Local energy policy statement: consultation

Chapter 1: People

Building a future energy system that is shaped by and for the people of Scotland

Principles

• Consumers should be at the centre of local energy systems development, and early engagement is key in achieving that.

• Not everyone will want to engage with local energy projects in the same way. Those developing projects should account for these differences, allowing people and communities to be involved in different ways.

This chapter highlights that the way people interact with energy will change in the future and discusses what this might mean for individuals and communities.

1.1 A future shaped by people

The Scottish Government's vision is to build a future energy system that is shaped by and for the people of Scotland.

By people, we mean all energy consumers, individual households and businesses.

Local energy is wide-spanning, touching on many different areas and impacting on everyone – regardless of who you are or where you live.

In 2019, the Scottish Government published our Energy Consumer Action Plan^[4], which demonstrates our commitment to putting consumers' front and centre of policy and regulatory decision-making. It is important to recognise the role that Scotland's consumers will play in making a net zero emissions Scotland a reality.

It is equally important that any change happens with consumers, not to them.

Across the sector, we must act now to improve our understanding of consumers' needs and interests, take steps to protect consumers from regressive impacts, and encourage the changes in behaviour that are so critical to achieving net zero emissions.

Only through building trust and transparency can we help consumers to make the bigger changes that will be required to deliver net zero – from increasing the uptake of low emission vehicles, to improving the energy efficiency of our buildings.

Energy Consumer Action Plan

As citizens and consumers, we are expected to play an increasingly important role in shaping our future energy systems. It is for this reason that we are committed to changing the way consumer issues are viewed and tackled in Scotland. This is essential because our ability to meet our energy and climate change targets depends on Scottish consumer voices being heard loud and clear – and, crucially, being integrated into regulatory and policy decision-making at an early stage. Among our top priorities:

• We will establish an independent Energy Consumer Commission for Scotland to give Scottish consumers a more powerful voice in devolved energy policy and those areas reserved to the UK government.
• We will consult widely to encourage lively public debate that allows the people of Scotland to shape their energy future.
• We will legislate to introduce a statutory consumer duty on Scottish public authorities to place consumer interests at the heart of policy and regulatory decision-making, ensuring that consumer outcomes are reflected in the energy transition.

1.2 Future energy system

The future energy system is one that will see a continued global shift away from centralised generation and passive consumption. This will mean more choice over how people produce, consume and purchase the energy they need.

The pace and extent of the change required to meet the increasingly complex energy requirements of consumers requires action now - particularly if Scotland's ambitions to become net zero by 2045 are to be realised.

While there is still uncertainty around what a future energy system will look like, what is clear is that the way people interact with the energy system will be more complex than the current arrangements. Chapter 4 provides details of some of the "energy products" that are starting to emerge, such as aggregator services and time of use tariffs.

At present, only the more informed consumers are able to take advantage of these: we need to raise awareness more generally across all of Scottish society to ensure all consumers become better-informed and can take advantage of the opportunities that new local energy services can offer. The responsibility to make that happen is not down to the Scottish Government alone, but a collective responsibility across a wide range of stakeholders across the energy sector. Only then can consumers begin to make the bigger changes required to deliver net zero by 2045.

1.3 Building on strong foundations

Scotland has a legacy of strong community engagement in local renewable energy generation. Our flagship Community and Renewable Energy Scheme (CARES)^[5] has supported hundreds of local community groups and other eligible organisations to develop, own and/ or take a stake in local renewable energy projects across Scotland.

The Scottish Government has set two targets that signal to the sector our belief that the benefits of Scotland's renewable energy resources should be shared with its people and these are of significant relevance to local energy systems: 1 GW of community and locally-owned energy by 2020, and 2 GW by 2030, and by 2020, at least half of newly consented renewable energy projects will have an element of shared ownership.

The rationale for developing these projects historically was to provide a community group with an asset to generate an income which would support the wider community's longer terms economic and social aspirations.

The change in UK Government subsidies (for example, the reduction/ closure of the Feed-in Tariffs Scheme and Renewable Heat Incentive) means that community groups are now less likely to look to renewables for the purpose of income generation - unless those projects are commercially viable without subsidy.

Scotland has a strong track record in community engagement in local renewable generation, which has often been led by community groups. There will be opportunities for community groups within wider local energy systems projects - ones that focus on adding value locally for the energy generated and supplied, such as:

• Energy systems designed and developed in line with local needs and aspirations.
• Well-informed, empowered, and active consumers.
• Provision of affordable warmth.
• Retention of local money within local economies.
• Partnerships and cooperation that can become a foundation for further community or local development.

There now needs to be greater focus and priority given to decarbonisation as the driver for community-led action.

Local energy systems projects will be more complex (for example, involving multiple stakeholders, new technologies, etc.), and involve more diverse groups of consumers within a local community - each with their own specific objectives.

This means that the role of consumers – as individuals and as part of wider-communities - will become more relevant and important. However, for each of these groups, the common expectations are that the energy system will be affordable, secure, reliable and resilient.

Work is already underway to consider how Scottish Government funded delivery programmes can take account of these changes. This includes our next CARES programme with a refocus towards decarbonisation. Prioritising wider community engagement and raising awareness within this context will also be a key aspect of the new programme.

Case Study: Greener Kirkcaldy

Greener Kirkcaldy, a community-led development trust in Fife, works locally to benefit people and the environment. They would like to see a future where everyone can heat their home affordably, eat well, and tread lightly on our planet.

They want their local community to get ahead of the curve during this period of transition to a low carbon energy system and make sure no-one gets left behind. They are planning to install solar PV on their community building, and have secured Scottish Government funding to add battery energy storage to make the most of the energy generated. Once it is installed, they will demonstrate their energy system to other community centres in Fife, to help them future proof their facilities and be ready to engage in a more locally managed, low carbon energy system.

They are also planning to inform their community about the solar PV and storage, brief them on changes coming in the wider energy system and how individuals might engage and benefit.

Greener Kirkcaldy are participating in Community Energy Scotland's 'Community Energy Futures' programme. This is helping build the knowledge and capacity of community groups in areas of high fuel poverty, to help their communities gear up and benefit from the coming energy changes so that no-one is left behind.

1.4 Early engagement

As mentioned earlier, the way people interact with the energy system is likely to become less straightforward in the future - meaning more complex partnership arrangements will be required.

It is important that organisations developing projects or providing enabling infrastructure undertake constructive and open engagement with the people and communities who have an interest – indeed, there are many organisations that already exist within communities across Scotland who are known and trusted by the wider community who can help. This is true for both organisations within the community/local area and those based externally.

This will help to create and strengthen trust and build strong relationships from the outset. Ideally, engagement should start as early as possible and should continue throughout the development phase of the activity and also throughout construction, operation and beyond.

When planning initial community consultation, it may be helpful to consider:

• What should be the geographical area to engage (as linked to Chapter 2)?
• Within that area, who are the appropriate contacts and communities of interest for consultation?
• How best can excluded groups within the community be engaged and represented?

There are already processes in place at a local level that require consultation, led by the Local Authority, primarily to support planning. These could, potentially, be adapted to include local energy needs. The Scottish Government's suite of Good Practice Principles^[6],[7] for renewable energy developments provides a good standing point in helping a community to understand what's involved.

When engaging with people, who are often removed from the energy system and its development, it will be important to make clear at the outset what the priority outcomes of any project or proposal are. For example, is the focus system resilience, decarbonisation of heat, or the introduction of more electric vehicle charging infrastructure? This will help in reassuring consumers and people who may wish to engage with any future system.

1.5 No one is left behind

The Scottish Government recognises that achieving its ambitions for tackling climate change will require transformation across our economy and society. As the pace of our transition increases, the need to ensure it is just becomes ever more important. That is why the Scottish Government has taken world-leading action to embed Just Transition principles^[8] in our Climate Change legislation.

The Scottish Government has also established a Just Transition Commission^[9] to provide practical advice on 'a net-zero economy that is fair for all'. It will consider how to achieve this in a way that tackles inequality and poverty, while promoting a fair and inclusive jobs market.

The Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019^[10] has recently been passed with unanimous support across Parliament. This sets out ambitious targets towards eradicating fuel poverty across Scotland.

As previously indicated, the future energy system is likely to see rapid changes in technology and innovation. This is expected to bring more choice for consumers (both domestic and business users), and greater economic opportunities/ benefits for Scotland. However, it is important to recognise that there may be additional costs, and that some people may struggle to grasp the new opportunities in the energy market.

An Equality Impact Assessment and Fairer Scotland Impact Assessment will be undertaken in conjunction with this Policy Statement. The aim of this work is to ensure that there are no unintended consequences of the policy that have negative impacts on individuals or groups across Scotland, and that the policy makes the most of any opportunities to reduce existing inequalities. Where regressive impacts are identified, we will work with stakeholders to take steps to mitigate these so that consumers – including the most vulnerable in society – are protected.

1.6 Affordable energy

As stated above, the Scottish Government understands that, in our pursuit of affordable energy within a net zero economy, additional costs may arise. However, consideration must be given as to how low income families across Scotland are not unfairly burdened with these costs and to ensure that their energy is affordable.

The Scottish Government's draft Fuel Poverty Strategy for Scotland 2018^[11] outlines how local energy supply options could potentially play a role when local authorities are considering ways to tackle fuel poverty.

1.7 Driving Demand Reduction

Reducing Scotland's energy demand is a key component of the energy transition. Smarter energy systems, combined with more energy efficient homes and more empowered and knowledgeable consumers who have greater control over their energy, will be large factors in achieving a net zero economy.

Energy Efficient Scotland^[12] is the Scottish Government's 20 year programme – requiring, potentially, up to £12 billion of investment by public, private and third sectors - containing a set of actions aimed at making Scotland's existing buildings near zero carbon in a way that is socially and economically sustainable. By the end of the programme, Energy Efficient Scotland will have transformed the energy efficiency and heating of Scotland's buildings: making our existing homes, shops, offices, schools and hospitals more comfortable and easier to heat.

However, that role should not fall to the Scottish government alone - it is critical that there is a shared purpose and responsibility encompassing all of Scottish society for reducing our energy demand and being responsible consumers of energy. For example, it is expected that people will become empowered to take more control of how they heat their home through smart meters.

1.8 Questions

5. What options should we consider to ensure that the local energy transition is fair and inclusive for all consumers?

6. How can we ensure that people and communities across the whole of Scotland can participate in local energy projects?