New Build Heat Standard: consultation - part two analysis

Chapter Three: Approach to Conversions

An analysis of responses to four questions about conversions is presented in this chapter. Conversions are defined as the changes to the occupation or use of a building that cause Building Regulations to apply. To not overburden minor conversions, the Scottish Government proposes the NBHS regarding ZDEH systems apply only to conversions where heating is introduced to a building for the first time, or where an existing heat generator is located in the part of the building subject to conversion.

Q5. Do you agree with the proposed approach to conversions as set out in section 2.3?

Just over half of those answering Q5 agreed with the approach to conversions – 54% of all respondents agreed, including 52% of individuals and 55% of organisations.

Agreement varied considerably across organisations, however. Four fifths (80%) of those in the wider construction sector agreed, followed by 73% of Local Authorities and 67% of manufacturers and suppliers in the energy sector. Two fifths (40%) of energy sector trade bodies agreed. Only one fifth (21%) of property developers / builders agreed with the proposals; the majority of this group (64%) were unsure, rather than disagreeing (14%).

Q6. Do you envisage any unintended consequences as a result of the proposed approach to conversions as set out in section 2.3? Please provide reasons for your answer.

Among those answering Q6, three fifths (59%) envisaged unintended consequences as a result of the proposed approach to conversions, while 41% did not. Concern was higher among individuals (67%) than organisations (56%).

However, views among organisations were mixed and slightly conflicting. Almost all Local Authorities (91%) indicated there could be unintended consequences. While all organisations in the wider construction sector felt there could be challenges, only 20% of property developers / builders felt this could the case. Similarly, while 67% of trade bodies in the energy sector anticipated issues, only 33% of manufacturers and suppliers in the energy sector were concerned.

Cost implications

Across the 53 open responses to Q6, the most common theme was a belief that the proposed approach to conversions could have negative economic consequences for individuals and communities. A few respondents noted that while consumers might be willing to accept the cost of replacing a boiler with a new ZDEH system, there will be instances that call for a complete retrofit of the existing heating infrastructure in a building being converted which could be financially burdensome. This was also referenced in the consultation workshops.

Some respondents noted that the regulations could reduce the number of buildings being converted due to increased costs as noted in responses to Q2, which respondents believed could affect community improvement and available housing. To mitigate the increased costs of retrofitting heating systems and properly insulating building fabrication, a small number of respondents recommended grant programmes or financial incentives.

"Mothballing of potential conversion projects that would bring much needed affordable and social homes online for social landlords and local authorities… Retrofitting the fabric of the building could be cost prohibitive, depending on the construction materials used in the building, as well as any conservation area requirements for listed buildings." - Representative of Scottish Local Authorities

Several respondents noted that poorly fabricated houses may require a complete renovation to elevate the home to the standard of energy efficiency needed for ZDEH systems to operate effectively. Historic Environment Scotland also noted it would require a skilled and knowledgeable workforce to implement the approach correctly and safely. Participants in the Island Communities workshop and the Consumer and Equality workshop noted concerns about the fabrication of older homes, particularly stone built, and the cost associated with renovation exacerbated by the complicated supply chain in island communities.

"However there is a potential when converting buildings … that the age of the building may not allow for the air-tightness required for systems such as heat-pumps. This could make the conversion of buildings impractical or too costly to run afterwards. In rural areas this could prevent buildings being kept in usage, again increasing depopulation." – Individual

A few respondents noted that increased costs may force smaller projects to complete the work without oversight and the correct permissions, with one anonymous local authority suggesting the need for enforcement frameworks to ensure this does not occur.

Suggested changes

Some respondents recommended changes to the NBHS that they believed would limit unintended consequences. These included the following:

• To reconsider applying the regulation to areas of the building where a heat generator is located due to conversions often being relatively minor and occurring in internal garages and attic spaces where boilers may be located.
• Providing clearer guidance or assessments for determining when ZDEH systems are needed. For instance, the Heat Pump Association suggested it should be based on a mandatory increase in EPC rating and participants in the Island Communities workshop questioned whether a minimum change in floor area should be required. The Heat Pump Association suggested a minimum 25% of floor area increase could be clear guidance to determine if an existing DEH system will need to be replaced. In response to Q7, Fife Council suggested that if the conversion "is less than 50% of the overall building area served by a DEH system then the heat generator can be retained"
• Exemption of buildings with biomass heating systems.

Clarification

While not a direct response to the question, a few respondents called for various clarifications. Areas needing greater clarity included: whether heating systems are defined as both the heat generator and the distribution system, as one respondent highlighted it would be difficult to replace a whole distribution system in historic homes in a cost-effective manner; whether conversions would also include provisions on area (square metres) of renovation; and whether building warrant applications will trigger a need to comply with NBHS.

A small number noted that the regulation as proposed could be misinterpreted or create misunderstanding. While most respondents did not elaborate on how the NBHS could be misinterpreted, one local authority worried without clear definitions, regulations may be implemented differently across the country.

Less commonly mentioned themes

A small number of respondents mentioned the following unintended consequences and considerations:

• The impact of the regulation on different building types, such as multi-occupancy buildings or historic buildings, where it may not be easy to change the heating system.
• The possibility that NBHS will affect an applicant's ability to secure planning permission for buildings with historic significance.
• A negative environmental impact as the NBHS drives builders toward new builds instead of undertaking conversion projects, increasing carbon emissions.
• Consumer confusion if they do not understand the new ZDEH systems as discussed more in Chapter One.
• Impacts on the construction sector if conversions become too costly.

Q7. What criteria would you use to define the replacement of a direct emissions heating (DEH) system as being 'reasonably practicable'?

Q8. What criteria would you use to define it as being 'not reasonably practicable'?

Respondents provided very similar answers to Q7 and Q8, and in most cases their understanding of what was reasonably practicable was often the inverse of what was not reasonably practicable. For this reason, these questions have been analysed together and the themes evident are presented below.

Economic Feasibility

Of the 76 respondents who provided open answers to Q7 and the 71 who provided open answers to Q8, the most common way to define a project as reasonably practicable or not was economic feasibility and cost effectiveness.

A reasonably practicable replacement of a DEH system included conversion projects where the cost was minimal or proportionate to the work required, or if the costs were justified in the longer term. This included: buildings that meet high efficiency standards, with Passivhaus standards^[11] named as an example by a few respondents; where the technology could easily be adapted without much expense; and where the building fabrication can be altered without much expense.

A small number of respondents suggested a cost benefit analysis of the cost of installation compared to the potential energy savings may help identify situations where the costs are too high, or if the risks could include loss of housing or abandonment of building or projects. Other comparative measures mentioned by a few respondents included cost of the adaptation of heat systems in relation to the value of the property, the financial burden on individuals or companies involved, and the long-term utility savings.

"Being reasonably practicable would generally be seen as something that is not cost prohibitive, perhaps measured against a percentage of the overall project costs. A full cost benefit analysis in this respect should be undertaken." - Local Authority Building Standards Scotland

While many respondents mentioned high costs as a reason why moving to a ZDEH system may not be reasonably practicable, some others recommended considerations for the regulations, such as:

• Create a scale to ensure the emissions benefit outweighs the financial burden, i.e. a conversion would need to produce over a certain amount of greenhouse gas in order to be subject to new regulations.
• Create a limit in relation to area/cost, e.g. if the conversion is less than a certain percentage of an overall building already served by a working DEH system then a replacement ZDEH system is not required.

As discussed in greater depth in the analysis of Q2, some respondents also noted that an outcome where a household's energy costs increase or become unaffordable should be considered not reasonably practicable.

A small number noted that if it was deemed not reasonably practicable to transition to a ZDEH system at the time of conversion, all aspects of the heat system in the conversion must be ZDEH compatible to ensure a smooth transition in the future.

"Is there a potential solution to safeguard future ZDEH for conversions where these are justified as not being reasonably practical to deliver ZDEH at the time? As noted above, technologies and/or costs may change as time progresses and therefore future opportunities to change heat systems to ZDEH may fall within the 'reasonably practical' category at the point of heating upgrade." – Perth and Kinross Council

The importance of funding opportunities to support projects that are not financially viable was highlighted by a few respondents.

Grid capacity concerns

Many respondents noted that a replacement being reasonably practicable was dependent on the availability and capacity of electrical grid systems. Some expressed a view that all conversions taking place in urban and suburban locations should be considered reasonably practicable. Conversely, several others noted that rural areas should be considered not reasonably practicable if the grid in those areas could not support the transition of homes to ZDEH systems.

"We believe the default position should be that replacement of direct emission heating is reasonably practicable in all circumstances. We believe that only in circumstances where a new property is in a rural area where the connection of electricity (off grid) is unfeasible, should other heating options be considered." – Scottish Power

Supply chain and workforce concerns

Several respondents reiterated the challenge of supply chain shortages and how this could make replacing DEH systems with ZDEH systems in conversions not reasonably practicable. This applied to both manufacturers and the supply of the materials needed to upgrade buildings and infrastructure, as well as the skilled workforce necessary to meet development demands and to maintain existing systems. One anonymous individual suggested implementing a staged rollout across Scotland to ensure supply chain function and skilled worker availability.

Clarity and transparency questions

Several respondents questioned whether a transition to a ZDEH system in a conversion could be defined as practicable when there are still several unknown factors. These respondents requested greater transparency about the implementation plan for NBHS, such as information about infrastructure upgrades, the plan to upskill the workforce, manufacturing plans, engagement with energy providers, and the impact of other recent regulatory changes such as the Building (Scotland) Amendment Regulations 2022.

Less commonly mentioned themes

Other themes evident in response to Q7 and Q8 included:

• Some had concerns that certain types of buildings may not be reasonably practicable to transition, such as multiple occupancy or listed, historic buildings.
• General concerns about the technological viability of ZDEH systems were mentioned by some. The Royal Institution of Chartered Surveyors noted that technical feasibility is based on energy demand of the building, which must be low, and the suitability of the heating delivery units.
• Some respondents noted that the overall disturbance to the building should be considered in the NBHS. For example, Fife Council noted that it could be considered reasonably practicable to transition to a ZDEH system if the pipework systems within the building are sized and arranged to facilitate the necessary connection.
• According to some respondents, there will never be a case where it is not reasonably practicable for a transition from DEH to ZDEH if the conversion met the conditions stated in the consultation paper.
• A few respondents recommended that the NBHS considers the age of the heating systems that may need replaced in a conversion. For example, one argued that if a boiler is old enough to need replaced then it should be considered reasonably practicable to mandate transition to a ZDEH system. However, a relatively new boiler should be considered not reasonably practicable to replace.
• Flexibility and deciding what was reasonably practicable on a case-by-case basis was requested by a few respondents.
• Kingspan Insulation Ltd. suggested that any definition of reasonably or not reasonably practicable should be reviewed over time as technology will evolve.
• When asked about non-domestic new built buildings at Q11, a few commented that applying the same regulations to existing buildings would incur a very high cost for the building fabric upgrades needed to transition heating systems and to make the existing space energy efficient. This was specifically noted in relation to historic and listed buildings and buildings with stone extensions or conversion. One respondent noted that capital funding was not currently available to complete upgrades to the fabric of buildings.