Improving energy efficiency in owner occupied homes: consultation

Annex C: Assessment

Background

In our 2018 Route Map, we committed to using and building upon the current Energy Performance Certificate (EPC) assessment process in order to support the introduction of a long term standard for energy efficiency. We recognised that homeowners need an appropriate and proportionate assessment process to inform them as to how energy efficient their home is, what action they need to take to meet the standard and, once done, how to demonstrate they have met it.

In October 2018, the Scottish Government established a Short Life Working Group (SLWG) on Assessment, bringing together industry experts from Building Research Establishment (Chair), Built Environment Forum Scotland, Changeworks, Citizens Advice Scotland, COSLA, Elmhurst Energy, Energy Saving Trust, Heriot-Watt University, Historic Environment Scotland, Institution of Civil Engineers, Royal Institution of Chartered Surveyors, The Wise Group and Zero Waste Scotland.

The aim of the Group is to review and advise on what additional assessment requirements are needed to support homeowners in meeting the standard. This included, but was not limited to, consideration of the tools needed to deliver such assessments, technical feasibility and cost effectiveness, the skills required to deliver, the scoping of costs and wider consideration of building condition. It is worth noting that whilst this consultation focusses on the owner-occupier sector, assessment has been developed to also consider the private rented sector.

Since forming, the Group have met seven times and have produced a set of Interim Proposals, included in this Annex for consideration. These proposals outline the discussions and agreement of the Group to date and, at this stage, offer a broad view of how a new assessment regime might work. After this consultation, the Group will reconvene to consider any feedback received and develop a set of final recommendations for Scottish Ministers in 2020.

It is important to highlight at this stage that whilst the Group were asked to consider how such an assessment might be streamlined with the current EPC process, the methodology used for EPCs was out of scope. More information on what we are doing to improve the EPC methodology is provided below at 'Update on EPC work'.

Topics still to be considered by the SLWG

The proposals outlined below are, at this stage, intended to offer broad-level principles. There are a number of areas that are yet to be fully explored by the Group. These include:

• A definition for cost effective. This is explored in more detail in Annex D. The working group will need to consider this in the context of assessment to ensure there are no conflicts;
• Arrangements and processes associated with compliance and enforcement;
• How a potential 'Designer' role (as recommended by the Quality Assurance SLWG) or the introduction of PAS 2035 might integrate with the assessment process; and
• How buildings of multi-tenure, multi-use and multi–dwelling might be approached. Whilst this represents a broader issue, the working group will need to consider this in the context of assessment to ensure there are no conflicts.

Update on EPC work

In our 2018 Route Map, we have committed to using EPCs as the 'standard' for measuring the energy performance of domestic properties. This system is well understood and well embedded, though its application and underlying methodology does attract some criticism. Feedback received through previous consultations has highlighted a number of concerns around the underlying methodology of EPCs and, in January 2019, we published A Review of Domestic and Non-Domestic Energy Performance Certificates in Scotland^[23] to explore these issues and identify how EPCs can be improved. This report noted 80 possible actions for our consideration. These will be fully explored as part of our work on Energy Efficient Scotland, with a view to publishing an Action Plan on EPCs in 2020.

Assessment - Draft SLWG Recommendations Proposals Report

A brief overview of the Interim Proposals of the Assessment Short Life Working Group is provided here.

We propose that a new assessment regime should form two levels; a Standard Assessment and a Full Assessment.

A Standard Assessment will be mandatory under section 64 of the Climate Change (Scotland) Act 2009, at the trigger points outlined within this consultation.

Subject to detailed legal investigations, the Standard Assessment will include and build on the current EPC assessment process. It will use RdSAP methodology to ensure recommendations align with the regulatory standard, but provide the assessor with more functionality to allow them to tailor the recommendations to the specific building.

As well as the standardised data collected via the EPC assessment, the assessor will collate information on building designations, obvious defects or condition issues, local measure costings, the scenario preferences of the building owner (e.g. lowest cost, biggest cost savings or carbon savings) and tie in with the Local Authority's Local Heat & Energy Efficiency Strategy. By including this extra data, it is intended that assessors will have more ability to provide relevant and tailored advice and recommendations to building owners. However, it is important to highlight that it is a purely asset-based assessment and takes no account of how a building is used.

A Full Assessment will include and build upon the Standard Assessment by capturing additional data relating to occupancy and local climate. This aims to provide the building owner with a more relevant illustration of how the recommendations from the Standard Assessment will affect their specific circumstances. It may also provide limited ability to optimise the recommendations made through the Standard Assessment. It is proposed that this level of assessment be voluntary.

On completion of an assessment, building owners will be provided with a report of recommendations. These should be listed in a fabric-first hierarchy and provide a clear pathway to both regulatory compliance and zero carbon. The report should be adapted to the owner's scenario preferences and should signpost to available support services.

It is proposed that current EPC assessors are best placed to deliver a new assessment regime, given their current knowledge and skills. However, as these proposals will move assessors into more of an advisory role, upskilling will be required. This will include more detailed training on construction types, energy efficiency measures, renewable energy systems and softer skills, such as identifying and working with more vulnerable groups.

If the assessment is delivered by the private market, there is a need to ensure adequate protections are in place for consumers. Accreditation and quality assurance measures are already in place for EPC assessors, but a revision to the assessment regime provides a useful opportunity to review these and ensure they are robust.

Early estimates on costs indicate that the Standard Assessment should cost only a little more than the current EPC rate of £50-£120, and a Full Assessment will cost up to double. It is therefore proposed that those who can pay should, and adequate financial support be offered to those who can't. Costs should be factored into existing and future support schemes (e.g. loans).

Assessment Short Life Working Group: Draft Interim Proposals – December 2019

General Overview

An assessment should exist on two levels and should comprise both a mandatory and an optional element

Two levels of assessment are proposed, a Standard Assessment and a Full Assessment. The Standard Assessment will be mandatory, and homeowners will be required to undertake this to meet regulatory obligations (i.e. EPC band C by 2040). It will include and build upon the current Energy Performance Certificate (EPC) process, by offering more functionality to tailor recommendations to a specific building.

The Full Assessment will include and build upon the Standard Assessment by introducing an occupancy element. This aims to provide owners with an understanding of how recommendations made through the Standard Assessment might impact on their specific circumstances. In most situations this element will be optional.

Both levels of the assessment are outlined in more detail below.

Standard Assessment

A Standard Assessment should be mandatory under regulation

This will require all homeowners to undertake a Standard Assessment at one of the specified trigger points outlined within the main body of this consultation i.e. point of sale or point of renovation. Only by making the Standard Assessment mandatory can we meet the requirements set out within Section 64 of the Climate Change (Scotland) Act 2009^[24] and help homeowners to work towards the challenging targets outlined in the Energy Efficient Scotland: Route Map.

A Standard Assessment should use RdSAP methodology to ensure it meets regulatory needs

Through the 2018 Energy Efficient Scotland: Route Map, the Scottish Government has committed to setting a long term standard for domestic properties using the Energy Efficiency Rating of EPCs. To ensure that the output recommendations of the Standard Assessment meet these requirements, the process should be built on existing RdSAP conventions.

A Standard Assessment should include and build upon the current EPC process

The Standard Assessment process should include and build upon the current EPC process by offering more functionality to tailor recommendations to a specific building. This will allow the assessor to select or insert more appropriate technical values (such as u-values or insulation thicknesses) and select the most appropriate recommendations for the building. It is important to note that, given the use of RdSAP, the Standard Assessment will be an asset-based measure of energy performance (as is currently the case with EPCs) and will take no account building use.

Subject to more detailed legal investigations, this should be a single assessment process that smooths delivery for homeowners and allows us to meet the requirements of both the Energy Performance in Buildings Directive^[25] and Section 64 of the Climate Change (Scotland) Act 2009.

Full Assessment

A Full Assessment should be offered to homeowners

The RdSAP conventions used within the Standard Assessment are based on generic assumptions about energy and building use. A more detailed, Full Assessment should be offered to homeowners as an optional and additional service. This will build upon the Standard Assessment by introducing an occupancy element, allowing assessors to optimise recommendations and illustrate to homeowners how these might impact on their specific circumstances. This will require additional data that represents how the household use their building e.g. heating patterns.

To be clear, a Full Assessment will still be reliant on the RdSAP conventions used during the Standard Assessment and should not be confused with a full SAP calculation.

There are circumstances where a Full Assessment may be the most appropriate option e.g. for vulnerable customers or those considered to be in fuel poverty. Where an assessment is delivered via a Scottish Government or local authority programme, the Full Assessment should be delivered as the default option.

Recommendations

Recommendations should be tested for technical feasibility and cost effectiveness

As far as possible, recommendations made through an assessment should be actionable. It is therefore important to only recommend measures that are technically feasible and cost effective from the outset. The process for testing these elements should be as straightforward for the assessor as possible.

Where recommendations are not considered technically feasible and/or cost effective, homeowners will be offered an opportunity to apply for an exemption. The exemption process should be fair and robust to remove opportunities for 'easy opt-out'. Additionally, an exemption now should not necessarily mean an exemption in the future. Measures may become technically feasible or cost effective in the future, as technology develops or installation costs reduce.

A homeowner should be provided with a tailored report of recommendations, setting a clear pathway to a warmer home, regulatory compliance and zero carbon

This will provide homeowners with a clear plan of how to improve the efficiency of their property, to make their home warmer and meet regulatory requirements and beyond. Where possible, it will also provide a clear pathway for making their building zero carbon through, for example, the decarbonisation of their heat supply. Recommendations should be presented according to the homeowner's preferred scenario (e.g. lowest capital cost, highest carbon reduction). However, alternative scenarios should be offered to give the homeowner more choice, particularly where different low carbon heat options may be suitable.

For some buildings it may not be possible to present a series of recommendations that reach regulatory compliance and/or zero carbon, for example, where recommendations are deemed not to be technically feasible or cost effective. In such instances, homeowners would be expected to undertake any recommendations that are actionable, bringing the building as close to compliance as possible.

Whilst a significant amount of data collection will be required, the final report should be clear and concise, providing the homeowner with only the information they need to make informed decisions. Should the homeowner wish, all data should be made available to them on request.

Delivery

Assessors

An assessment should be conducted by an existing EPC assessor

The current EPC market provides a convenient foundation on which to build a new assessment regime, and existing assessors already carry the core knowledge and skills required to deliver this.

Existing EPC assessors will require further training and/or qualifications to deliver an assessment

Whilst existing EPC assessors have the core knowledge and skills required to deliver an assessment, whether Standard or Full, they will require additional training. It is envisaged that assessors will take on a more advisory role. They will be required to identify and communicate how different measures will impact the property and homeowner, the pros and cons of each intervention, any potential disruption required for installation, and any change in household/system functionality post installation. This will require more specialised training on building construction types (including specific training on traditional buildings), listed buildings and conservation areas, and insulation measures and renewable energy systems. There may also be a need to develop softer skills, such as customer service, identifying and engaging with vulnerable customers, consumer protection, working with cultural differences and available funding and support schemes. Though this appears extensive, it should be highlighted that not all assessors would necessarily be required to be trained in all areas. For example, some assessors may specialise in traditional buildings, whilst others specialise in more modern construction types.

There are a number of formal qualifications already available (e.g. City & Guilds Energy Awareness) that may meet the requirements of these proposals. There are also opportunities to build upon existing training programmes and develop new formal qualifications.

To ensure the correct skills are identified, a full skills review will be necessary.

Consumers

Assessors should be fully accredited, which could be supported by a Scottish Quality Mark.

It is vital to implement adequate consumer protections to ensure the service delivered by assessors is consistent, of high quality, fair and cost effective. Through the Scottish Government's Operating Framework for Approved Organisations^[26], there are currently measures built into the existing EPC process to protect consumer interests, specifically relating to quality assurance and recourse. Some of these measures are as follows:

• Each Approved Organisation must publish and enforce a code of conduct for members, together with a complaints, appeals and disciplinary processes;
• Minimum requirements for audit of EPC output are set within the Operating Framework;
• Action in response to complaints (if upheld) and on audit failures can extend from enhanced future auditing, through additional training right up to suspension and termination of registration; and
• Where an assessor is in default, the Approved Organisation must act to rectify issues with the customer.

Current accreditation frameworks may not be sufficiently robust to fully protect consumers, particularly if the assessment market expands rapidly. It is likely that quality assurance will need to be expanded and sufficiently resourced to ensure that the process works properly for consumers as the basis for improvement. The introduction of a new assessment regime provides an opportunity to review and build upon these to ensure a robust and fair system.

The use of accreditation and associated quality assurance will help provide assurance of an assessor's competence, whilst use of a quality mark over and above that will reassure consumers that the service they provide is of an adequate standard. Furthermore, a quality mark endorsed by the Scottish Government will lend the Standard and Full Assessment extra credibility from a consumer perspective.

It should be noted that the Scottish quality mark and the accreditation scheme are still under development.

Costs

Early estimates suggest a Standard Assessment may cost only marginally more than a current EPC assessment

Against the current EPC base rate of £50-£120 per assessment, early estimates suggest that a Standard Assessment may cost an additional £10-£30. This factors in the additional time that would be required to define specific data and adjust the recommendations accordingly.

Estimating the costs of the Standard Assessment is difficult at this stage as there is no current model on which to base this, beyond the current EPC assessment. It is important to note that costs will be driven significantly by market conditions. Furthermore, this estimate does not yet factor in costs of additional training for assessors, applying tests for technical feasibility and cost effectiveness, or the extra time required to log obvious building defects. The costs presented here are therefore subject to change.

A Full Assessment may cost up to double that of the current EPC assessment

Again, against the current EPC base rate of £50-£120, initial estimates suggest that the Full Assessment may cost an additional £50-£120 i.e. up to double the current EPC price. These costs include all those associated with the Standard Assessment, plus the additional training, and time required to undertake the occupancy element of the assessment.

We are more confident with these figures, as there are existing models on which to base them. Again, this estimate does not include costs associated with applying tests for technical feasibility and cost effectiveness or the extra time required to log obvious building defects. The costs presented here are therefore subject to change.

The cost of an assessment should be met by the homeowner, with appropriate financial support provided to those who need it

Generally speaking it is proposed that homeowners who are able to pay, should do so. It is also proposed that those that are unable to pay should be provided with adequate financial support to carry out an assessment. The working group acknowledge that 'unable to pay' needs to be more clearly defined. However, this lies out with their remit.

There may be situations where those usually considered 'able to pay' do not have the funds available. With the offer of two assessment levels (Standard and Full), there may also be situations where homeowners can pay for the Standard Assessment, but are unable to stretch to a Full Assessment. This may result in those who would potentially benefit most from a Full Assessment missing out. The inclusion of assessment costs should therefore be considered in all current and future support programmes, such as local and national grant funding and loan schemes.

Furthermore, the Full Assessment may offer a useful means by which to assess fuel poverty according to the new definition, and therefore support the delivery of the Fuel Poverty Strategy. Accordingly, it would be logical to fund the assessment for those in fuel poverty given that two of the four drivers of fuel poverty are determined by the occupant (behavioural use of energy and income level).

Assessment tool

Inputs

A Standard Assessment, as a minimum, should draw on the following inputs:

(a) Data and recommendations from an EPC assessment

As the Standard Assessment is rooted in the existing RdSAP methodology, any tool developed must be able to draw on EPC measurement data, whether taken at the time of the Standard Assessment or taken from a previous (in date and still relevant) EPC assessment. There is potential to automate some of this process by pulling data through from the existing EPC Register.

It is noted, however, that whilst it will be acceptable to draw on a previous EPC assessment, in practice assessors are likely to opt for conducting a new assessment, particularly where a previous assessment has been done by another assessor. There are a number of reasons why this situation may occur, including liability issues or the time required to check another assessors work being closely matched to collating new data. This creates a need to ensure clear messaging to building owners as to why a new assessment is being undertaken.

(b) Legal designations of the building in question e.g. listed building status, conservation zone, etc.

The legal designation of a building should be noted and there is potential to draw some of this information from existing data sources, such as Historic Environment Scotland's Canmore. This will allow certain recommendations to be flagged and the assessor to make an informed decision about their appropriateness. For any such assessments, appropriate disclaimers should be made against the assessor's recommendations and the homeowner should be directed towards their local planning authority for further guidance on the acceptability of recommendations, according to planning regulations.

(c) Obvious defects or condition issues that may impact on the installation and/or effectiveness of any improvement measures

Often, building defects will impact on whether or not a measure can be installed or its effectiveness when installed. It is therefore important to log any obvious building defects and bring these to attention of the homeowner. In practice, this may be straightforward at point of sale, where an assessment is being undertaken by a surveyor as part of a Home Report survey. In other instances, there may be opportunity to draw on and adapt some aspects of the House Condition Survey to suit.

It is important to note that the assessment does not include a detailed condition survey and will not account for any hidden defects. The homeowner may be required seek additional technical advice from a suitably qualified professional. This element should therefore include relevant disclaimers.

Defects or condition issues should not lead to an exemption. Any measures recommended by an assessor that would otherwise be considered technically feasible and cost effective should be installed, but should be accompanied by any necessary repair work.

(d) Local costings for the installation of measures

The inclusion of local costings will be vital to fully informing the homeowner of the potential costs of any work needing to be completed. It will also be necessary to determine whether or not recommendations are cost effective.

Local costings do present significant challenges, however, that need to be fully explored. The level of 'local' is a key issue, as is its interaction with cost effectiveness, particularly in geographical areas that might attract a rural premium. Care must be taken to avoid rural exclusion i.e. where rural properties have the potential to be more efficient but are limited because of their location. Management of such data is another key issue, e.g. who collects and manages the data, how is it stored and accessed and how is validity and quality maintained.

(e) Scenario preferences of the homeowner

Homeowners may have different motivations when improving the energy efficiency of their properties. For example, some may be motivated by lowest installation cost, whilst others by savings (energy, cost or carbon) or available incentives. It is important therefore to capture this information so that the associated recommendations might be tailored to suit.

(f) Local Heat & Energy Efficiency Strategies

It is important to ensure any recommendations being made via an assessment are consistent with plans laid down by the local authority, through their Local Heat & Energy Efficiency Strategy. This will be particularly important when recommending low carbon heat options. It is vital to ensure that any recommendations made do not undermine any zoning undertaken by the local authority, whilst also ensuring homeowners are given adequate choice. Assessors will therefore have to be aware of specific local strategies.

A Full Assessment, as a minimum, should draw on the following inputs:

As previously stated, a Full Assessment includes and builds upon the Standard Assessment. Therefore, all data collected via the Standard Assessment should be pulled through into the Full Assessment.

(a) Occupancy patterns

In order to demonstrate how recommendations will impact directly on the household, it is important to include occupancy patterns and how energy (and how much energy) is used within the building. The level of detail required to assess occupancy is yet to be fully explored. However, this could be fairly standardised, providing discrete categories of occupancy that can be tweaked based on the household's circumstances. Or it could be more free-form, drawing data from household interviews, thermostat settings, billing information, smart meter data (with the necessary permissions) or a mix of all of these.

There is also potential that this information could be recorded directly by the homeowner via, for example, an online tool. This may help to maintain data integrity, mitigate any instances of data manipulation and reduce the cost of the Full Assessment.

(b) Local climate data

As with the occupancy information, the inclusion of more specific local climate data will help to provide a more tailored illustration of how selected recommendations will impact on the household directly.

Outputs

An assessment should, as a minimum, provide the following outputs:

(a) A tailored set of recommendations that sets a clear pathway for the property achieving regulatory compliance and zero carbon

This will provide a clear plan of action for the homeowner, demonstrating the most suitable route to a warmer home, regulatory compliance and beyond (via all relevant EPC bands), and zero carbon, in an appropriately staged approach. This will help to future-proof the assessment process against any potential regulatory changes and in so doing, will help Scotland meet its challenging climate change targets. Homeowners should be actively encouraged to go beyond regulatory compliance wherever possible.

Recommendations should always be displayed in a fabric first hierarchy.

As far as can be determined at the assessment stage, recommendations should be technically feasible and cost effective. A clear description for both should be provided to the homeowner to ensure they understand how this has been determined. Technical feasibility will likely require a suitably qualified technical expert and recommendations should therefore be caveated to reflect this. Cost effectiveness may present some conflict as it may still be beneficial to display some measures that are deemed not to be cost effective in order to provide a clear pathway to regulatory compliance or zero carbon.

(b) A description of how the recommendations impact on the building's ability to meet regulatory requirements (i.e. Standard Assessment) and, where chosen, how they will impact the household directly (i.e. Full Assessment)

In the case of a Standard Assessment, this will demonstrate the extent to which the building meets regulatory requirements. This could also include an estimate of cost, energy and carbon savings, with the caveat that these are based on standard assumptions relating to occupancy.

A Full Assessment will take this a step further by illustrating how the recommendations will impact on the household directly. Again, this could include estimates of cost, energy and carbon savings, noting these have been more tailored to the household's use of the building and therefore should be more representative. Disclaimers will be required, however, to note that savings outlined here are estimates, calculated based on data provided by the homeowner and are intended for illustrative purposes only.

(c) Different scenarios based on the homeowner's preferences

Recommendations should be presented according to the homeowner's preferences and needs recorded during the assessment e.g. cost savings, carbon reduction or preference for certain measures. The report should outline various different scenarios dependent on these preferences as well as highlight any current or future incentive schemes available in Scotland e.g. Renewable Heat Incentive or Smart Export Guarantee (SEG).

In some cases, a homeowner may wish to see all scenarios, or may be indifferent to the presentation of information. In which case, all scenarios should be presented on the report.

It is worth noting that there may be some difference between the presentation of scenarios dependent on whether the homeowner is receiving a Standard or Full Assessment. Disclaimers should therefore be included to highlight that the scenarios are determined based on either standardised data that is not as tailored to the homeowner's personal circumstances (Standard Assessment), or additional data provided by the homeowner (Full Assessment).

(d) Advice on how to be more energy efficient and a list of available support services

Homeowners should be provided with advice on how to use their home in a more energy efficient manner. With the homeowner's permission, this could also include a referral to Home Energy Scotland for more free and impartial advice or support. They should be provided with a list of the various support services available to them, as well as any relevant incentive schemes. For example, energy-saving advice, or assistance that may be available to help with installation costs.

Exemptions

Technical feasibility

Exemptions should be available where recommended measures are deemed not technically feasible. The level to which this can be determined during an assessment is outlined below.

As previously noted, exemptions should not apply to any recommended measures that are deemed unfeasible solely due to a building defect or condition issue.

Assessment should be non-destructive

Assessment should be non-destructive, meaning there should be no physically invasive or destructive processes carried out at the assessment stage e.g. drilling bore-holes in walls to check wall cavities.

Assessment should provide a theoretical indication of whether recommendations are technically feasible

Given the non-destructive nature of the assessment and the wide range of measures available, it is unlikely that a single assessor will have the full range of skills necessary to determine technical feasibility for all possible measures. Assessors, therefore, should only provide a theoretical indication of technical feasibility. Actual feasibility should be determined by a suitable technical expert. For example, an assessor could recommend that, in theory, cavity wall insulation can be installed on the basis that a cavity exists. However, only a suitably qualified technical expert will be able to confirm actual feasibility on conclusion of more invasive investigations.

Broadly speaking, where a measure is subsequently determined to be unfeasible, homeowners should move on to the next appropriate measure. The determination of whether a suitable alternative may be available could be assessed at compliance stage i.e. when the building owner is seeking exemption for the unsuitable measure. However, in practical terms, this may cause significant issues as careful consideration must be given to whether earlier recommendations within the 'fabric first' hierarchy that are deemed unfeasible have an impact on the feasibility of later recommendations. For example, where cavity wall insulation (early measure) and a heat pump (later measure) are recommended: if the cavity wall insulation is deemed to be unfeasible, this will likely have an impact on the feasibility of the heat pump. It is therefore important to build the resolution of such issues into the logic of any assessment tool/software developed.

As it stands, this proposal generates a potential need for homeowners to call on the services of additional technical experts. In turn, this may create a situation where, after the initial assessment, recommendations need to be revised. How this process is managed therefore needs careful consideration to ensure it does not place any undue cost burdens on homeowners.

Cost effectiveness

Exemptions should be available where recommended measures are deemed not cost effective. Possible definitions for cost effective are discussed in section 1.5.3 and Annex D of this consultation document. As cost effectiveness is yet to be fully defined, the working groups have not considered this fully in the context of assessment.

Compassionate grounds

In exceptional cases, exemptions should be available where it is inappropriate to enforce regulation for compassionate social reasons. For example, for more vulnerable groups, where the process of upgrading the property would have an unfair and disproportionate impact on the homeowner's life.