7 Opportunity for Energy Efficiency and Microgeneration in the Built Environment
7.1 The table below shows the estimates put forward for the number of homes suitable for various types of measures, as in the Consultation on the Energy Efficiency Action Plan for Scotland.
Table 8: Realistic potential number of homes that may see the installation of various measures in Scotland
|Measure||Realistic Potential (no. of homes - '000)|
|Cavity Wall Insulation||625|
|Solid Wall Insulation (internal or external)||460|
|Solar Water Heating||1,870|
|Air Source Heat Pump||290|
|Ground Source Heat Pump||30|
|Reduced Energy Behaviour||2,585|
Source: Consultation on the energy efficiency action plan for Scotland, October 2009
7.2 There are a number of energy efficiency and microgeneration measures which have been introduced in order to help Scotland reach its 2020 milestone. Although some of these are UK-wide, others are specific to Scotland; the list below identifies the relevant programmes;
- The Community Energy Saving Programme ( CESP)
- Smart meters
- Feed in Tariff ( FIT)
- Energy Assistance Package
- Home Insulation Scheme ( HIS) and Universal HIS ( UHIS)
- Scottish Housing Quality Standard
- Tolerable Standard
- Climate Challenge Fund
- Scottish Building Standards
- Energy Saving Scotland Home Loan Pilot
- Green Deal
- Energy Company Obligation
- The Carbon Emissions Reduction Target ( CERT)
- Private Rented Sector Policies
- Renewable Heat Incentive ( RHI)
- Energy and Resource Efficiency Service
- CRC Energy Efficiency Scheme
7.3 Some schemes, such as Feed-in Tariffs ( FITs), do not have specific funding levels but are predicated on consumer take-up. Without developing complex consumer models to estimate the likely demand for renewable technologies from each scheme, which is beyond the scope of this project, our only recourse is to accept at face value any estimates available from reputable sources. Table 9 indicates the measures where figures for direct investment have been established, along with time frames for delivery and those that will act as investment drivers.
Table 9 - Energy Efficiency and Microgeneration Investment Timeline for Scotland; 2010 - 2020
Source: Energy Efficiency Action Plan; Energy Bill, Green Deal Impact Assessment
This timeline is based on information available up to February 2011. While schemes listed above have end dates it is possible that a new funding scheme could be implemented to continue work, for example the Energy Company Obligation continuing the work of CERT/ CESP.
At the time of writing there was very little supporting evidence as to the possible nature of work likely to be generated through the Energy Company Obligation and only limited detail available for the Green Deal and Renewable Heat Incentive.
Although the timeframe for the research considers up to 2020, energy efficiency and microgeneration activity will continue past this time, with schemes either being extended or new schemes introduced
7.4 Home Insulation Scheme was an area-based Scottish Government programme which was supported with £15m in 2009-10 and £25m in 2010-11 (including £10m for a new universal access insulation scheme), with matching funds being sought from other sources, including energy companies, local authorities, housing associations and private householders. The Scottish Government is continuing to support the universal scheme delivered by local councils. According to the Consultation on the Energy Efficiency Action Plan for Scotland, 'up to 100,000 households will be offered advice and assistance on energy efficiency in the first phase, with many going on to receive the energy efficiency measures on offer, mostly loft and cavity wall insulation'.
7.5 Another area-based programme is the £27.4m Climate Challenge Fund ( CCF) which was set up to assist communities in developing projects to reduce carbon emissions over the 2008-2011 period. Although some of the projects are likely to focus on insulation in homes, encouraging behavioural change is considered to be a priority. Approximately 250 communities have so far been funded.
7.6 There are also some demand-led programmes within Scotland. Amongst these is the Energy Assistance Package, which alongside the Home Insulation Scheme, has been designed to undertake the measures supported through CERT and has a budget of £45.9m over 2010-11.
7.7 Another area which has received direct investment is the Scottish Government's Energy Saving Scotland home loans pilot scheme - active between October 2009 and June 2010 and worth £2m. The difference between this and the Green Deal is that the homes loans are interest free loans, are unsecured and the responsibility of the homeowner, and have an 8-year maximum loan period. In contrast the Green Deal is neither interest free nor a loan, it has payments linked to an energy meter, is paid through the energy bill, and has a much longer repayment period of up to 25 years .
7.8 The Scottish Housing Quality Standard ( SHQS) is also important in helping Scotland meet its energy efficiency agenda. The standard requires that all social housing is fitted with cavity wall insulation, where feasible , loft insulation, hot water tank and pipe insulation, and a full central heating system of acceptable efficiency.
7.9 On a smaller scale, the Tolerable Standard requires that all housing must meet a minimum condemnatory standard, below which a house should not be used as living accommodation. According to the Consultation on the Energy Efficiency Action Plan for Scotland, the 'Scottish Government guidance defines this element as the presence (or otherwise) of loft insulation. Local authorities are therefore able to take action against owners requiring them to install loft insulation where the property is suitable ( e.g. top floor flats) but where no action has been taken, to improve its thermal insulation. There are also Private Rented Sector Policies where there is an issue with incentivising private sector landlords to install measures to combat fuel poverty.
7.10 According to the Consultation on the Energy Efficiency Action Plan for Scotland, the Carbon Emissions Reduction Target ( CERT) programme is estimated to lead to more than 68,000 homes receiving cavity wall insulation and 84,000 homes receiving professional loft insulation per year, if delivered fully. Furthermore, the programme is projected to be delivered over 2008-2011 and has an estimated funding pot of £96m per year, if a pro-rata split of spend is achieved in Scotland.
7.11 Another GB wide programme is the Community Energy Saving Programme ( CESP) which is projected to run over a period of three years, beginning in January 2010. The area based scheme is likely to be influential in shaping supplier obligations and consists of a wide range of energy efficiency and micro generation measures which are to be implemented across the private and social housing sectors. According to the Department of Energy and Climate Change, the programme is worth £350m over its life.
7.12 There are also clean energy cash-back schemes to incentivise individuals and businesses to take up measures which generate heat and electricity using low-carbon sources. The first is a renewable electricity cash-back scheme, known as Feed-in Tariffs ( FIT) and the second is a renewable heat cash-back scheme, known as the Renewable Heat Incentive ( RHI). In the case of FiTs, which were introduced in 2010, the Department of Energy and Climate Change ( DECC) has estimated that its introduction may lead to up to 750,000 households undertaking installation of renewable technologies by 2020. With the RHI, the initial phase was introduced in 2011 target towards long term support in non-domestic sectors and plans for more widespread support for householders to be introduced in October 2012 to coincide with the Green Dean order to calculate an annual investment figure for energy efficiency measures, figures have been calculated pro-rata for Scotland, and multiplied by an average cost of the technologies most likely to be introduced under the scheme. The DECC report, Consultation on the Renewable Heat Incentive, stated that the RHI scheme will be worth around £850m over the Spending Review Period and our estimations show that Scotland will benefit from almost £90m of this funding, if using a pro-rata split.
7.13 Other UK-wide programmes include the installation of smart meters in every home by 2020. DECC has estimated that the cost of installing nearly 50 million electricity and gas smart meters across the UK would require an investment programme of around £7bn , with energy suppliers responsible for buying and installing the meters .
7.14 Two of the main measures for the future are the Green Deal and the Energy Company Obligation, both of which are linked to the UK's Energy Bill. The Green Deal consists of energy companies and high street stores helping to guide customers through a process whereby they can obtain energy efficiency measures, the cost of which the occupier will pay back over a period as they make savings on their energy bills. This is likely to lead to energy efficiency measures which have quick payback periods being introduced towards the start of the programme. In this respect the Green Deal will drive investment in a similar manner to FIT and RHI, rather than have direct funding.
7.15 There is less detail available on the Energy Company Obligation apart from the fact that it looks set to continue the work established by CERT and CESP, although with an increased focus on harder to treat homes. If this is the case it will have direct funds associated with it, which is the case for both CERT and CESP; however no details are available on what the funding amounts are likely to be.
7.16 Building Standards have been identified as a driver of future energy efficiency and microgeneration because all extensions, conservatories, conversions, and alterations including replacement boilers, windows, and doors must meet the Scottish Building Standards which came into effect in April 2009, and were updated in October 2010. Although the building standards do not have any direct funds linked to them, their introduction will lead to an increase in the volume of energy efficiency work, especially if more stringent energy performance criteria are established in the future.
7.17 There are other programmes in place which target the non-housing sector - both public and the private. In relation to the Energy and Resource Efficiency Service, the UK Government hopes to set an example by promoting the uptake of measures to demonstrate leadership, whilst simultaneously creating demand for energy efficiency and micro generation services, thus boosting jobs (although this programme also helps consumers and businesses). Meanwhile the CRC Energy Efficiency Scheme is advice-based and aims to raise awareness within large organisations - especially at a senior level.
7.18 Looking at the range of measures, either being undertaken and planned through to 2020, illustrates the potential opportunities as well of the scale of the work that is required. The following sections of the research will cover these in more detail, drawing out key recommendations; however one very important area is that actions taken over the next few years will set the context and direction for future work. In this respect, as the earlier stakeholder analysis showed government policy and legislation will be key aspects in shaping future direction, not only in terms of direct investment to support energy efficiency and microgeneration, but also in influencing the nature of the client demand driven aspects that will need to occur if long term energy efficiency targets are to be successfully achieved.
Table 10: Baseline Projections for Investment per year (£m, current price basis) by Microgeneration Measure in Scotland: 2010 - 2020