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ANNEX 3 PARTIAL REGULATORY IMPACT ASSESSMENT

1 Title Of The Proposal

1.1 This is a Partial Regulatory Impact Assessment ( RIA) of the proposals to amend the Town and Country Planning (General Permitted Development) (Scotland) Order 1992 (the GPDO) to give permitted development rights to categories of microgeneration equipment for domestic properties.

1.2 This partial RIA assesses the likely impacts of the proposals in the consultation paper. The proposals for the GPDO and this assessment may be revised following the consultation.

2 Purpose and Intended Effect

Objective

2.1 The amendments to the GPDO are required to enable more microgeneration equipment to be installed on existing buildings without the need to obtain planning permission. They seek to promote the up-take of domestic microgeneration on existing buildings in order to provide a sustainable source of low carbon energy and to reduce carbon dioxide emissions from buildings.

2.2 It is intended that the proposals will have the following effects:

• the elimination of time and monetary costs to householders of obtaining planning permission (a perceived barrier to take-up);
• potential energy savings to householders;
• wider direct and indirect effects including an anticipated reduction in the work of planning authorities in determining planning applications;
• stimulation of the market demand for renewable technologies;
• increased uptake of renewable sources of power relative to non-renewable sources leading to knock on effects on carbon savings; and
• contribution towards the national target for renewable energy.

Background

2.3 Microgeneration is the production of heat (less than 45 kilowatt capacity) and / or electricity (less than 50 kilowatt capacity) from zero or low carbon source technologies. Some microgeneration technologies produce energy using renewable resources such as solar, wind or biomass ( e.g. wood) and some, like combined heat and power ( CHP), may use fossil fuels but are much more efficient than conventional systems.

2.4 There is little available data on the current use of domestic microgeneration in Scotland or even in the UK. An independent report commissioned by the former Department of Trade and Industry ( DTI) in 2005 ⁵ identified that there were approximately 82,000 microgeneration installations of all types across the UK. There is no equivalent data for the proportion currently installed in Scotland. To establish a baseline information can be obtained from sources of grant funding for microgeneration equipment.

2.5 In Scotland, two routes are available for householders to apply for grants for microgeneration. Both are managed by the Energy Savings Trust ( EST) however double funding for projects is not allowed.

2.6 The Low Carbon Buildings Programme is funded by the Department for Business Enterprise and Regulatory Reform ( BERR) at a UK level. Phase 1 was launched in April 2006 for a period of 3 years. Data available for household grant applications for Scotland since its launch almost 2 years ago is shown below ⁶.

Figures are shown for live or successfully completed grants only. Grants that have been offered but subsequently withdrawn or expired are not included.

2.7 The Scottish Community and Householder Renewables Initiative ( SCHRI) is funded by the Scottish Government. Data from the SCHRI shows the following distribution of grants for microgeneration since January 2003.

2.8 Assuming that all applications for grant funding have led to the installation of microgeneration technology, on the basis that if not implemented grants would be withdrawn or expire, there are at the very least approximately 2450 schemes in place in Scotland. The rates of grant distribution are approximately 100 per year for the LCBP and 450 per year for the SCHRI. On the basis that projects cannot be double funded and assuming these rates continue, a minimum of approximately 550 schemes are implemented across Scotland each year at present. However, some caution must be applied in that it is not confirmed whether these grants were for microgeneration installations on existing households or as part of new build developments.

Rationale for Government Intervention

2.9 To tackle energy issues : The Scottish Government have set a target of generating 50% of Scotland's electricity from renewable energy by 2020. Support is given to the full range of renewable technologies to achieve this, including microgeneration, to tackle the major issues of climate change, secure and diverse energy supplies and energy poverty.

2.10 To benefit businesses and consumers : Support for microgeneration will also enable the development of a viable renewables industry in Scotland through greater demand, improvements to the effectiveness of technologies and ultimately economies of scale leading to reduction in prices for consumers. Microgeneration could become a realistic alternative or supplement to conventional energy sources.

2.11 To create certainty in planning : At present there is a lack of clarity about the need for planning permission for some technologies leading to different interpretations of the GPDO and an inconsistent approach across Scotland. Where a planning application is required, the current fee for this in Scotland is £145. This increases significantly however when associated costs, such as professional fees and time for negotiations, are factored in. The resource requirement and uncertainties may therefore be a deterrent to the use of microgeneration technologies, which the amendments to the order would remove.

2.12 Generally : The proposals represent a deregulatory initiative which reduce the regulatory burden on households.

2.13 Retaining the status quo : With no changes made to the GPDO, the generating capacity of renewable energy will be restricted and the cost effectiveness of microgeneration equipment will suffer.

3 Consultation

Within Government

3.1 The proposals have been the subject of discussion and internal consultation with Historic Scotland, Scottish Building Standards Agency, Energy and Telecommunications and Landscapes and Habitats. Discussions have also been held with colleagues in England.

Public Consultation

3.2 There has been no previous full public consultation exercise on the proposals in Scotland. The Consultation Draft of Scottish Planning Policy ( SPP) 6 highlighted that a general review of the GPDO was underway and that consideration was being given to how permitted development rights for microrenewables may be used. A research project considering this issues involved stakeholder consultation to inform recommendations.

4 Options

4.1 Three options have been considered, including the 'do-nothing' scenario. The remaining options vary in relation to the level of control exercised via planning

4.2 Consideration of the options below does not take account of external events which may affect the take up of microgeneration technologies, such as changes in non-renewable fuel prices.

Option 1 : Do Nothing - Status Quo.

4.3 At present the extent to which householders have rights to install microgeneration technologies without planning permission is unclear. Guidance in the Annex to Planning Advice Note ( PAN) 45, Planning for Micro-Renewables indicates that most micro-wind turbines are likely to require planning permission, whilst in some cases solar collectors may not. The lack of clarity would continue with this option resulting in inconsistent application across the country and uncertainty for stakeholders. Maintaining the status quo would not achieve the objective identified in section 2.1 above clearly or consistently. It would not require changes to implement.

Option 2 : Absolute Permitted Development Rights for all Microgeneration Equipment

4.4 This would enable anyone wishing to install any type of microgeration equipment on their dwelling to do so without the need to apply for planning permission. It would remove all financial and time costs relating to the application process and some associated professional fees. It would also result in a myriad of impacts on the built and natural environment and to residential amenity. This option would achieve the objective identified in section 2.1 but would do so at the expense of generally accepted planning principles relating to protection of the environment in the wider public interest. It would require changes to the GPDO to implement the proposals.

Option 3 : Permitted Development Rights Limited by Impact Criteria

4.5 The GPDO would set individual criteria for the right to install different types of microgeneration technologies on domestic dwellings. The criteria would take account of the likely impacts associated with the particular technology, for example in relation to size, positions and proximity to other houses. This represents a precautionary approach with greater restrictions for some technologies for specific areas, for example those designated for their historic value, in order to control impacts on the environment and residential amenity. This option would achieve the objective in section 2.1 whilst mitigating risks associated with likely impacts. It may not generate the same level of up-take as option 2 but in doing so it will prevent the risk of creating a backlash against microgeneration. It would require changes to the GPDO to implement the proposals.

5 Costs and Benefits

Sectors and Groups Affected

5.1 Planning authorities: Amendments to the GPDO will impact upon planning authorities who have responsibility for its implementation. Benefits will be felt in that it will be possible to interpret the Order with greater clarity and certainty and there will be fewer applications for them to consider.

5.2 Householders: The proposals are also likely to benefit householders wishing to install microgeneration technologies in that there will be certainty whether planning permission will be required. Where it is not needed there will be benefits of reduced costs in terms of time, there will be no fee applicable and associated professional fees may also be reduced.

5.3 Microgeneration technology manufacturers, retailers and the associated chains for research and design and components: These sectors will are likely to benefit from a greater demand.

5.4 Neighbours: A range of impacts may affect the occupants of households surrounding those which install microgeneration technologies depending on the type installed.

5.5 Environmental health authorities: The authorities responsible for enforcement of issues relating to nuisance, for example noise, may be affected indirectly if a greater number of complaints are received from neighbouring households.

5.6 Non-renewable energy suppliers: Power generation companies and their supply chain are likely to be affected by a reduced demand.

Estimates of Microgeneration Uptake

5.7 Before estimates of costs and benefits of amendments to the GPDO can be attributed figures for the likely uptake of the relevant microgeneration technologies for Scotland are required. As referred to in section 2.4 above there is little information available on existing uptake of microgeneration in Scotland. This is mirrored in information available for the potential future uptake. The figures below are therefore very general estimates and should be treated accordingly.

5.8 The 2005 report for the DTI provides estimates for the uptake of different technologies for the UK, which could occur without intervention or support by Government. The figures also take no account of the increased awareness resulting from announcements related to climate change or energy policy or from marketing by technology retailers. Anecdotal evidence suggests that increased public awareness is leading to an increase in uptake which is greater than originally anticipated in the report. All estimates calculated should therefore be considered as the lower range of their potential. The 2005 report estimates for the UK for those categories of development which at present may require planning permission are given at Figure 1.

Figure 1. Potential microgeneration uptake for the UK

5.9 2001 Census figures show that the proportion of Scottish households relative to the UK is approximately 9%. Applying this to the figures above gives a general estimate of the equivalent potential uptake for Scotland.

Figure 2. Potential microgeneration uptake for Scotland

5.10 The 2005 Report figures do not distinguish between installations on existing buildings, for which a planning application would be required, or on new buildings where the microgeneration technology would be part of the application as a whole. Whilst in other areas of the UK the proportion of new build housing to that of the existing may be significant ⁷, new build activity only represents approximately 1% of the total housing stock in any one year ⁸. No adjustments to the figures are therefore made in this regard.

5.11 As implied in section 4.3 above some microgeneration technologies may already be considered to be permissible under the existing GPDO. To account for this adjustments are made as indicated in Figure 3. PV and solar are similar in their characteristics and at present may be considered permitted development where their installation will not result in visual impacts. Wind turbines and micro-hydro will currently require planning permission because of the nature of their likely impacts. There is some uncertainty around the need for planning permission for GSHP but it is assumed this is much less relative to PV and solar on the assumption that bore holes or trenches would be engineering operations that would require a consent. The adjustments needed are therefore taken into account in Figure 4.

Figure 3. Estimates of the percentage share of technologies which may currently be interpreted as permitted development

Figure 4. Potential microgeneration uptake for Scotland, including assumptions for those technologies which may at present be considered permitted development (Option 2)

5.12 Whilst the figures above would indicate the potential uptake of microgeneration technologies if permitted development rights were absolute (Option 2), adjustments are required for when criteria are applied to different technologies which take account of possible impacts (Option 3) as are proposed in this consultation paper.

5.13 Under option 3, GSHP, with their associated pipe work and engineering works, would generally be considered permitted development. It is not proposed to permit micro-hydro without planning permission due to possible environmental impacts. Wind turbines are more likely to be allowed in lower density areas, such as rural or urban fringe locations. Photo-voltaic and solar technologies restrictions relate more to their relationship with the building than to general types of location. Estimates are shown in Figure 5 and the resulting impact on numbers in Figure 6. These assumptions however, do not take account for specific location circumstances which may restrict the type of technology that could generate energy efficiently.

Figure 5. Estimates of the percentage share of technology uptake which may be permissible when criteria applied to permitted development rights

Figure 6. Potential microgeneration uptake for Scotland, including assumptions for those technologies which may at present be considered permitted development and assumptions relating to limitation criteria (Option 3).

Benefits

5.14 It is anticipated that amendments to the GPDO will bring a range of benefits as identified throughout previous sections. These generally relate to four broad areas, the first two of which are more readily quantifiable using the estimates above.

• The removal of the need to apply for planning permission will result in savings for householders both for the application and some associated fees. It should also reduce the length of time taken for technologies to be installed.
• A reduction in the number of planning applications to authorities will result in savings in staff time and lower costs.
• A growth in demand for microgeneration technologies would increase production and manufacturing and lead to technological improvement through research and development.
• A more competitive market should contribute to reaching a range of targets including reduced energy bills for consumers, a more diverse energy mix and ultimately to a reduction in carbon emissions.

Householders

5.15 The current cost of submitting a householder planning application in Scotland is £145. The indirect costs, for example professional fees, is approximately £725 ⁹. This results in a saving of £870 per installation. By applying the saving per installation to the number of cases that would otherwise have required planning permission in options 2 and 3 to 2030, cumulative savings can be estimated.

Figure 7. Householder savings (£) - Option 2

Figure 8. Householder savings (£) - Option 3

5.16 Option 2 offers savings of at least £14 million by 2020 and option 3 savings of at least £10 million. Whilst there is a significant difference between the 2 options, risks associated with a possible backlash against technologies in relation to their impacts in option 2 could then have a major impact on the realisation of the potential savings by 2030 but which would be more likely to be achieved under option 3.

5.17 These savings do not take into account the value which householders place on the time saved in not having to apply for planning permission in regard to completing the necessary forms and procedures and being subject to the uncertainty of a process of which they have little detailed knowledge.

Planning Authorities

5.18 The estimates for the total units installed in Figures 4 and 6, repeated below, equate to the number of planning applications that authorities would not have to determine under each of the options. Staff resources could therefore be more appropriately assigned.

5.19 Option 2 would generate the greatest uptake in the short-term and therefore would generate the greatest savings of resources. However, these would need to be off-set against costs incurred, for example by environmental health authorities where complaints are made in regard to impact on neighbours.

Technologies

5.20 The economics associated with early stages of technological development indicate that costs are higher in initial phases. Once demand is generated and barriers to uptake removed it would be expected that technologies would be refined so that they became more efficient in terms of production costs and their output. The resultant benefits would be to consumers and the industry as a whole. Quantifying benefits in this regard are extremely complicated given the variety of assumptions which relate to different rates for different scales of technology, commercial energy costs, level of government intervention, grid technology (see 2005 Report for DTI).

5.21 Option 2 would generate the greatest uptake in a short time period therefore allowing economies and efficiencies to be realised sooner. However, this could be jeopardised by the risks associated with a backlash.

Targets

5.22 Where microgeneration technologies are installed householders will require less energy from the grid and may even be able to export extra capacity. This is turn should reduce fuel bills for consumers. In the longer term this has potential to reduce the number of households affected by fuel poverty.

5.23 The use of microgeneration technologies may represent relatively small amounts of energy for individual householders but over the longer term will cumulatively contribute towards a security of energy supply and creation of a variety of sources that are economically viable.

5.24 The ultimate benefit from each of these actions would mean that the use of fossil fuels to generate energy is replaced by low and zero carbon emitting options. This would play a part in meeting targets for the reduction of carbon emissions.

5.25 The risks highlighted previously associated with absolute permitted development rights would introduce vulnerability to the achievement of the above targets, the majority of which have broader, aspirational aims.

Costs

5.26 It is anticipated that amendments to the GPDO could have a variety of costs, as identified throughout previous sections.

Planning Authorities

5.27 The £145 fee payable to authorities to process these types of application would no longer be received. The more precautionary approach in option 3 therefore results in less revenue being lost. The options would therefore result in the loss of revenues identified below, though fees are set to cover processing costs nationally and so national staff costs should reflect the workload.

Environmental Impacts

5.28 The current situation of applying for planning permission enables the planning merits of an application to be considered, for example the impact on the natural and built environment such as landscapes and listed buildings. Where this would be removed in full, as in option 2, a range of impacts will be possible without control of any kind. Option 3 however, accounts for the likely impacts of particular technologies within the limitation criteria. Anything that fell outwith the criteria would then be subject to a planning assessment.

5.29 These impacts are likely to be to the detriment of neighbouring residents in terms of noise and amenity as well as to the wider environmental in terms of the cumulative impact of a variety of technologies within a small area. As a consequence, these would result in complaints to regulatory bodies such as environmental health authorities.

Commercial Energy Providers

5.30 An increase in locally produced energy will result in less energy being taken from the grid which is provided by commercial scale companies. They would therefore experience a reduction in demand and therefore loss of revenues. Option 3 would mean that this is limited in the short term.

6 Small / Micro Firms Impact Test

6.1 The microgeneration industry is characterised by small scale firms. No specific information is available, or research undertaken, on the impact of these proposals specifically on small businesses. However, the removal of barriers would promote technologies and benefit those companies looking to develop and refine products. Taking a precautionary approach, as in option 3, would enable impacts to be monitored and considered in product refinement to prevent adverse impacts undermining the acceptability of technologies and the industry.

6.2 As well as manufacturers and retailers the planning system is supported by a range of professional sectors, including private planning consultancies, architects and surveyors. Option 2 would result in a slower rate of growth for these firms and whilst this would occur for option 3, it would be to a lesser extent.

7 Legal Aid Impact Test

7.1 This test is not considered relevant to the amendments to the GPDO.

8 'Test Run' of Business Forms

8.1 The amendments to the GPDO do not contain business forms.

9 Competition Assessment

9.1 Key areas for the consideration of competition impacts are:

• Competition between large scale commercial energy providers which are present dominate the market and the introduction of smaller scale microgeneration technology manufacturers and retailers which will enable households to generate their own energy.
• Competition between energy providers could lead to changes in energy prices as conventional fossil fuel sources reduce and prices for energy from microgeneration becomes more competitive.

10 Enforcement, Sanctions and Monitoring

10.1 Planning authorities will continue to provide the authoritative interpretation of any amendments made to the GPDO. Where this is challenged in the courts precedents will be set which assist this interpretation. Planning authorities will also remain responsible for enforcement either where a planning application has not been made that is required or where a consent has been implemented incorrectly.

10.2 Option 2 of the proposals may result in impacts to neighbouring residences which may require monitoring and enforcement by environmental health authorities.

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