Energy Efficient Scotland: the future of low carbon heat for off gas buildings - call for evidence

Enabling the Uptake of Low Carbon Heat

This section explores:

• The way a future Scottish framework can best support the uptake of low carbon heat in buildings not currently using mains gas, in particular the role of:
  • Phasing and leadership
  • Strategy in guiding investment and delivery
  • Finance and incentives in supporting uptake
  • Advice and information in enabling consumers to make informed choices
  • Regulation in giving market certainty
• Ways to support Scotland's supply chain and ensure the local economy benefits from new opportunities

The Scottish Government wants to understand the elements that will be needed to create a future framework to support the uptake of low carbon heat in buildings not currently using mains gas, in particular the role of:

• Phasing and leadership
• Strategy in guiding investment and delivery
• Finance and incentives in supporting uptake
• Advice and information in enabling consumers to make informed choices
• Regulation in giving market certainty

Figure 5: The Scottish Government's approach to strategic planning

Phasing & Leadership Delivery

Historically, transitions of a similar nature and scale have progressed over a period of years with major roles for both industry and government.^[57] When industry has played a leading role in driving change, those participants have profited from the opportunity to shape emerging markets, and regulation has been lighter touch. When industry has played a smaller role, it has been legislation that has driven progress.

We are interested to hear how the transition can be driven and what the roles of government and industry should be in driving it. In addition, we are interested in understanding how the transition should be phased. For example, a part of Energy Efficient Scotland involves setting long-term targets for improving the energy efficiency of Scotland's buildings, including a proposed phased approach to regulation, which is preceded and supported by enabling policy action.

Questions

41. How should we phase in the policy framework in order to better support the decarbonisation of heat supply to off gas buildings? Please reflect on whether or not a similar approach to that proposed for energy efficiency remains the best option.

The role of strategy in guiding investment and delivery

The Scottish Government has already proposed that investment and delivery of heat decarbonisation should be guided by Local Heat & Energy Efficiency Strategies. We have proposed that local authorities undertake a socio-economic assessment to determine future energy efficiency and heat decarbonisation objectives across their areas. The Strategies would enable local authorities to zone areas according to the most appropriate form of low carbon heat technology, and would also enable them to plan delivery programmes. The majority of Scotland's local authorities are now piloting these Strategies, including in off gas buildings, so that the eventual approach to supporting installation of energy efficiency and low carbon heat measures in these areas can be planned and phased properly.

Questions

42. How could Local Heat & Energy Efficiency Strategies (LHEES) help to prioritise early phasing of uptake of low carbon heat in areas not currently using mains gas?

Funding, Finance and Incentives

We currently run a number of schemes to pilot, test and support the deployment of low carbon heat, including the Low Carbon Transition Programme, District Heating Loan Fund and our Home Energy Scotland and Resource Efficient Scotland loan schemes (Table 4). In addition our national fuel poverty programme, Warmer Homes Scotland, provides funding to fuel poor households including for renewables, including low carbon heat measures.

Table 4: Current Support for Low Carbon Heat

District Heating Loan Fund	To help overcome financial and technical barriers to installing district heating projects. Current budget of £7.0 million for this financial year.
Salix	Provide loans for public sector for Energy Efficiency measures.
SME Loans	Issued through Resource Efficient Scotland. The SME Loan budget is £3.0 m and is projected increase to £3.5 million with demand.
Home Energy Scotland Loans	Domestic loans for Energy Efficiency and renewable technologies. The HES Loan Energy budget currently (2018/19) £6 million.
Energy Efficient Scotland Transition Programme and Decarbonisation Fund	Local Authority pilots HEEPS area based schemes – focussed on fuel poverty, LHEES, non-fuel poverty households or new clients. 2 year project.
Community and Renewable Energy Scheme (CARES)	Aims to support and grow community and local energy projects throughout Scotland, as well as aiming for a considerable increase in the number of shared ownership energy installations across the country.
Low Carbon Infrastructure Transition Programme	Grants and repayable grant –Provide a range of support, from expert advice to financial support to assist the development and delivery of private, public and community low-carbon projects across the country.
Resource Efficient Circular Economy	The Resource Efficient Circular Economy SI aims to protect the environment, promoting resource efficiency, environmental innovation and performance management in the public and private sectors.
GB Energy Company Obligation	ECO UK Home initiative. Home energy efficiency advice.
Energy Investment Fund	The Energy Investment Fund (EIF) provides investment and funding for energy projects throughout Scotland, via either loans or equity investments
Resource Efficient Scotland	Combines support to small & medium businesses and the public sector on energy, water and material efficiency with an aim to reduce carbon emissions, prevent waste and realise financial savings for organisations and increase economic competitiveness.
Non Domestic Public Sector Energy Efficiency Framework	Supports Public and Third Sector organisations procure Energy Efficiency retrofit work. The NDEE Support Unit, accelerates the number of projects and the delivery timescales and supports energy demand reduction.
Renewable Heat Incentive (RHI) Domestic and Non-domestic	UK Government financial incentive scheme, which promotes the use of renewable heat by paying for the amount of clean, green renewable heat produced.

As set out above, the Renewable Heat Incentive (RHI) supports and drives the majority of investment in low carbon heat at present. We are currently assessing future models for financing support for low carbon heat, post-RHI which is due to end in 2021.

Significant additional investment – from public and private sources – will be needed to achieve our long term vision to decarbonise Scotland's building stock. We are already investing over £0.5 billion through Energy Efficient Scotland over the four years to 2021, and have restated our commitment to continuing to target funding to low income households to improve their homes, with low cost loans made available to self-funding households and SMEs to help them spread the upfront costs of investing.

We are interested in evidence from stakeholders about the best routes to create a positive climate for investment, including the types and operation of funding, finance and incentives that could be introduced to support low carbon heat deployment.

Questions

43. How should the deployment of low carbon heat be funded? i.e. what relative contribution should come from central public funding, energy consumer's bills and private recipient funding?

44. What is needed to encourage private investment in low carbon heat?

45. Of the current sources of finance which are currently available for low carbon heat, which are working well and which are not? Are there successful examples of attracting private sector finance to support low carbon heat deployment that should be explored?

The role of advice, assessment and information

The Scottish Government currently has a well-established national advice and information programme provided through Home Energy Scotland and Resource Efficient Scotland, who provide households and businesses with independent and impartial advice and information on improving the energy efficiency of their properties and the installation of low carbon heat technologies. Advice is currently offered in a range of different formats, including online and face-to-face advice for homes and businesses.

In addition, building owners are also required to obtain an Energy Performance Certificate (EPC) at the point of sale or rental, which provides information about the energy efficiency of a building, its expected running costs and a list of suggested improvements, including low carbon heat, to make it more energy efficient and to reduce the building's environmental impact.

As part of Energy Efficient Scotland we are considering what additional assessment is required for domestic buildings to support the operation of energy efficiency standards. We have established a Short Life Working Group to consider this and plan to consult on the principles underpinning an additional assessment during 2019.

We are interested to hear from stakeholders how the advice and information building owners and occupiers receive can be strengthened to support the uptake of low carbon heat. This includes evidence on how the current EPC assessment or any new assessment as part of Energy Efficient Scotland could be used to support uptake of low carbon heat supply in off gas buildings.

Questions

46. How should off gas buildings be assessed for their suitability for low carbon heat technologies?

47. To what extent should the assessment of suitability for low carbon heat relate to the proposed Energy Efficient Scotland assessment?

48. What wider information and advice should be supplied to inform consumers seeking to install low carbon heat supply in buildings that are off gas?