Energy Efficient Scotland: strategic environmental assessment

4 Background to Local Heat & Energy Efficiency Strategies and a new approach to district heating

4.1 Background - delivering in partnership with local government

4.1.1 The Programme will be a strategic partnership with local government. Throughout its development we have consulted and discussed the design with our partners in COSLA and across local authorities, so that we can, jointly, build upon the successful components of existing programmes. From the start in our initial pre-consultation discussions with stakeholders, they identified the importance of strategic planning for the Programme at local and national levels across the 20 years of the programme.

4.1.2 Given the need for this strategic planning to take place from the outset of the programme, we have already consulted in detail twice during 2017-18 on proposals for Local Heat & Energy Efficiency Strategies (link). We propose that a LHESS would be the foundation on which the Programme is delivered over the twenty year cycle of the programme. Their purpose would be to :

• provide the evidence base to guide the Programme, locally and nationally over its 20 years. Each local authority would assess its building stock, and identify the potential for improvement of their energy performance and heat supply in order to meet long term Programme standards. This would allow it to set objectives to deliver this improvement, and the scale of the investment needed to meet this. Looking at all of the LHEES together across Scotland, will give a comprehensive picture of the building stock, and levels of improvement needed for the whole of the Programme;
• act as the guiding framework for developing and funding of future investment strategies. The strategic analysis that each local authority undertakes in preparing its LHEES would help it to prioritise and cost local delivery programmes. These would be submitted to the Scottish Government for approval and funding. The LHEES analysis will also help the Scottish Government to design and support national investment programmes (where needed) that can complement local authority activities;
• provide an investment prospectus for developers and the supply chain in the energy efficiency and heat sectors. The data underpinning each LHEES, and the objectives that they set, would provide valuable market information for investors (from both the private and public sectors), on potential new investment opportunities. The prioritisation and costing of local delivery programmes and national investment programmes would help to give investors and the supply chain certainty to help them plan for long term delivery across the 20 years of the programme.

4.1.3 Given that we envisage that LHEES would be central to informing and shaping the overall delivery of the Programme, we are proposing that there should be a statutory duty on local authorities to prepare and deliver them. We recognise that there are resource implications for this and that additional support may be required.

4.1.4 We have therefore consulted twice during 2017 and 2018 on the purpose, scope, and content of LHEES, and on the powers and resources needed to deliver them. In parallel, we have been working with COSLA and with 12 local authorities to pilot the preparation of LHEES. This is allowing us to understand the processes of data gathering, objective-setting, and design and prioritisation of local delivery programmes. The pilots are testing different methodologies and providing evidence on the resources needed to prepare LHEES.

4.1.5 We are now committing to providing support to all remaining local authorities in Scotland over the next two years, to pilot development of LHEES in their areas as part of the Programme Transition Programme. During 2018 we will also establish a working group with COSLA and representative local authorities to develop and agree guidance and supporting materials for LHEES, in preparation for roll-out of the Programme from 2020, and in advance of any proposed statutory duty.

4.1.6 We are considering the evidence from the second consultation alongside the ongoing findings from the pilots. Following conclusion of the consultation accompanying the Routemap, we will consider the overall need for legislation, in the light of responses to this and to the earlier LHEES and district heating consultation, before setting out our final position.

4.2 Background information on the Programme goals for regulating District Heating

4.2.1 In parallel to consulting on Local Heat & Energy Efficiency Strategies, we have consulted twice during 2017 and 2018 on the potential for regulation of district heating. We consulted on the creation of a regulatory framework that would provide confidence for investors and would ensure protection for district heating consumers. We also proposed that the public sector could take a leading role in the development of district heating where LHEES identified it was appropriate to do so. Further development of district heating could play an important role in helping local authorities meet their objectives set out in their LHEES for the Programme.

4.2.2 We are considering the evidence from this consultation. Following conclusion of the consultation accompanying the Routemap, we will consider the overall need for legislation, in the light of responses to this and to the earlier LHEES and district heating consultation, before setting out our final position.