis, to support district heating networks.
• Renewable Energy Investment Fund Delivered by Scottish Enterprise - Scottish Investment Bank. Key areas for support are: marine, district heating and community energy.
• Scottish Partnership for Regeneration in Urban Centres (SPRUCE)The Scottish Government established SPRUCE using European Regional Development Funds in conjunction with the JESSICA (Joint European Support for Sustainable Investment in City Areas) programme. The fund manager is Amber Infrastructure. Social housing providers are invited to develop renewable energy projects and energy efficiency schemes as part of the retrofit of their existing housing stock.

9.4 Further information on available funding, including criteria and timescales, will be made available through Knowledge Hub (see paras 1.8 and 13.2)