Local Heat and Energy Efficiency Strategy pilots: phase 3 - evaluation

1. Introduction

Local Heat and Energy Efficiency Strategies have now been piloted by all 32 local authorities with funding from The Scottish Government. This report presents the results of the evaluation of the third and final phase of these pilots, which involved nine local authorities and took place between November 2019 and April 2021^[1].

Interviews were conducted with 15 stakeholders, including: officers of each of the nine local authorities, consultants supporting the pilots' delivery, Scottish Government officials and organisations involved with LHEES, such as Zero Waste Scotland and The Energy Saving Trust.

This report outlines key findings and recommendations from these interviews. The report also details the characteristics of each of the pilots as well as the resulting recommendations provided by the delivery consultants.

1.1. Local Heat and Energy Efficiency Strategies

In June 2015, the Scottish Government designated energy efficiency as a National Infrastructure Priority, and in 2016, Ministers made a commitment of £0.5 billion over the next four years to support energy efficiency and heat decarbonisation in both domestic and non-domestic buildings.

Energy Efficient Scotland was launched in 2018 with a dual focus: to remove poor energy efficiency as a driver for fuel poverty and to reduce greenhouse gas emissions through more efficient buildings and decarbonising Scotland's heat supply.

LHEES provide a pathway to delivering heat decarbonisation and energy efficiency, allowing local authorities to prioritise and target a range of work, such as deploying energy efficiency measures or encouraging the development of district heating or other low carbon heat sources.

The Scottish Government has worked with local authorities to pilot LHEES. The aim is to take a strategic approach to improving the energy performance of all buildings and decarbonising heat for the whole local authority area. The intention was that (after piloting on a smaller scale) every local authority would develop LHEES to be implemented over 15-20 years.

Following two consultations in 2017^[2], the Scottish Government proposed the following six broad stages of development for LHEES^[3]:

• Stage 1: Assessment of existing local and national strategies and data availability.
• Stage 2: Assessment of existing building stock's energy performance and heat supply.
• Stage 3: Setting of aggregate targets for heat demand reduction and decarbonisation of buildings.
• Stage 4: Socio-economic assessment of energy efficiency measures and potential heat decarbonisation solutions.
• Stage 5: Selection of areas / prioritisation of opportunities for heat demand reduction and decarbonisation of buildings leading to the designation of zones.
• Stage 6: Costing & phasing of delivery programmes.

1.2. LHEES pilot programme

There have been three phases of the LHEES pilot programme:

• Twelve local authorities participated in phase 1.
• Eleven local authorities participated in phase 2.
• Nine local authorities participated in phase 3.

Evaluations of phases 1 and 2 have already been published^{[4] [5] [6]}.

Phase 1

The findings from the Phase 1 LHEES pilots were used to inform the subsequent phases. All Phase 1 pilots targeted energy efficiency improvement and heat decarbonisation and aimed to use a defined 'local area' to:

• Test tools and methods
• Identify sources of data and gaps
• Provide resources, capabilities and access to contractors
• Enhance opportunities for working across local authorities.

There was substantial variation between local authorities in the focus of the pilots and the nature of the technical support provided. Phase 1 used a centrally procured consortium of consultancy services. Local authorities raised concerns, questioning whether they or Scottish Government oversaw the consultancy services and felt they got a poorer result than if they had directly procured their own consultancy.

Phase 2

Phase 2 LHEES pilots aimed to test and develop new methods for creating LHEES and explored taking a sectoral approach, while aims remained consistent to those from Phase 1.

Phase 2 focused on the following sectors:

• Self-funding (domestic and non-domestic buildings)
• Domestic private rented sector (PRS)
• SMEs
• Public sector buildings.

Phase 3

Phase 3 pilots continued to test and develop methods for creating an LHEES, identify data sources and data gaps, and improve understanding of the resources and capabilities needed for the development and delivery of an LHEES.

They differed from the pilots in previous phases because they were asked by Scottish Government to focus on one of the following:

• Areas with high heat demand and therefore significant opportunity for district heating.
• Areas with high proportion of buildings off the gas grid.

1.3 Report structure

This report presents the findings from our evaluation of the Phase 3 pilots:

• Section 2 briefly sets out the evaluation methodology, and there is a brief summary of each of the Phase 3 pilots in Section 3.
• Section 4 sets out the findings of the LHEES Phase 3 evaluation and compares these findings to those found in the evaluations of LHEES Phase 1 and Phase 2.
• Section 5 summarises the evaluation findings.
• Details of the organisations that contributed knowledge and views to this evaluation, a summary of each individual pilot and a glossary can be found in the annexes.