Energy Efficient Scotland: recommendations from quality assurance short life working group

Introduction

The Policy Landscape

Energy Efficient Scotland is the Scottish Government's flagship energy efficiency programme. It brings together work to improve the energy efficiency of Scotland's buildings and has two main goals; to remove poor energy efficiency as a driver of fuel poverty and to reduce greenhouse gas emissions from Scotland's building stock.

Improving energy efficiency of buildings is a priority of the Energy Strategy [1] which outlines that the Scottish Government will take action to improve the use and management of energy in Scotland's homes, buildings, manufacturing and industrial processes. Energy Efficient Scotland is also a key delivery mechanism for the new Climate Change (Emissions Reduction Target) [2] and Fuel Poverty (Targets, Definition and Strategy) (Scotland) [3] Bills which were introduced in Parliament earlier this year. Through setting ambitious goals for fuel poverty and greenhouse gas emission reductions, the two Bills make the successful delivery of Energy Efficient Scotland key to achieving these targets. In the context of the Energy Strategy, the Programme has a role in achieving the vision of a flourishing and competitive local and national energy sector, which will deliver secure, affordable and clean energy for Scotland's households, communities and businesses. Energy Efficient Scotland will operate across all parts of Scotland - rural, urban, small towns and islands. It builds on Scottish Government's existing successful programmes and over time will integrate and extend them so that they make an offer of support to property owners across Scotland.

The Scottish Government published the Energy Efficient Scotland Route Map in May 2018. The Route Map [4] sets out the pathway to realising the vision to make Scotland's buildings warmer, greener and more efficient.

Previous consultations on Energy Efficient Scotland [5] [6] have identified a consensus that long-term standards are essential to allow property owners to plan for the future and to provide long-term certainty for the supply chain. The Route Map therefore sets out the trajectory for all domestic buildings to reach an Energy Performance Certificate (EPC) of band C by 2040 with stretch targets for different sectors, bringing the ambition forward to 2030 in the private and social rented sectors and for households experiencing fuel poverty. Non-domestic buildings will also be assessed and improved to the extent which is technically feasible and cost-effective by 2040.

In 2017, 58% of homes were rated EPC band D or below [7] and this represents the scale of the opportunity for the supply chain in Scotland to increase the rate of installation of energy efficiency improvements between now and 2040. In addition, there are currently 200,000 non-domestic premises in Scotland, 20,000 of which are public sector buildings and many of which are likely to require some improvements to their energy performance.

Energy Efficient Scotland therefore has the potential to support substantial employment opportunities and build Scotland's supply chain. It has been estimated that the Programme will require investment of £10 billion over its lifetime and that every £100 million spent on energy efficiency improvements in 2018 will support approximately 1,200 fulltime equivalent jobs across the Scottish economy^[1].

Considering the significant economic opportunity, as well as the importance of Energy Efficient Scotland in achieving Scotland's fuel poverty and greenhouse gas emission reductions targets, establishing trust in the programme is vital to its success. In addition, robust quality assurance, consumer protection, and a skilled workforce as well as compliance and enforcement of these standards are critical. Energy Efficient Scotland provides an opportunity to build on existing provisions and create an integrated, accessible and effective quality assurance framework.

Short Life Working Group on Quality Assurance

In order to ensure that quality assurance under Energy Efficient Scotland reflects the needs and views of the Scottish supply chain, Scottish Ministers agreed to convene a Short Life Working Group (SLWG) to focus on the quality, skills, supply chain and consumer protection requirements of the Programme. This Group included representatives from across industry, consumer organisations and enterprise and skills agencies. A full list of member organisations as well as the Group's remit can be found in Annex A of this report. The role of the Scottish Government in the Group was to facilitate the discussions by providing administrative and secretariat support.

The SLWG worked to put forward the recommendations set out in this report to ensure that a comprehensive quality assurance framework can be developed as part of Energy Efficient Scotland, that consumer protection is at the core of the framework, and that Scotland has a competent, appropriately-trained supply chain to meet likely consumer demand for energy efficiency improvements. The work of the SLWG and the themes discussed were guided by the Principles set out in the Route Map and outlined below. The Group's discussions were principally focussed on the self-funding market (householders not in receipt of any public grant support) and Local Authority-led delivery of energy efficiency improvements in domestic and smaller non-domestic properties i.e. those out of scope of the Non Domestic Energy Efficiency (NDEE) framework developed by Scottish Government^[2].

In developing these recommendations, the Group considered current developments around the Each Home Counts review and the development of new retrofit standards^[3].We suggest that Scottish Government continue to monitor its progress to ensure there is sight of this in future policy development and that Scotland's supply chains can benefit from energy efficiency initiatives elsewhere in the UK.

We also suggest that the recommendations are re-visited once we have greater clarity on the delivery of the Programme. This will allow for a more accurate determination of the cost of their implementation and how they could be applied in practice. In the meantime, development will continue to be built on industry best practice and existing processes to minimise costs for both the consumer and supplier and will be carried out in conjunction with Scottish Procurement and Commercial Directorate and other partners to ensure the final requirements are proportionate, fair and non-exclusionary.

The SLWG met for the first time in January 2018 and held five meetings covering the following themes:

• Quality – identify how we can ensure high standards are consistently met across the lifetime of the Programme;

• Skills and Capacity – make sure that Energy Efficient Scotland drives improvements in the skillset of the industry and that there is sufficient capacity in the supply chain to meet a potential increase in consumer demand;

• Procurement –identify any remaining barriers still faced by small and medium enterprises (SMEs) and micro-businesses in public sector procurement and how these could be overcome;

• Non-domestic buildings - understand the opportunities for the supply chain in this sector and identify the skills needs;

• Consumer protection – ensure that the needs of consumers are considered at every stage of the Programme development and the delivery of the eventual customer journey.

In considering the specific needs of the supply chain in Scotland, the SLWG also discussed how:

• to provide clarity on the quality assurance and consumer standards expected from supply chain participants as part of the Programme delivery framework;

• to keep the supply chain informed of the work and training opportunities available;

• to assess and address any barriers that suppliers might face in participating in the Programme;

• we can best promote the opportunities available to small and medium enterprises (SMEs) and micro-businesses throughout Scotland and help ensure that they can benefit from the significant economic investment presented by the Programme;

• to promote skills and training opportunities for the supply chain;

• we can best help the industry overcome inefficiencies and keep their costs low, making participation in the Programme financially viable while maintaining a high standard of quality;

• to be inclusive of industry and support them through the Programme transition period and beyond.

Next steps

This report is the culmination of the SLWG's work over the last 12 months and includes 21 recommendations on the themes and topics considered. In addition, the report includes information on progress to date as well as suggestion of how the recommendations and actions could be monitored and evaluated.

As suggested throughout, there is a need now to engage with wider industry on these recommendations, the projects that are being taken forward as a result and the wider plans for Energy Efficient Scotland to both raise awareness and to seek their views on this proposed direction of travel. There will also be a need to re-visit the recommendations once there is greater clarity on the delivery of the programme and the offer that will be made to its recipients.