Renewable and zero emissions heating systems in affordable housing projects: evaluation

2. Introduction

2.1. This report

In November 2020, the Scottish Government appointed Locogen to complete an evaluation of renewable and zero emissions heating systems in 21 Scottish affordable housing projects. This report is the key deliverable of that study and its aims are:

• to assess the estimated, actual, and counterfactual costs of the participating projects' heating systems
• to determine the drivers behind decision making for each project
• to provide recommendations for further study in future evaluations.

To do this, Locogen contacted representatives from seven Local Authorities (Councils) and eight Registered Social Landlords (RSLs) who had recently developed one or more affordable housing projects or were currently doing so.

The scope of this study is divided into three work packages. Our methodology for each of these work packages is explained in Section 3, and an overview and characterisation of the participating projects is provided in Section 4. The remaining body of the report summarises the findings made across the three work packages.

2.2. Policy context

In response to the global climate crisis, the Scottish Government has established a commitment to reach net zero greenhouse gas emissions by 2045. In contribution to this, the Scottish Government announced incoming legislation that will mean all new homes given planning consent from 2024 must use renewable and zero-emissions heating systems. These heating systems will need to have zero direct emissions at point of use.

Changes to domestic building standards will affect many stakeholders within the new build housing sector, including private developers, Councils and RSLs. The latter two organisations are the primary recipients of funding to deliver affordable homes with the support of capital grant funding through the Scottish Government's Affordable Housing Supply Programme. The Scottish Government committed more than £3.5 billion to deliver 50,000 affordable homes over the financial years 2016-17 to 2020-21, with the undernoted grant subsidy benchmarks determining the appraisal route that a Council's or RSLs application for grant funding follows:

As Table 2 demonstrates, higher grant subsidy benchmarks are available to RSL social rent projects in rural and remote locations, where it is known and accepted that costs are generally higher due to location. An additional benchmark of £2,000 is available for Council and RSL to projects meeting the greener standard. This standard relates to the sustainability standards in Section 7 of the current Scottish Domestic Building Standards Technical Handbook and is defined as Bronze Level plus Aspect 2 of Silver Level. These sustainability standards are summarised in the following table.

For the Silver and Gold standards, Aspects 1 and 2 are most relevant to this evaluation as they relate to energy and emissions. These are defined as follows in the 2020 Domestic Building Standards Technical Handbook:

Aspect Silver level 1: Carbon dioxide emissions

All new dwellings that meet or exceed the Target Emissions Rate (TER) detailed in Section 6, Energy, of this Handbook, will automatically meet the Silver level criteria in respect of CO₂ emissions. This is due to the 21% improvement on the 2010 standards that occurred in October 2015.

Aspect Gold level 1: Carbon dioxide emissions

Under the guidance to Standard 6.1, the carbon dioxide emissions (Dwelling Emission Rate) are to be 27% lower than the Target Emission Rate set by the 2015 Standards. Where a building contains more than one dwelling (such as a block of flats or terrace of houses), the average carbon dioxide emissions for the proposed block or terrace (DER) may be compared to the average target CO₂ emissions (TER) for the 'notional block or terrace'.

Aspect Silver level 2: Energy for space heating

Maximum annual demand for useful energy for space heating should be: 40kWh/m² for houses, or 30kWh/m² for flats or maisonettes. To assess, the output from box no.99 of the SAP 2012 DER worksheet should be no more than the figures above.

Aspect Gold level 2: Energy for space heating

Maximum annual demand for useful energy for space heating should be: 30kWh/m² for houses, or 20kWh/m² for flats or maisonettes. To assess, the output from box no.99 of the SAP 2012 DER worksheet should be no more than the figures above.

To demonstrate compliance with these Aspects, the Standard Assessment Procedure (SAP) must be used. SAP is a methodology implemented by the UK Government that uses information on the building design, and climate and occupancy assumptions, to determine if the energy and environmental performance of a new home meets building standards. SAP calculations are fundamental to the design of any new home in the UK and are a strong influence on several design factors including building fabric efficiency and heating system specification.

For example, in order to meet Bronze Level plus Aspect Silver level 2, which is the requirement for the greener subsidy benchmark in the Affordable Housing Supply Programme, the building fabric efficiency (i.e. the level of insulation) would have to be improved above levels that meet the Bronze criteria in order to achieve the desired annual space heating requirement per unit floor area. This is the output from box no.99 of the SAP 2012 DER worksheet referred to in the definitions. It is important to note, given the focus of this study, that meeting this Aspect and the associated greener subsidy standard is influenced primarily by the building fabric specified and not by the chosen heating system. Conversely, Aspect 1 of Silver or Gold level would be heavily influenced by the chosen heating system and its associated emissions – however, this is not a requirement of the Affordable Housing Supply Programme's current greener subsidy benchmark.

In summary, guidance on the operation of the Affordable Housing Supply Programme is a key influence on the design decisions and costs associated with delivering affordable housing in Scotland. The lack of uniformity of the heating systems across the projects participating in the study infers that Councils and RSLs are influenced by many other factors too. The main body of this report seeks to identify, explain and analyse these other factors, to provide the Scottish Government with a greater understanding of current heating system specification in affordable housing, as well as the future challenges that may be anticipated as Scottish building regulations are adapted, to further align with decarbonisation legislation.