Energy Efficient Scotland: route map

Chapter 3: Improving our Buildings

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By 2040, all Scottish homes are EPC C (where technicallyfeasible and cost effective).

When we consulted on the Programme in January 2017, there was a clear consensus around setting long term targets, providing certainty and a clear direction of travel. To give that certainty and clarity we are consulting on requiring homes to meet a long term standard based on the Energy Efficiency Rating of the Energy Performance Certificate ( EPC) for domestic properties. This will see all domestic properties achieve EPC C by 2040 at the latest.

Achieving EPC C for the majority of our homes is a challenging but achievable target that will deliver the emissions reductions required by our Climate Change Plan. However, to remove poor energy efficiency as a driver of fuel poverty we need to go further for fuel poor households.

Meeting the long term standard

We know that there are different starting points for energy efficiency across the social rented, private rented and owner occupied sectors, so this Route Map proposes different journeys to bring these properties up to the long term standard.

In the social rented sector landlords have already been working towards ensuring that the majority of their properties are the equivalent of EPC C or D (depending on dwelling and fuel type) by 2020, to meet the Energy Efficiency Standard for Social Housing ( EESSH). We want to ensure that social housing continues to lead the way on providing energy efficient properties for its tenants. Therefore, following the recent review of EESSH, we are launching a consultation alongside the publication of this Route Map which proposes a target to maximise the number of homes in the social rented sector achieving EPC B by 2032 and that no social rented homes should be let if their energy efficiency is lower than EPC D.

We consulted last year on introducing minimum standards in the private rented sector, and this Route Map confirms that private rented properties will be required to meet EPC E by 2022, and EPC D by 2025. To maintain momentum in the sector, and to allow private sector landlords to plan improvements to their properties, we are consulting now on our ambition that the private rented sector meets EPC C by 2030. We want to ensure that tenants in the private rented sector are able to live in properties which are warmer and more affordable to heat.

The largest sector, owner occupiers, will take the longest time to bring all properties up to standard – so we think this should be achieved by 2040. We want to continue to encourage and enable owners to take action, but that alone may not be enough. This is why we are consulting now on our intention to consider the role for requiring action to improve owner occupied properties in the later stages of the programme.

We know that not all buildings will be able to achieve this standard, nor do we expect people to make improvements that provide little return in energy savings. That is why we are clear that all buildings should achieve the long term standard where it is technically feasible and cost effective.

The consultation accompanying this Route Map seeks your views on a number of areas and its findings will inform our work over the next two years. By 2020 we will look to confirm:

• The long term standard and how it will be phased in each sector
• Higher targets for fuel poor households
• Instances where buildings are not required to reach the long term standard
• Definition of technically feasible and cost effective

Next Steps – Long Term Standard
Energy Efficient Scotland consultation on long term standard – May to July 2018
Scottish Government response and confirmation of long term domestic standard – 2019

Across the different housing tenures we know that reaching the long term standard will require a mixture of encouragement and regulation that will differ between the sectors. We are setting out below the different pathways these sectors will take to achieve the long term standard and the support that will be offered.

below the different pathways these sectors will take to achieve the long term standard and the support that will be offered.

Our Offer – Domestic

The Scottish Government has been providing an offer of advice and support to households for a number of years - supporting those living in fuel poverty and encouraging others to make energy efficiency improvements to their properties to reduce their greenhouse gas emissions and save money on their fuel bills.

At the core of our offer to owners and occupiers is Home Energy Scotland ( HES) which provides free and impartial advice on energy efficiency and energy saving measures to all households in Scotland. Home Energy Scotland provides advice to households on funding and support available, including advice on income maximisation schemes, and makes onward referrals to Scottish Government programmes, Local Authority Area Based Schemes and to CITRUS Energy for advice on switching tariffs. Community liaison officers visit the most vulnerable people in the community in their own homes to ensure they get the support they need.

As well as providing free, impartial advice the Scottish Government provides grant funding to cover the cost of installing energy efficiency measures in fuel poor households through its Home Energy Efficiency Programmes ( HEEPS). For owners that are able to pay and for private sector landlords the Scottish Government provides interest free or low cost loans helping to spread the cost of making energy efficiency improvements and installing home renewables. These are also available to registered social landlords helping them spread the cost of investing in energy efficiency.

The HEEPS programme has helped make a significant contribution to the Scottish Government’s commitment to tackling fuel poverty since its launch in 2013. Our investment of almost
£300 million between 2013 and 2016 has leveraged investment from UK Government schemes, social landlords and home owners to produce a total investment of over £600 million. As a result almost 100,000 households now live in homes which are warmer and cheaper to heat due to the measures installed between 2013 and 2016. The effects of these changes will benefit households for many years to come. HEEPS is continuing to deliver and our 2016/17 and 2017/18 programmes should help almost another 50,000 households improve their homes.

The programme also helps towards the Scottish Government meeting its climate change targets by reducing CO ₂ emissions and we know that our advice and support service helps households save on their fuel bills. Households with health problems are increasingly being referred to our schemes through new partnership arrangements meaning that HEEPS will continue to have a genuinely cross-cutting impact on areas such as fuel poverty, health and climate change.

This support will continue to be made available during the transition phase of the Programme, and we will continue to leverage funding from the energy supplier obligation, including ECO. The Scotland Act 2016 provides Scottish Ministers with very limited powers over only some elements of ECO, and the UK Government has failed to provide any degree of certainty about the long-term future of this scheme beyond the early 2020s. This lack of control and continued uncertainty about the future of ECO means it is difficult at this time to justify the use of these powers as they currently stand. However, we are committed to working with the UKGovernment to seek clarity about the long-term future of ECO and a dialogue with theSecretary of State on the expansion of powers being devolved so that ECO can be delivered in a more meaningful way that will truly align with our efforts to tackle fuel poverty in Scotland.

Details on future programme delivery will be set out in 2020.

Social Housing

Target: Maximise the number of social rented homes achieving EPC B by 2032.

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Maximise the number of social rented homes achieving EPC B by 2032.

Performance

The social rented sector has some of the most energy efficient homes in Scotland, with over 90% already achieving an EPC D or above ^[32] . EESSH was introduced in 2014 to encourage social landlords to improve the energy efficiency of their stock. It sets a minimum energy efficiency rating of SAP 2009 60-69 (this equates to EPC D or C) for landlords to achieve by 2020, depending on fuel and dwelling type ^[33] .

We have carried out a review of EESSH which considered progress against the 2020 target and the setting of future milestones ^[34] .

Phasing

Following agreement through the EESSH Review Group, we are proposing new EESSH milestones and targets. These new milestones support our wider ambitions for fuel poverty, Energy Efficient Scotland, emissions reductions and domestic heat. We are proposing a new target that will see social housing maximise the number of homes meeting EPC B by 2032. We are also proposing that no social housing should be let if the energy efficiency rating is lower than EPC D, and seeking views on when this should come into force.

This ambition will look to realise the removal of poor energy efficiency as a driver of fuel poverty in social housing, and for all social housing to be carbon neutral as far as reasonably practical.

We are consulting on our proposals for social housing and EESSH after 2020 ( EESSH2) as part of our wider consultative work on the development of the Programme ^[35] .

Next Steps – Social Housing
EESSH Consultation – May-July 2018
Analysis of consultation responses – Autumn 2018
Scottish Government response and confirmation of post-2020 activity – Winter 2018/19

Case Study

Cairn Housing Association

Cairn’s Albert Street estate has 25 units, with a mixture of houses, four-in-a-blocks and tenement style flats. The properties were built in 1988 with electric storage heating and hot water cylinders.

The existing energy performance of the stock varied between band D and E. Some tenants had taken to supplementing the heating with their own panel heaters. As the storage heating was nearing 20 years of age, another solution was being sought that would provide better performance and meet the EESSH rating.

Cairn used their asset management software to model different solutions, ensuring they surpassed the EESSH energy ratings but at the lowest cost. This resulted in the selection of high heat retention storage heaters, new highly insulated hot water cylinders and the top up of loft insulation to 300mm.

Cairn successfully applied for funding from the HEEPS ABS Loan scheme, with Albert Street being one of the projects included. The project was procured through a framework and the successful main contractor was Keepmoat. As well as the heating and hot water, they had to renew isolators and upgrade the consumer units.

On average per unit, works took one and a half days to complete, at a cost of £4,380. Cairn had customer satisfaction rates of over 85% on the works and positive comments on the effectiveness and look of the new heating. Upon completion the energy performance increased to a minimum of band C for all the units in the estate, ensuring full EESSH compliance.

Case Study

Stirling Council – Solar Photovoltaics / Battery Storage

In 2011, Stirling Council commenced the roll out of solar photovoltaic installations to its social housing stock. The strategic objectives were to reduce fuel poverty, reduce carbon emissions and improve the energy efficiency performance of the housing stock to meet Scottish Housing Quality Housing Standard and the expectation of new challenging targets coming forward from the Scottish Government ( EESSH was introduced in 2014).

By 31 March 2018, 2,400 installations were completed (42% of the Stirling Council housing stock) with a further 1,300 installations planned for 2018/19.

The average size of system installed is 3.0kWp at an average cost of £4,200 (ex VAT) generating on average 2,330kWh per annum per property.

In order to maximise the “self-consumption” benefit to tenants, the solar PV installations are being complimented with solar diverters in the “off-gas” stock and piloting battery storage across the solar PV portfolio. Depending on the size of system installed and the orientation, solar PV increases the energy efficiency rating by between 10 to 20 RdSAP (2012) points.

Battery storage has been installed in over 100 properties to date and a further 200 installations planned for 2018/19. Systems range from an internally mounted system providing 2kWh storage to an externally mounted system that can provide 13.5kWh of storage. Data is showing that battery storage can provide the householder with a “self-consumption” rate of 25% during winter months to over 90% during summer months. The cost of a 13.5kWh battery storage system is currently around £5,600 (ex VAT) but costs are starting to fall as the technology starts to mature in the UK. Battery storage is starting to open up other opportunities including sharing microgeneration power over connected homes and the ability to import Economy 7 power in to the battery to time shift consumption out with Economy 7 time bands.

Feedback from tenants has been very positive. They have cited the reduction in their electricity bills and that they are secure in the knowledge that Stirling Council’s Housing Service remotely monitors the performance and maintenance across the entire portfolio of both PV systems and battery storage units.

Private Rented Sector

Target: Private rented homes to EPC E by 2022, EPC D by 2025, and EPC C by 2030 (where technically feasible and cost effective)

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Private rented homes to EPC E by 2022 and EPC D by 2025, and EPC C by 2030 (where technically feasible and cost effective)

Performance

Overall, more people in privately rented accommodation are living in homes that have poorer energy efficiency than elsewhere in the domestic sector ^[36] .

We believe that people living in the private rented sector should live in homes that are warm and affordable to heat. Our offer of support has not delivered sufficient improvement in the building stock in this sector and we consulted on the introduction of minimum energy efficiency standards in 2017 ^[37] .

Phasing

Following the previous consultation this Route Map confirms that we will be bringing forward regulations to require that where there is a change in tenancy after 1 April 2020 the property will need to be EPC E, extending to all private rented properties to be EPC E by
31 March 2022; and to require that where there is a change in tenancy after 1 April 2022 the property will need to be EPC D, extending to all privately rented properties to be EPC D by
31 March 2025.

To maintain momentum in the sector, and to allow private sector landlords to plan improvements to their properties, we think that we should set out now when privately rented properties would be expected to meet the long term standard. Therefore we are consulting now on our ambition that private rented sector properties are EPC C by 2030 (where technically feasible and cost effective). We are seeking views on this in the consultation accompanying this Route Map.

Next Steps – Private Rented Sector
The Programme consultation on requiring PRS to meet EPC C by 2030 – May-July 2018
Ministers confirm timescales for long term standard in PRS – Route Map 2019
Consultation on draft regulations to implement minimum EPC E standard – 2019
Introduce Regulations – 2019
Regulations come into force 2020

Owner Occupied

Target: Owner occupied homes to reach EPC by 2040 (where technically feasible and cost effective)

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By 2040, owner occupied homes to reach EPC C (where technically feasible and cost effective)

Performance

Private homes occupied by their owners account for 61% of domestic housing. Improving the energy efficiency of these homes will be critical in achieving the overall aims of Energy Efficient Scotland.

The Scottish Government provides support to improve the energy efficiency of private homes through schemes such as the Home Energy Efficiency Programmes for Scotland ( HEEPS). This has seen a steady improvement in the number of homes achieving EPC C, and there are now around 34% of homes at this standard or higher. However, this still leaves a significant number of properties that would need to be improved to meet the long term standard, a large increase on current levels. Clearly more needs to be done to encourage owners to improve the energy efficiency of their homes, particularly in those ‘able-to-pay’ households that are not eligible for support through our fuel poverty schemes.

That is why we are consulting on proposals to set a long term standard requiring owner occupiers to improve their homes to EPC C by 2040 (where technically feasible and cost effective).

Phasing

We are proposing that we initially continue to focus on supporting home owners to make improvements to the energy efficiency of their homes, making the offer through our national advice services, providing access to low or no interest loans and working with local authorities to encourage them to deliver an end-to-end energy efficiency service for able-to-pay home owners.

We know that it will be challenging to increase the level of activity that will be needed to achieve EPC C in all owner occupied properties, where this is technically feasible and cost effective. Setting out our ambitions now across all domestic properties will give the market a clear signal, and focusing action to support owners who want to improve their properties over the first 10 years of the programme will help drive improvements. But waiting until 2040 to require improvements will not be practical or meet our ambitions. That is why the Programme consultation seeks views on requiring action to meet EPC C from 2030 onwards.

Next Steps – Owner Occupiers
Energy Efficient Scotland consultation on domestic long term standard – May-July 2018
Stakeholder engagement to identify proposals for supporting and requiring action phases – 2018

Higher Targets For Fuel Poor Households

Target: All homes with fuel poor households to reach EPC C by 2030 and EPC B by 2040, where technically feasible, cost effective and affordable.

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Homes with fuel poor
households to reach EPC C
by 2030 and EPC B by 2040,
where technically feasible,
cost effective and
affordable.

Households that are living in or vulnerable to fuel poverty spend a larger proportion of their income on fuel bills. We know that improving the energy efficiency of their homes is one of the most sustainable ways to lift households out of fuel poverty. It saves them money on their fuel bills year-after-year as well as helping to protect them against future changes in fuel prices. That is why by the end of 2021 we will have allocated over £1 billion since 2009 on tackling fuel poverty and improving energy efficiency. This funding builds on the over 1 million measures delivered through a range of ( UK and Scottish) programmes to over 1 million households since 2008.

We recently consulted on establishing a non-statutory sub-target and interim milestone in our draft Fuel Poverty Strategy to remove poor energy efficiency as a driver for fuel poverty by ensuring all homes reach a minimum energy efficiency rating by 2040.

As set out earlier in this Route Map, we are proposing setting a minimum energy efficiency standard of EPC C to be met by all domestic properties, where technically feasible and cost effective by 2040. This will ensure that all homes have achieved a good level of energy efficiency, helping to remove it as a driver of fuel poverty as well as supporting the installation of low carbon and renewable heating systems in the future.

However, due to the depth of fuel poverty experienced by some households we know that reaching EPC C will not be enough to lift all households out of fuel poverty. That is why we are proposing a new milestone requiring social housing to maximise the number of homes achieving EPC B by 2032. And whilst some of our most vulnerable citizens live in social housing we also want to ensure that other fuel poor households are protected. That is why we are proposing adopting a higher ambition for fuel poor households, regardless of tenure, that would see them improved so that they reach EPC C by 2030 and EPC B by 2040.

We know that in many cases homes would need significant interventions to achieve EPC B, for example the installation of solar panels and heat pumps in addition to significantly improving the building fabric, requiring significant investment. That is why at this stage we do not believe it is appropriate to make these ambitious targets mandatory across the entire domestic building stock. However, we are proposing that these ambitious targets act as a guide for our national and area-based fuel poverty programmes which will operate throughout the lifetime of the Programme, building on the existing schemes in operation. In practice this will mean maximising the level of improvement possible within limits affordable to the public purse. We are seeking views on the practicalities and operation of setting higher targets for fuel poor households in the Energy Efficient Scotland consultation published alongside this Route Map.

Next Steps – Fuel Poverty
Publication of draft Fuel Poverty Strategy and bill – by summer 2018
Fuel Poverty (Scotland) Bill introduced in Scottish Parliament – summer 2018
Delivery of Fuel poverty Programmes - On-going

Case Study

Miss R from Ballater, Aberdeenshire

Miss R, a householder from Ballater lives alone and was worried about how she was going to make it through the winter living in a cold home with ill health and the cost of her energy bills. After doing some research Miss R got in touch with Home Energy Scotland to see if she might be eligible for some help.

Once it was established that she was eligible for the Warmer Homes Scotland scheme, she was referred to Warmworks to begin her customer journey. A surveyor then went to the property to assess what measures would be most appropriate; it was here that Miss R was told she could get secondary glazing installed under the scheme at no cost to her.

‘Very nice chap, he told me what was going to happen next and explained that it may take 6 weeks to get the windows. He was very good, very efficient – I couldn’t fault anyone.’

Warmworks appointed a registered sub-contractor to carry out the works and a technical survey was completed. At this point, the technical surveyor explained where everything would be situated and advised Miss R on the preparations needed before the work was carried out. A few days later the installation began. The team arrived on time and worked swiftly to ensure that everything was installed within one day to minimise disruption to Miss R.

‘I was dreading the install a little bit as I didn’t want any upheaval, but it was absolutely fine! They arrived about 8 o’clock in the morning and didn’t stop for coffee or tea or anything, they worked so hard. They showed me how to open and close the windows, they also explained it all to my friend as well just in case I can’t get them open or need help.’

When the work was finished a Warmworks inspector came out a few days later and explained to Miss R that everything was installed correctly and in line with the right specifications. Miss R’s home is now more energy efficient and she has noticed a difference in the warmth of her home.

‘My kitchen is too warm now! It’s going to make an enormous difference in the winter – I have an old Rayburn in my kitchen, I also have two big windows in the kitchen here facing north east, which is where the worst of the winter weather comes from. Before this it would get really quite cold, you wouldn’t believe the amount of clothes that I had to put on to keep warm!

Miss R had this to say about her experience with Warmer Homes Scotland:

I have got quite a lot wrong with me; I have five different lung conditions, arthritis, and I’ve been in hospital quite a bit. I thought I wasn’t going to make it through the winter.

I was really very impressed. It’s a wonderful thing that you’re doing – it’s like a fairy tale to me!’

Assessing The Performance Of Our Homes

The current Energy Performance Certificate ( EPC) system for assessing the energy performance of domestic properties ^[38] is well understood and well embedded - for more information on EPCs see pages 16 and 17.

Feedback on the previous consultation highlighted a number of concerns around the underlying EPC methodology and we have already commissioned some initial research to explore these issues and identify how EPCs can be improved to support the Programme. This will be taken forward as part of our further work on Energy Efficient Scotland.

In setting a long term standard using the Energy Efficiency Rating of EPCs we are committing to using and building on the current EPC assessment process. With the setting of the standard we will need an appropriate and proportionate assessment process. Owners need to know how energy efficient their buildings are (which is based on the EPC), what they have to do to meet the standard, the best way to do that and once the work is done, to be able to demonstrate that the standard has been reached.

For some home owners (and some landlords) the process from assessment through improvement to meeting the long term standard will be straightforward and the current EPC assessment should be able to be used. We want these home owners to be able to use the existing assessment process if this suits their circumstances, but we know that this will not suit all home owners. There will be situations where the home owner may be unsure of what measures to install, or want to know what to do to achieve a higher standard. There may also be technical issues around buildings that could mean that some additional assessment will be needed.

Building owners also need confidence that once they have met the Programme standard they will not be required to do further work because the assessment and the methodology supporting the EPC assessment has changed. We know this is an issue. For example EESSH addresses the issue using a conversion table. But this may not be appropriate in other sectors. We are seeking views on how to address the issue through the Programme consultation accompanying this Route Map.

We believe that by refining the way that the current EPCs are calculated will help in some assessment situations. But this will not be the case for all instances and some additional advice or assessment may also be needed. This additional assessment should be appropriate and proportionate and build on the existing EPC assessment process. By using and developing the existing EPC assessment we will maintain and grow the existing capacity, experience and skills we have within the Scottish supply chain.

To agree the additional assessment that will be needed we are planning to work with partners through a Short Life Working Group. The remit of this group will include

• Considering what other assessment measures are needed to support the Programme;
• Considering the skills set an Energy Efficient Scotland Assessor should have to deliver any additional processes or services;
• Considering how the agreed principles of technically feasible and cost effectiveness are delivered in the real world;
• Considering a proportionate and streamlined way to ascertain and improve energy performance, building on EPC processes;
• Scoping out costs for the assessment and infrastructure to support this; and
• Consideration of consultation responses to non-domestic assessment proposals.

Membership of this group will be drawn from EPC assessor bodies, construction professionals and traditional buildings interests and other interested parties including consumer specialists.

Next Steps – Energy Efficient Scotland Assessment
Set up the Energy Efficient Scotland Assessment Short Life Working Group – August 2018
Consult on principles underpinning the Programme Assessment – 2019
Energy Efficient Scotland assessment and guidance available – 2020

Non-Domestic Buildings

Target – Our non-domestic buildings will be assessed and improved to the extent this is technically feasible and cost effective by 2040.

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Our non-domestic buildings will be assessed and improved to the extent this is technically feasible and cost effective by 2040

We are not setting the long term standard for our non-domestic buildings just now - this will be done following further work and public consultation after which we will set out any proposed changes to the regulations made under section 63 of the Climate Change (Scotland) Act 2009.

Performance

Requirements to assess the energy performance of non-domestic buildings in Scotland using EPCs were first introduced a decade ago. They began in May 2007 with new buildings, followed by buildings on sale or rental in January 2009 and a requirement to display an EPC in larger public buildings ^[39] . Currently small non-domestic buildings (under 50 m² in area) do not require assessment. There are other limited exemptions ^[40] .

In 2009, section 63 of the Climate Change (Scotland) Act ^[41] introduced a requirement for Ministers to make regulations for the assessment and improvement of the emissions and energy performance of non-domestic buildings. Following consultations in 2011 and 2013, The Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 ^[42] were introduced on 1 September 2016. These Regulations are triggered by sale or by rental of a building and apply only to larger buildings (those over 1,000 m ²).

This established the systems needed for further assessment of non-domestic buildings where following the issue of an EPC improvement targets are identified. Owners are advised and a record is made of what owners need to do to meet the targets.

Case Study

Houston Bottling & Co-pack makes savings of £16k with Scottish Government SME Loan

Scottish bottling company Houston Bottling & Co-pack used the zero interest small business loan from the Scottish Government to upgrade the lighting in its warehouses to high efficiency LEDs - cutting more than £16,000 a year from its energy bill.

Houston Bottling & Co-pack, established in 1988, is an independent company which provides bottling and co-packing services to the Scotch Whisky industry. From its bonded warehouses in Renfrew and Dumbarton, approximately one million cases of whisky are packed and exported worldwide each year. Customers include; William Grant & Sons Ltd, MacDuff International, Chivas Bros, Tomatin Distillers and a significant range of craft distillers.

The company previously used a mixture of high energy halogen and halide lamps to provide lighting for its warehouses. These lamps were electrically inefficient, had a poor lighting level and frequently wore out. This required warehouse staff to rig up a hoist and move stock to replace the bulbs, increasing downtime and reducing productivity. The company identified that upgrading to LEDs would significantly reduce energy costs, with a short payback period on investment. LEDs have a number of advantages over incandescent light sources including lower energy consumption, longer lifetime, smaller size and greater robustness.

Resource Efficient Scotland supported Houston Bottling & Co-pack to implement this money saving project by providing access to the Scottish Government’s SME loan scheme, which offers businesses unsecured interest free loans of up to £100,000 to make savings to their energy, waste and water equipment systems. Resource Efficient Scotland’s advisors also provided free technical support and guidance throughout the project planning and implementation stages. This included testing and measuring lighting options within the warehouse to make sure that the lights being trialled would be bright enough.

“We are committed to implementing the most efficient processes possible in our bottling and packing services, so it makes sense to apply this ethos in all of our business activities. Resource Efficient Scotland supported us at every step of the way in upgrading our lighting system, from planning and funding the project through to installation. With this help, a relatively small change to our building is translating to a big saving in our energy usage.” Duncan Elder, Houston Bottling & Co-pack.

Satisfied with the results of the project, Houston Bottling & Co-pack worked with Resource Efficient Scotland again to implement energy efficiency lighting solutions in their Dumbarton site.

Our Offer – Non-Domestic

The Scottish Government currently provides a variety of support to owners and occupiers of non-domestic buildings in the public, private and community sectors to encourage them to make energy efficiency improvements to reduce their greenhouse gas emissions and reduce their fuel bills.

At the core of our offer are our advice and support services, Resource Efficient Scotland ( RES), Local Energy Scotland and the public sector Non-Domestic Energy Efficiency ( NDEE) Project Support Unit, who together provide advice and project support to SMEs, communities and public sector organisations.

The Scottish Government continues to provide loans ranging from commercial to no or low interest to cover the cost of installing renewable energy technologies or energy efficiency measures to SMEs, public sector and communities. We are currently piloting a cashback offer with the existing SME interest-free loan scheme, which we will evaluate, considering whether it can be offered more widely.

Since 2008 we have invested over £38 million in loan funding for public sector energy efficiency projects through Salix Finance and £24 million through the RES 3 Loan Scheme. Since 2013 £44 million has been made available through CARES (Community and Renewable Energy Scheme) to support community and local energy.

Through our Low Carbon Infrastructure Transition Programme ( LCITP), co-funded by the European Regional Development Fund, we support the acceleration of low carbon infrastructure projects across the public, private and community sectors aiming to stimulate commercial interest and investment in our low carbon sector.

The Scottish Government has also established a NDEE Procurement Framework to support delivery of energy efficiency retrofit works and services for the public sector. This framework offers better solutions and value for money than single project procurement exercises run by individual public sector bodies. To date around £15 million of capital investment has been supported by this framework.

This support will continue to be made available up until 2020, during the transition phase of the programme, with further details on the future offer through Energy Efficient Scotland to be set out in 2020.

Phasing

The Climate Change Plan shows that there has been a 6% reduction in emissions in the service sector since 2009. If we are to achieve our ambition of a 59% reduction of emissions from this sector by 2032 on 2015 levels then clearly more progress needs to be made.

In our Climate Change Plan, through Energy Efficient Scotland we proposed a review and expansion of current regulations for 2020. This Route Map sets out our proposals to extend the regulations to all buildings requiring them to achieve a specified standard, phasing the application of the regulations over the lifetime of the Programme.

We are proposing to gradually broaden the application of regulations, leading to full coverage across all non-domestic buildings from 2035 at the latest. To do this, each phase would have a backstop date by which all qualifying buildings must have had an assessment identifying improvement targets for the building and showing how the building owner will meet those targets through improvement work. Building owners would then have a set period of time to carry out the work.

The phasing of the regulations will be based on the floor size of buildings, which is easily defined and measured, continuing the approach in the current regulations.

The table below is one example of how the regulations might apply. Actual criteria (e.g. building floor area) will be determined as part of the review process.

Regulations apply from	Building area trigger for assessment
2021 – 2026	>1000 m²
2026 – 2031	200 – 1000 m²
2031 – 2036	100 – 200 m²
2036 – 2041	0 – 100 m²

The phasing will need to ensure a steady and consistent rate of work that is within the capacity of the supply chain to deliver and which spreads the work and investment over the lifetime of the programme.

As part of our work on phasing we will also be considering whether elements in the current regulations such as the exclusion of buildings smaller than 50m² or the option to defer improvement by the reporting of annual energy use should be continued.

We are proposing moving towards a benchmarking system where the performance of a building is assessed using a ‘notional specification’ to an existing building. This specification would illustrate ‘what good looks like’ for that particular type of building, based on typical and achievable levels of improvement. Our accompanying consultation seeks your views on the move towards a benchmarking system for non-domestic buildings and sets out in more detail some of the areas we will be considering.

We will be undertaking research on benchmarking and as part of this we will also be exploring whether it is practical, in 2020, to set out the long term standard for performance of non-domestic buildings. This would give building owners long-term certainty over what future investment may be needed from the start of the Programme.

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Properties with floor area >1000m ² account for 6% of the total number of non-domestic buildings...
Source: preliminary SG analysis

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...however they account for the majority (57%) of the total floor space of non-domestic buidlings
Source: preliminary SG analysis

The development of benchmarks and setting of the long term standard will consider the cost of improvement to building owners. We recognise that improvement must be cost effective and the measures proposed technically feasible. We are committed to working with our businesses to improve their energy efficiency and energy productivity.

Once our research is complete we will convene a Working Group with relevant partners to review the findings and support the development of detailed proposals for new regulations.

A public consultation on the detailed proposals will take place in 2019. Subject to consultation, we intend to publish the new benchmark standards, regulations and assessment tools for non-domestic buildings in 2020, with regulations coming into force the following year.

Public Sector Non-Domestic Buildings

Of the 200,000 non-domestic buildings, around 20,000 are owned by the public sector. Regulations requiring improved energy efficiency of non-domestic buildings would, of course, apply to those owned by the public sector. We believe that the public sector could build on the work it has already done on energy efficiency and potentially achieve the Energy Efficient Scotland standard ahead of 2040.

The public sector has a legal duty under the Climate Change (Scotland) Act 2009 to contribute towards meeting Scotland’s climate change targets when carrying out its functions. It has a strong track record delivering energy efficiency and many organisations are actively working to improve their buildings. There will be an expectation that it will continue to lead by example, championing the Programme. To date, the public sector has invested significant sums in energy efficiency, including £38 million of loan support for 685 energy efficiency projects through SALIX finance.

In 2016 we also launched the NDEE Framework. This framework has been designed to support Public and Third Sector organisations procure energy efficiency retrofit work. To date, 12 projects have procured through the Framework, with capital investment of around £15 million.

Throughout 2018 and 2019, we will be working with the public sector, via their duty to report under the Climate Change Act and the development of Local Heat & Energy Efficiency Strategies, to develop an accurate baseline of public sector buildings, identify how much improvement is needed to achieve the long term standard, the timescales involved and what support would be needed.

Next Steps – Non-Domestic
The Programme consultation seeking views on proposals to move to a ‘benchmarking; approach – May - July 2018
Commission research to determine appropriate benchmarks for initial and further regulations – 2018
Convene an industry working group to review research and proposals for amended regulations – late 2018
Consultation on amended non-domestic regulations – 2019
Publish amended regulations and assessment tools for non-domestic buildings including new benchmarks – 2020
New regulations come into force – 2021

Case Study

Opportunity

Working with the Scottish Funding Council ( SFC), Edinburgh College, Borders College, Newbattle Abbey College, and West Lothian College were successful in attaining Scottish Government 2017 Capital Stimulus Programme funding to support a large-scale Colleges Energy Efficiency Pathfinder ( CEEP) project. The aim of the project was to provide significant energy and carbon emissions savings across the suite of Colleges, with the challenge of a relatively short project programme.

Solution

To support, develop and deliver the CEEP project, SFC and the Colleges identified Scottish Government’s Non-Domestic Energy Efficiency Framework as the ideal procurement route; delivering Energy Performance Contracts which are underpinned by Measurement and Verification ( M&V) principles to guarantee savings.

Outcome

Using the Framework, and in collaboration with NDEEF Project Support Unit run by Mott MacDonald, the Colleges were able to:

• Develop project requirements in to appropriate tender documentation;
• Run a mini-competition to select a preferred Contractor;
• Review and agree the Contractor’s detailed design solutions; and
• Ultimately, implement a range of energy savings measures throughout their estates within

an 11-month period following Outline Business Case approval, at a total project cost of £3.7m. The energy saving measures in the project include LED lighting, Combined Heat and Power plant, high efficiency heating system replacements, building fabric upgrades, building management system and controls upgrades and variable speed drive installation. Guaranteed annual energy cost savings exceed £0.3m and annual carbon savings of around 1.5 ktCO2e are anticipated.

Initial assessments show significant reductions in energy bills across each of the Colleges. Wider project benefits have also been realised including significantly improved teaching and working environments, as well as learning opportunities for students around energy efficiency technologies and general construction related activities.

Energy Efficient Scotland non-domestic assessment

Current regulations introduced a requirement for owners to assess and improve buildings that the regulations applied to. The regulations also established a section 63 Assessment, as well as the new roles and tools needed to help building owners to assess and improve their buildings.

The new role of ‘Section 63 Advisor’ was created. The Advisor, who is also a non-domestic EPC Assessor, uses approved software to calculate the improvement targets for a building. Then, in discussion with the building owner, they agree a package of improvement measures to meet the targets. This is recorded on an ‘Action Plan’ which is lodged to the Scottish Energy Performance Certificate Register ( SEPCR) ^[43] . Under the current regulations, the building owner may choose either to improve their building or to defer improvement by the reporting of annual energy use through a ‘Display Energy Certificate ( DEC)’ lodged to the SEPCR ^[44] . A separate DEC Assessor role, already established elsewhere in the UK, was introduced in Scotland.

We will be reviewing the current assessment process to identify where change is needed to support further regulation. This will include:

• how to report on building energy performance clearly and easily
• the option of a new rating system
• how we can better use the information we have on energy performance to support building owners.

In doing this work we want to ensure that the assessment allows building owners to better understand the energy performance of their building, how it can be improved and how the building compares to a typical or very efficient example of the same type.

We will start with the review of responses to the consultation issued alongside this Routemap,
as part of the Energy Efficient Scotland Assessment Short Life Working Group set out on pages 41 and 42.

Energy Efficient Scotland for industrial users of energy

The Programme is focused on the energy efficiency of buildings, on energy used for
heating, cooling and lighting. However, many

industrial businesses use significant amounts of energy for productive processes. We believe that our initiatives should be streamlined and are committing to aligning, where possible, advice and support to invest in energy efficiency with wider advice and support to reduce energy used for productive processes.

Our Climate Change Plan commits us to improve the evidence base of the industrial sector to allow more effective monitoring. Following our work to improve baseline data on non-domestic buildings, we will do further work to identify the amounts of energy consumed and carbon emitted by industrial processes. This information will support industry to be more productive and decarbonise, and should also be of use to benchmark the performance of industrial operations.

We have committed to work in collaboration with representatives of energy intensive industries, in line with our Energy Strategy, to increase the focus on providing incentives for industrial operations to become more energy efficient or to decarbonise, and to align support with the Programme, taking account of the more bespoke needs of industry.

A discussion paper will be produced during 2018 setting out what financial or other support is needed for industry to invest in decarbonisation measures, identifying gaps, examining opportunities for investment through mechanisms such as competitive calls, loan guarantees or other financial instruments and building on existing activity such as that within our Manufacturing Action Plan for Scotland ( MAP) ^[45] .

Next Steps
Aim to gain more clarity on the amounts of energy consumed, and carbon emitted, by industrial processes as compared to industrial
premises
Produce a discussion paper during 2018 that will set out what financial or other support is needed for industry to invest in
decarbonisation measures