Heat in buildings monitoring and evaluation Framework

3. Enablers

3.1 Enabler: green heat sector - workers and skills pipeline

Proposed indicator: number of people in training to achieve relevant qualifications through apprenticeships, further education and higher education – via Modern and Graduate Apprenticeships and enrolled on Further and Higher Education courses

Data source - numbers training in Modern and Graduate Apprenticeships: Skills Development Scotland

Data source - numbers enrolled on Further and Higher Education courses: Scottish Funding Council

Unit: number of people

Description:

• Parts of the existing workforce will need to retrain and reskill to support the required growth in the green heat and energy efficiency sector, leading to a strong pipeline of talent with capacity and competency fit for current and future industry needs.
• We therefore aim to track the number of heat pump and energy efficiency installers who are entering the profession. This will include both new entrants to the sector and those currently retraining in the sector.
• We do not currently have accurate data on this and will continue to explore options to better measure these indicators. In the meantime, data on numbers training in Modern and Graduate Apprenticeships are available from Skills Development Scotland and data on numbers enrolled on Further and Higher Education courses are available from Scottish Funding Council. Due to some apprenticeships being carried out at colleges and universities there may be duplication in the data. These sources may give an indication of the scale of the skills pipeline for the sector, however since educational groupings can be quite broad, there are data limitations.
• It will also be important to understand the demographic split of the skills pipeline, such as by sex, age and geography, to ensure a fair access to skills and to identify any areas of under-representation.

3.2 Enabler: public engagement

Proposed indicator: public awareness and understanding of the need for the transition from fossil fuel heating to clean heat alternatives, of the changes that individuals and businesses need to make, and how to access support.

Data sources: Scottish Household Survey (SHS), Scottish Government Climate Change Public Engagement Strategy public polling^[18]

Unit: to be confirmed

Proposed indicator: public participation in the heat transition - number of opportunities available for people to engage in heat transition-related public engagement activities in Scotland (for example public consultations and related engagement events, and citizens' panels)

Data source: no data source currently

Unit: to be confirmed

Proposed indicator: public willingness and intention to undertake energy efficiency improvement measures and install clean heating systems

Data sources: SHS, Scottish Government Climate Change Public Engagement Strategy public polling

Unit: to be confirmed

Description:

• We know from research we commissioned in 2020 that there is a lack of public understanding about the link between fossil fuel heating and climate change. We are also aware that certain groups, such as those in fuel poverty and more critically extreme fuel poverty, are often seeking immediate and direct emergency crisis intervention in the first instance, rather than longer-term, sustainable support. We therefore recognise the need to increase public understanding and awareness of the changes required, and the solutions and support available to different groups for the heat transition.
• We plan to track people's awareness and understanding of the need for the transition, of the clean heating system alternatives available, and of the role of improved energy efficiency in reducing emissions from buildings. We also want to be able to measure people's intent to make the necessary changes, as well as their awareness of the support available to them.
• We will use data from the SHS to measure changes in people's awareness of clean heat technology and the rates at which people are installing clean heating systems.
• The Climate Change Public Engagement survey will provide insights into the extent to which people's awareness of and attitudes towards the heat transition are changing over time. To support this, we are currently developing questions specific to the heat transition to add to the existing survey. The next survey will run in spring 2024, and again in 2026.
• One limitation of these data sources is that they mainly poll domestic owner-occupiers. Therefore, we will also explore ways to poll other groups, such as private sector landlords and non-domestic audiences.
• We will also continue to explore how we measure public participation in the heat transition. While we do not currently have a data source for this indicator, we are planning to undertake a stakeholder mapping exercise to identify and understand who is delivering engagement on heat decarbonisation to the public, how, and who the key audiences are.

3.3 Enabler: access to funding and finance

Proposed indicator: number of privately available financing products

Data source: Green Finance Institute – UK Green Mortgage Products^[19]

Unit: number of products

Description:

• We estimate that the cost of the heat transition is in the region of £33 billion. The Scottish Government will continue to help people to meet the costs of these changes, especially those who need support the most.
• However, we also need to see a huge scale-up of private finance offerings that can support individuals and organisations to cover the upfront cost of installing clean heating systems and energy efficiency measures.
• These include green mortgages or additional secured loans, as well as more innovative financial product offerings for the UK market – e.g. property linked finance, where the financing is tied to the building and not an individual, and equity release products which allow people who own their property to release cash for green retrofit by selling a stake in their property. Choices will be required between the level of private finance - individual or institutional – relative to the public funding levels.
• We will monitor this indicator by tracking the number of available financing products on the market using the Green Finance Institute's UK Green Mortgage Products database.

Proposed indicator: level of private financing that public funding leverages

Data source: data fromthe Scottish Government's heat networks, social housing and public sector delivery schemes

Unit: ratio

Description:

• Blended finance mechanisms, combining funding from different private and public sources, will be an important part of the overall finance structures required to achieve our goal.
• We will therefore track the level of private finance leveraged as a ratio of public funding, using data from the Scottish Government's heat networks, social housing and public sector delivery schemes. We will also continue to explore other ways to monitor the accessibility of finance to fund green heat and energy efficiency measures across Scotland.

3.4 Enabler: matters reserved to the UK Government

Proposed indicator: UK Government policy position: gas and electricity prices

Data sources: annual average domestic energy prices, annual average non-domestic energy prices, and a qualitative update from officials

Unit: ratio between domestic gas and electricity prices and a qualitative update

Proposed indicator: UK Government policy position: network planning and investment

Data source: qualitative update from officials

Unit: N/A

Proposed indicator: UK Government policy position: the future of the gas grid

Data source: qualitative update from officials

Unit: N/A

Proposed indicator: the percentage of UK heat pump installations which take place within Scotland as a result of the Clean Heat Market Mechanism

Data source: no data source currently

Unit: per cent

Description:

• The UK Government has committed to making significant policy decisions in reserved areas which could influence our progress in decarbonising heat in buildings.
• We plan to track indicators related to the status of some of these key reserved policy areas that we believe have most potential to impact the Heat in Buildings programme:
  • The ratio between electricity and gas prices: to meet our climate targets, we will need to see all homes and businesses currently heated by fossil fuel boilers convert to clean heating by 2045. The higher unit cost of electricity as compared to gas can make moving from a gas boiler to a clean heating system, such as a heat pump, more expensive to run. This is despite the efficiency of a heat pump (approximately three times more efficient than a gas boiler) mitigating some of the increase in running costs. To address this difference in energy prices, the UK Government has committed to making progress by the end of 2024 in 'rebalancing' the price of gas and electricity by moving policy costs away from electricity and onto fossil fuels when current high gas prices fall. Any rebalancing must take into account the potential impact on fuel poor households or those at risk of fuel poverty by ensuring that appropriate support is available.
  • Wholesale electricity prices: through a Review of Electricity Market Arrangements (REMA), the UK Government is considering reforms to ensure the wholesale electricity market can deliver a decarbonised electricity system by 2035, in a way that supports affordability and security of supply.This includes whether or not to move away from a single national price to Locational Marginal Pricing (LMP).In theory, LMP could lower electricity costs for Scotland's consumers and end-users but increase costs for those investing in renewables in Scotland. We are developing our position on what 'good' electricity market arrangements look like for Scotland and will continue to seek to influence UK Government proposals.
  • Policies on network planning and investment in the electricity grid: we plan to qualitatively monitor UK Government policies on network planning and grid investment, the decisions for which are mostly reserved to the UK Government under the Electricity Act (1989). The Scottish Government has general responsibility for determining applications relating to transmission infrastructure (such as overhead lines) under Sections 36 and 37 of the same Act, which we will look at in conjunction with wider GB decision-making. Investment will be critical to enhancing the electricity network to meet increased demand for electric heating (and transport) in the future, without which the network itself may leave us with poor energy security, poor resilience and the grid itself becoming a barrier to achieving net zero.
  • Policies on the future of the gas grid: The UK Government plans to make a decision on the future role of the gas network in 2026, including on the role hydrogen may play. UK Ministers have recently indicated that heat pumps will remain the main solution for decarbonising heat in the UK, and our Hydrogen Action Plan^[20] likewise expects only a limited role for hydrogen for domestic heating. Nevertheless, the decision on the future of the gas grid is reserved and will have a significant impact on the ability of the Scottish Government to meet its emissions reduction targets for heat in buildings.
  • Product Standards: The UK Government is responsible for setting product standards, in particular through the EcoDesign regulations, and also through its proposed Clean Heat Market Mechanism (CHMM), legislated through the UK's Energy Act 2023. Through the CHMM, the UK Government hopes to reduce the upfront installation and running costs of heat pumps, and to support an expansion of heat pump manufacturing within the UK. The CHMM will place an obligation on the manufacturers of heating appliances to meet targets for the proportion of low carbon heat pumps they sell each year, relative to fossil fuel boilers. These targets will steadily increase year-on-year, providing firms with the certainty to invest in building the heat pump market. The UK Government expects to set targets for qualifying heat pump installations, totalling around 60,000 in 2024-25 and around 90,000 in 2025-26. Targets for future years could be set to correspond to deployment of 150,000 heat pumps in 2026-27, 250,000 in 2027-28 and 400,000 in 2028-29. We plan to work with the UK Government to track the percentage of heat pump installations from across the UK which take place within Scotland as a result of the CHMM, using powers requiring the UK Government to engage with the Scottish Ministers within the UK Energy Bill, in the design and operation of low carbon heat schemes such as the CHMM.

3.5 Enabler: heat infrastructure and planning

Proposed indicator: number of properties covered by a designated heat network zone:

• domestic
• non-domestic

Data source: no data source currently

Unit: number of properties

Description:

• It is critical that we encourage key infrastructure for the heat transition to be developed, and that it is supported by effective planning. This is especially important for developing new heat networks, which tend to have longer lead-in times, and to ensure that households and businesses are aware of the options available to them to decarbonise their properties.
• Local government has a vital role in setting out the long-term plan for decarbonising heat in buildings and improving their energy efficiency across an entire local authority area, via their LHEES and Delivery Plans, which they are required to publish by the end of 2023. Following on from LHEES, local authorities will need to identify areas likely to be particularly suitable for heat networks – a requirement of the Heat Networks (Scotland) Act 2021, and to then designate heat network zones that they deem suitable.
• We will explore ways to track the number of properties covered by a designated heat network zone, as local authorities begin to formally designate these zones, including working with other stakeholders, such as the UK Government and Ofgem.