Heat in Buildings Strategy - achieving net zero emissions in Scotland's buildings

Annex B Summary of Scottish Government Delivery Programmes

Domestic advice and support

Supporting domestic consumers – Home Energy Scotland - Delivered by Energy Saving Trust.

Free, independent advice on energy efficiency and low and zero emission heating. Also acts as a referral scheme for the Warmer Homes Scotland scheme. Portal for accessing number of support packages including HES loan, PRS loan, cash back incentives, equity loan pilot and Warmer Homes Scotland.

The commitment to provide a free and impartial advice service was set out in the EES route map in May 2018 and has formed part of the foundations of our work on energy efficiency from the outset. Advice is provided independently and free of charge and considers all aspects of energy efficiency including energy saving, keeping warm at home, reducing energy bills, renewable energy, lowering carbon footprint and income maximisation. The advice helps those in, or at risk of falling into fuel poverty and the service acts as the referral mechanism for customers to access grants, tailored advice and practical delivery measures, such as Warmer Homes Scotland. Over the next 5 years research will help inform us of the best form of service to provide, taking account of likely increases in demand, changes in the way people access information, and reacting to changes to government grant and loan schemes to help people achieve their aims.

Home Energy Scotland Loans and Cashback

We have introduced a further incentive via the Home Energy Scotland (HES) Loan Scheme by offering owner occupiers up to 75% in cashback (capped at £7,500) towards the installation of renewable heating systems. This incentive makes the uptake of renewable heating more attractive. We also offer cashback on HES loans for energy efficiency measures, and have increased the rate of this incentive from 25% to 40%.

Equity Loan for energy efficiency and essential repairs

In January 2017, the Scottish Government launched an area-based pilot equity loan scheme to assist homeowners to carry out energy efficiency interventions and essential repairs in participating council areas. The pilot will remain open to those who qualify until March 2021. The equity loan pilot allows homeowners (including private landlords in certain circumstances) to borrow up to £40,000 from the Scottish Government for eligible works (energy efficiency measures, heat loss reduction measures and repairs) and repay when the home is sold or ownership transferred. The loan is available for properties in Council Tax bands A to C or for properties in all council tax bands where the owner is in receipt of qualifying benefits. An evaluation of this pilot is currently being undertaken and any future equity scheme will be considered in light of the realignment of Energy Efficient Scotland with the Government’s decarbonisation of heat and climate change targets to support the focus on low and zero emissions heat options moving forward.

Private Rented Sector Loan (PRS)

This Scottish Government funded loan helps landlords improve the energy efficiency of properties and meet minimum standards. The loan is administered by Home Energy Scotland (HES). It is available to registered private landlords for improvements to domestic dwellings which are listed on the Scottish Landlord Register, are not a holiday or second home, are registered with the Scottish Assessors Association as paying domestic council tax rates, are not under construction, and are currently occupied by at least one tenant or will have at least one tenant in place within 30 days of the payment of the loan. It provides loans of up to £15,000 split across works including solid wall insulation, heating systems, gas connection, some glazing, insulated doors, some roof insulation, and some loft, floor and cavity wall insulation. Funding is also available for up to two home renewable systems per property, worth up to £17,500 in total, plus an energy storage system up to a max of £6,000.

SME advice and support

Supporting SMEs – Business Energy Scotland (BES) – Delivered by Energy Saving Trust from April 2022

(Currently Energy Efficiency Business Support (EEBS) Service – Delivered by Zero Waste Scotland until March 2022)

Free advice and support package available to Scottish SMEs to help improve energy efficiency and decarbonise heating in their premises.

Substantial, free advice and support offering to Scottish SMEs to help them understand how to improve energy efficiency and decarbonise heating in their premises. The two main offers of support are an initial energy opportunities assessment which identifies where and how energy savings can be made and a comprehensive report including a potential site visit to highlight possible improvements, further advice and potential sources of funding.

SME Loan Scheme and Cashback

Once SMEs have been through the assessment, they can then apply for interest free SME loans up to a maximum of £100,000 with cashback incentives also available.

We have introduced a further incentive via the SME Loan Scheme by offering SMEs up to 75% in cashback towards the installation of renewable heating systems (capped at £10,000). This incentive makes the uptake of renewable heating more attractive to SMEs.

We also offer cashback on SME Loans for energy efficiency measures, and have increased the rate of this incentive from 15% to 30% (capped at £10,000). We will continue to explore further opportunities to incentivise our offer to SMEs and are actively considering what kind of advice, support and financial offering would help us deliver at scale to this sector of the economy.

In total SMEs can apply for a maximum of £20,000 in cashback grant funding.

Supporting communities

The Community and Renewable Energy Scheme (CARES) - Delivered by the Energy Saving Trust under the Scottish Government Local Energy Scotland Brand

Advice and funding support to community groups and other eligible organisations seeking to explore their renewable energy options.

CARES was established in 2010 as a successor to the Scottish and Community Household Renewable Initiative. Since its inception, CARES has offered funding of over £51 million and supported over 600 projects to develop, own or take a stake in local renewable energy projects across Scotland. CARES provides advice and funding support to community groups and other eligible organisations seeking to explore their renewable energy options. CARES, delivered under the Scottish Government brand of Local Energy Scotland, aims to support the delivery of Scottish Government community and locally owned energy targets and its shared ownership ambition. CARES provides support to those developing local and community renewable projects with Local Energy Scotland’s network of Development Officers providing free, expert and impartial advice to community groups and organisations throughout project development. Loan and grant funding can be accessed through development funding of up to £150,000 with support including feasibility studies, design, and consenting of new renewable or innovation projects.

Enablement grant funding of up to £25,000 can be accessed in order to fund non-capital aspects of projects. This includes start-up costs of feasibility studies, community consultations and other preparatory costs. Funding can also be accessed through frequent CARES funding calls which run throughout the year.

In the post COVID-19 green recovery period and beyond, decarbonisation will be a key driver for community led activity at a local level. Recognising this, CARES will incorporate a greater degree of flexibility and increased partnership working in offering tailored packages of advice and support to projects focusing on decarbonisation and supporting community involvement in Local Heat and Energy Efficiency Strategies (LHEES).

The current CARES contract, running for a 4 year period from April 2021 – March 2025 will have a greater focus in supporting heat decarbonisation in local communities and supporting community engagement in Local Heat and Energy Efficiency Strategies (LHEES). In giving greater focus and priority to decarbonisation, particularly heat decarbonisation, this will act as the driver for community led action.

The contract supports delivery of our 2030 2GW community and locally owned energy targets as well as our shared ownership ambition of at least half of all newly consented commercial renewable energy projects having an element of shared ownership with communities. Additional funding is also available to support some of Scotland’s most remote and rural off-grid communities to upgrade their energy systems making them more resilient and sustainable for the future,

Supporting fuel poor areas

Energy Efficient Scotland – Area Based Schemes (ABS) - Delivered via Local Authorities

Provide energy efficiency improvements to households in or at risk of fuel poverty living in their own home or a private rented property, leveraging Energy Company Obligation (ECO) finance and private investment. ABS is effective in delivering large numbers of improvements to mixed tenure, multi-occupancy properties (e.g. flats, terraces, council estates/projects).

Since 2013 the Scottish Government has invested over £373 million in our Area Based Schemes (ABS), providing energy efficiency and zero emissions heating measures to over 100,000 households across Scotland. Local schemes are designed and delivered by councils, in conjunction with energy companies and local delivery partners, providing improvements to households in or at risk of fuel poverty living in their own home or a private rented property. ABS projects prioritise help for ‘harder to treat properties’ requiring solid wall or complex cavity wall insulation. ABS funding also helps leverage Energy Company Obligation (ECO) finance and private investment to maximise reductions in CO₂ emissions and cost savings for households. Taking advantage of economies of scale and shared costs, ABS has proved extremely cost-effective in delivering large numbers of improvements to mixed-tenure, multi-occupancy properties (e.g. flats, terraces, council estates/projects).

Over the next five years our ABS funding will continue to target areas with higher numbers of households in or at risk of fuel poverty, prioritising those in greatest need (i.e. the least energy efficient properties). We will build upon the expertise and experience of local delivery partners in delivering projects that benefit entire communities, reflecting local needs and conditions. As well as prioritising insulation measures - fabric first - we will deliver more ‘whole house’ retrofits to fuel poor households as ABS projects. We will adopt a ‘zero carbon first’ approach in improving heating systems and ensure that households continue to benefit from warmer homes, and reduced energy costs and CO₂ emissions.

Supporting fuel poor households

Warmer Homes Scotland - Delivered by Warmworks Scotland LLP on behalf of the Scottish Government

Warmer Homes Scotland is a fuel poverty scheme which enables eligible households to receive energy efficiency and heating improvements. Primarily, it delivers heating measures including an increasing number of heat pumps.

We have invested more than £124 million in our Warmer Homes Scotland Scheme since its launch in September 2015 helping more than 20,000 households throughout Scotland. Warmer Homes Scotland is the Scottish Government’s flagship fuel poverty scheme which offers each eligible household a bespoke package of measures that takes account of both the needs of the property and the needs of the household. Through Warmer Homes Scotland we have made available low and zero emissions heating systems and new insulation measures particularly beneficial to rural and remote communities not served by the gas grid. These include: air source heat pumps, micro-wind, micro-hydro, micro-CHP (Combined Heat and Power) systems and ‘Q-Bot’ - an underfloor insulation system installed by a robot. Additional enabling measures introduced under the scheme include extraction of failed cavity wall insulation, asbestos removal and the installation of fuel storage tanks and low energy lighting. Currently, households who receive improvements through the scheme are expected to save over £300 per year on their energy bills. It also supports skills development and training opportunities in the supply chain through the Employment and Skills plan embedded into the contract. Since Warmer Homes Scotland commenced in September 2015 there has been a steady increase in the number of air source heat pumps being installed. Changes have recently been made to the scheme to further incentivise zero emissions heating measures to help meet Scotland’s climate change targets. The Warmer Homes Scotland contract is due to end in September 2022. The successor to Warmer Homes Scotland will have heat decarbonisation and energy efficiency at the heart of the offer to help fuel poor households reduce their fuel bills through the installation of energy efficiency measures and zero emissions heating options.

Public sector support

Public Sector Non-Domestic Energy Efficiency (NDEE) Framework

Energy Performance Contract Framework designed for larger public sector projects. Improvement measures are financed via savings. NDEE Support Unit supports project delivery.

The Scottish Government launched the Non-Domestic Public Sector Energy Efficiency (NDEE) Framework and Project Support Unit in March 2016.

This framework has been designed to support Public and Third Sector organisations procure Energy Efficiency retrofit work. The economies of scale and standardised approach offered by the pan-public sector framework is attractive to both the public sector and private sector offering both better solutions and better value for money. 32 projects are currently in progress or have completed using the framework across Local Authority, University, College and NHS estates.

Projects at tender stage and beyond have, to date, committed circa. £27.5 million towards energy conservation measures providing ‘guaranteed’ annual energy cost savings of circa £3.3 million, and future use of the framework will support decarbonisation of the public sector estate.

Salix

Interest free loan funding from Scottish Government is available to the public sector in Scotland through Salix Finance to improve the energy efficiency of existing buildings, with over £50 million invested since 2008.

Multi-sector support

Low Carbon Infrastructure Transition Programme

Delivered in house with support from Project Partners including Scottish Futures Trust and Zero Waste Scotland.

Provides a range of support, from expert advice to financial support, to assist the development and delivery of private, public and community low-carbon projects across the country. Includes capital support for heat networks and support for social landlords for heat decarbonisation.

Launched in 2015, the Low Carbon Infrastructure Transition Programme (LCITP) is a collaborative partnership led by the Scottish Government, working with Scottish Enterprise, Highlands and Islands Enterprise, Scottish Futures Trust and Zero Waste Scotland. The Programme aims to stimulate commercial interest and investment and maximize Scotland’s vast potential in the low carbon sector whilst contributing to the positive progress of the Scottish Government in reducing Scotland’s greenhouse gas emissions.

Since 2015, the LCITP has awarded over £58 million of grant funding to 28 low carbon demonstration projects across Scotland which encourage replications and wider uptake of innovative renewable technologies.

This intervention, which is co-funded by the European Regional Development Fund, focuses on supporting the acceleration of low carbon infrastructure projects across the public, private and community sectors to develop investment grade business cases to help projects secure public and private capital finance. The LCITP and District Heating Loan Fund together have invested around £66 million in renewable heat since 2013. The LCITP will draw to a close in 2021, with a new fund launched shortly after.

District Heating Loan Fund - Delivered by the Energy Saving Trust

Loan fund for district heating projects open to local authorities, social landlords, SMEs and ESCOs with fewer than 250 employees. Depending on loan value may require co-investment.