RESPONSE TO SCOTTISH GOVERNMENT CONSULTATION ON HEAT & ENERGY
EFFICIENCY STRATEGIES AND REGULATION OF DISTRICT HEATING
14/05/2017
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This is the SFHA response to the Scottish Government consultation on Local
Heat & Energy Efficiency Strategies and the Regulation of District Heating
1. Who we are
1.1. The SFHA leads, represents and supports Scotland's housing associations
and co-operatives. We want to see a thriving housing association and cooperative sector providing sustainable and affordable homes.
2. Executive summary
2.1. Housing associations have a strong track record of leadership on home
energy efficiency, installation of renewable heat and development of district
heating schemes.
2.2. Housing associations have the most energy efficient homes in Scotland by
tenure yet at the same time, with the majority of tenants on low incomes, fuel
poverty levels are still relatively high at 27% of households.1
2.3. While we are supportive of proposals for strategies to be required to look at
energy efficiency and low carbon heating, in our view these strategies must
place at least equal emphasis on alleviating fuel poverty and providing
affordable warmth as they do on reducing carbon emissions.
2.4. Funding will be a significant issue for housing associations if ambitious
targets are set for low carbon heat and district heating. Cuts in energy
company obligation schemes mean that, at present, the majority of funds for
investment would come from tenants’ rents. At the same time housing
associations face competing spending priorities, including on the provision of
new affordable housing and the health and social care approach which rightly
seeks to support people to continue to live at home. Welfare reform is also
likely to have an impact on associations’ income.
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Scottish Government (2016) Scottish House Condition Survey 2015 – Key Findings available at
http://www.gov.scot/Publications/2016/12/1539/0 accessed 13th April
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2.5. We are supportive of regulation to improve energy efficiency and expand
district heating. We believe that regulation should have a statutory basis, for
example setting minimum energy efficiency standards for all buildings and
making connection to district heating a condition of planning consent, if it is to
achieve the ambitious targets set by Scottish Government.
2.6. If the ambitious goals set out in the draft Climate Change Plan, including
80% of homes to have low carbon heating by 2032, are to be met then
significant funding in the form of low interest loans and grants will be
required.
2.7. There will also need to be significant investment in the skills and support
required to develop, procure and to install and maintain the necessary
infrastructure to develop district heating schemes and major area based
energy efficiency projects.
2.8. Any significant investment in low carbon heating must be accompanied by
well resourced energy advice projects to ensure that people benefit from the
investment and understand how best to use their new heating systems.
3. Local Heat & Energy Efficiency Strategies
3.1. Do you agree that councils should have a duty to produce and implement a
LHEES?
In our view, local authorities should be required to produce and implement
LHEES as a strategic framework will be required if the ambitions to reduce
carbon emissions and switch to low carbon heating are to be achieved.
We believe that councils are best placed to deliver these, and that the plans
should have similar status to Local Development Plans and Local Housing
Strategies and should have close links to both documents.
We also agree that LHEES should set targets for energy efficiency and
decarbonisation and should include a costed and phased programme to meet
targets.
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Heat storage can play a significant role in improving energy efficiency and
decarbonising heat – Castle Rock Edinvar and East Lothian housing
associations have developed a scheme to store energy generated from
renewables to provide heat.
If the above is to be achieved, however, then significant resources and support
must be made available to allow councils to develop and deliver these plans and
the Scottish Government should be proactive in providing support and best
practice advice and guidance.
Flexibility should be given to local authorities as to whether they prepare plans
just for their local authority or whether plans cover groupings such as those used
for Strategic Development Plans or City Region Deals.
Other data that could be used to support the development of LHEES would
include social landlords’ EESSH returns to the Scottish Housing Regulator and
the EST Home Analytics tool.
Plans should not focus exclusively, or mainly on district heating – we believe that
they should have a strong emphasis on cutting fuel poverty and providing
affordable warmth, should focus on increasing energy efficiency, especially in
hard to heat buildings, and should focus on the installation of micro-renewables
and low carbon district heating in off gas areas. Similarly, the Building Standards
for new build should require buildings to be low energy users.
Proposals for district heating should not necessarily focus only on low carbon
heat – schemes such as the Aberdeen CHP scheme and the scheme by Cube
Housing Association at Wyndford, Maryhill reduce carbon use while providing
low cost heat through gas fired district heating. Such schemes could change to
low carbon fuel in future.
3.2. What are your views on the relationship between LHEES and Local
Development Plans (LDPs)?
We agree that LHEES could be used by planning authorities to inform the location
of new development.
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LHEES should be a material consideration for planners in setting out where new
development should take place and conversely LHEES should take account of the
proposals in LDPs.
In our view it would be appropriate to zone areas within LDPs as requiring
connection to district heating – this would build confidence in district heating and
help the Scottish Government achieve its climate change targets while addressing
fuel poverty.
4. District Heating Regulation
4.1. What are the key principles or approaches that should inform how the
regulatory approach manages risk for district heating?
Experience in other European countries such as Denmark is that district heating
can play a significant role in cutting fuel poverty and reducing carbon emissions
providing the right conditions are in place to enable this to happen.
The two key factors are certainty of take up of district heating by householders and
provision of affordable finance to allow schemes to be developed at a cost that
does not make development of the network prohibitively expensive.
We believe that certainty of uptake would be achieved by zoning development
areas for district heating connection through planning, through allowing councils to
compel existing building owners and users to connect to district heating schemes in
zoned areas.
We also believe that concessions could play a role in promoting and expanding the
use of district heating, although development and operation by arms’ length not for
profit companies would be more cost effective.
In order to enable district heating to fulfil its potential and to ensure that it achieves
benefits by providing affordable warmth as well as cutting carbon emissions, we
believe that more thought needs to be given to how district heating is financed.
While providing certainty to investors by creating concessions would reduce the
cost of finance, investors would still be looking for a return on their investment on
what is viewed in Scotland as a new technology.
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In countries where district heating is a widely used and mature technology, such as
Denmark, the Netherlands and Germany, the high cost of financing district heating
infrastructure is dealt with by networks being funded through the equivalent of local
government finance. These networks are owned and operated by arm’s length not
for profit companies.
If district heating is to fulfil its potential, reduce carbon emissions and, crucially,
allow the Scottish Government to meet its ambitions on fuel poverty, then its
expansion should be funded through low interest loans and it needs to be delivered
on a not for profit basis.
There should be a requirement for major industries to use waste heat, and it should
only be possible to be exempt from selling waste heat where there are no potential
users in the local area.
4.2. What are your views on the licensing of district heating and the provision of
technical standards?
Licensing, technical standards and consumer protection will be vital to ensure
that there is consumer confidence in district heating.
It is important that licensing is proportionate, however – proposals by the UK
Government to introduce regulation and standards for district heating and
communal heating have caused concern and uncertainty among social landlords
operating existing district and communal heating schemes.
Many of these schemes were installed to provide affordable heat to tenants on
low incomes and do not lend themselves to the retrofitting of heat meters. While
it is essential to build confidence in district heating and provide consumers with
rights, any approach needs to be proportionate and take account of the cost of
imposing requirements on smaller existing schemes.
5. Conclusion
5.1. We are broadly supportive of proposals to require the preparation of Local
Heat & Energy Efficiency Strategies and of plans for the Regulation of District
Heating.
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5.2. In our view it is essential that proposals to increase the provision of district
heating and reduce carbon emissions must focus at least as much on
alleviating fuel poverty as on reducing carbon emissions.
5.3. To do this, strategies and guidance should focus on improving the energy
efficiency of buildings first and should seek to install renewable heating in
areas off the gas grid.
5.4. If district heating is to fulfil its potential take up in Scotland and address fuel
poverty and carbon emissions, then areas should be zoned for district
heating, development funding should come from local
government/government low interest loans and not the private sector and
heat should be delivered by not for profit companies.
5.5. Housing associations have the potential to be lead partners for area based
home energy efficiency schemes and for the expansion of district heating –
they have the necessary finance and project management skills, the
groupings of properties and the long-term interest in properties and tenant
welfare.
5.6. To deliver as partners, however, they require financial support in order to
keep tenants’ fuel bills down and to allow them to deliver on other Scottish
Government priorities such as the development of new build social housing
and the provision of housing with health and social care.
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