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Research

Energy efficiency and low carbon market research 

Background

In 2016 Energy Saving Trust commissioned  Amec Foster Wheeler to carry out some research into the energy efficiency and low carbon market in Scotland.  Funded by Scottish Enterprise and the Scottish Government with the support of Zero Waste Scotland, the research has provided us with a ‘snapshot’ report from both a demand and supply perspective.

Executive Summary Report

You can read the Executive Summary report here.

If you would like to request a copy of the full research report then please email us on supplychainscotland@est.org.uk.

Key insights

A total of ninety five buyer organisations and eighty suppliers participated in the research.  These included local authorities, housing associations, commercial buyers, installers and energy assessors.

Buyers

Housing Associations: EESSH targets continue to drive demand from Housing Associations for insulation works and low carbon heating services (an estimated 17% of stock held by survey respondents doesn't presently meet EESSH standards).  Average expenditure per respondent is projected at £864K over the next three years.

Local Authorities: Local authority buyers expect to purchase insulation works and low carbon heating services in the next three years.  Within their own estates this could value up to £850k per local authority in the next three years.

Higher/further education (HFE): The HFE sector anticipates expenditure of approx. £550k in the next three years per institution.  This will be targeted predominantly at insulation works and low carbon heating services.

Other public sector: Across the public sector in Scotland, gaps in buyer procurement skills and short-term funding models restrict the scale of low carbon works undertaken.

Industrial/commercial: Industrial/commercial buyers continue to seek energy efficiency cost savings via low carbon works.  However, their projected modal expenditure is modest (less than 10K per organisation).

Procurement

Buyers are inconsistent in their means of procurement (single/multi-lot frameworks; overlapping funding leading to multiple tenders for similar works; revised tender specifications etc), particularly where opportunities are spread across multi-lot frameworks as it is much easier for larger suppliers to bid across lots.  Therefore, buyers need to consider how to engage more fully and effectively with the supply chain, particularly SMEs, through more consistent procurement routes.

Suppliers

Of respondents to this survey, suppliers typically have 10 employees or less and an annual turnover below £500k.  Forty-four per cent of respondents offer services across all areas of Scotland.  While most suppliers deliver services in-house there is also significant use of sub-contracting to meet specific project needs. Suppliers remain cautious in terms of the scale of market opportunities available to them in the next three years.  In addition, around one third of the supply chain is not engaged with public sector buyers.

Recommendations

The research yielded 12 recommendations:

  1.  For future market delivery, encourage consortia working amongst the supply chain.
  2.  Provide procurement guidance for suppliers to engage with public sector buyers.
  3.  For advertising opportunities, explore supplier attitudes to multi-channel advertising of opportunities.
  4.  Offer consolidated service offering profiles of suppliers to buyers.
  5.  Provide procurement guidance and training programme for all local authority buyers.
  6.  Encourage buyers to publish forward plans and/or prior information notices.
  7.  Encourage more buyer and supplier engagement events.
  8.  Provide guidance for buyers on assessment of value for money.
  9.  Encourage consistent procurement routes among buyers including a dedicated SEEP category in PCS.
  10.  Provide buyers with clear routes to obtaining funding (particularly over the mid to long term).
  11.  Avoid time constrained funding allocations.
  12.  Provide suppliers with a clear overview of the scale of funding available to buyers.

Next steps

Energy Saving Trust will be working closely with the project partners including the Scottish Government to take forward the recommendations arising from this research.

Webinar

Energy Saving Trust held a webinar on 11 October which gave an over view of the key insights gained from the research.  This included insights into:

  • The future demand for energy efficiency measures from key buyers in Scotland
  • Supply chain characteristics in Scotland

You can read a copy of the webinar slides here

 

Renewable Heat Incentive scheme - consultation update 

On 14 December 2016 the UK Government published their response to the consultation on the Renewable Heat Incentive scheme.

The consultation proposed several changes to the existing domestic and non domestic RHI scheme. Below is a summary of the UK Government’s final proposals in relation to the domestic scheme, which the UK Government intends to implement in spring 2017 subject to parliamentary approval.

  • The scheme will continue to support all four technologies currently supported.
  • The tariffs for new ASHPs will be increased to 10.02 pence per kilowatt-hour (p/kWh).
  • The tariffs for new GSHPs will be increased to 19.55p/kWh.
  • The tariff for new biomass installations will be increased to 6.44p/kWh, the level available between October and December 2015, adjusted for inflation.
  • The increased tariff for biomass boilers and stoves, ASHPs and GSHPs will be applicable to those participants who apply to the scheme on or after 14 December 2016 (the date the consultation response was published) although the increased tariffs will only apply from the date the regulations come into force. Participants will receive the existing tariffs for heat used (on the basis of either deeming or metering) before this point. This approach is intended to encourage consumers to continue to install renewable heating systems between the date of the consultation response and the date the changes come into force, to avoid a hiatus in investment and consequential impacts on the supply chain. 
  • Heat demand limits will be introduced, to limit the level of annual heat demand in respect of which any household can receive support. The heat demand limits will be set at 20,000kWh for ASHPs, 25,000kWh for biomass boilers and stoves and 30,000kWh for GSHPs. However, this will not disqualify properties with higher heat demands from applying to the scheme. There will be no heat demand limit for solar thermal.
  • All new ASHPs and GSHPs applying for support under the scheme will be required to have electricity metering to monitor their heating system. However, payments will continue to be on the basis of the deemed heating requirements of the property, except for second homes and where a renewable heating system is installed alongside another heating system, in which cases payments will continue to be on the basis of heat metering.
  • GSHPs making use of a shared ground loop will continue to be eligible for the non-domestic scheme and will not be eligible on the domestic.
  • There will be some changes to the budget management arrangements for the scheme.

If you have any questions about the policy decisions made in the consultation response then you can contact BEIS at emailenquiries@beis.gov.uk.

More information on all of the above changes including non domestic can be found is available.

If you have any questions about an existing DRHI application or a system already approved for DRHI payments then please contact Ofgem eServe, the scheme administrators, at 0300 030 0744 between 9:00am-5:00pm Monday-Friday or email domesticrhi@ofgem.gov.uk.

Energy efficiency and microgeneration – industry research feedback

Energy Saving Trust held two workshops with the energy efficiency and microgeneration industry in May/June 2016 to identify what the key barriers are facing these industries in Scotland.

Attendees included installers, manufacturers, assessors, consultants, trade bodies, local authorities and representatives from the Scottish Government.  Key topics discussed included:

  • Skills and training
  • Certifications and consumer protection
  • Funding and procurement
  • Building standards and planning

From feedback given at the workshops we have produced reports highlighting the key barriers facing the industry along with recommendations for overcoming them.

Key findings - energy efficiency workshop 

The energy efficiency workshop identified 22 barriers. These include:

  • Issues relating to awareness, cost and support available for modern apprenticeships. 
  • The industry is not attractive enough to young people. 
  • More enforcement and policing of energy efficiency measures is needed in Scotland. 
  • Communications should be improved in relation to the schemes to help improve awareness.
  • There are consistency issues in terms of the level of service and requirements across local authorities.

Key recommendations - energy efficiency workshop

The energy efficiency workshop identified 16 recommendations for overcoming these barriers.  These include:

  • Increase awareness of funding and support available for modern apprenticeships.
  • Consider setting up a government-industry contact group. 
  • Increase the amount of audits and inspections for government funded installations.
  • Consider new approaches for promoting energy efficiency schemes.
  • Increase awareness of the building standards dispute resolution process amongst suppliers.

Key findings - microgeneration workshop

The microgeneration workshop identified 10 barriers facing the industry.  These include:

  • The inaccuracy of some performance estimates given to householders by installers is an issue for the industry. This is particularly true for heat pumps and biomass.  
  • There is a lack of awareness amongst householders in relation to renewables and the associated benefits.
  • Home Energy Scotland renewables loans are not high enough (in terms of percentage contributions) and solar PV maximum value is not high enough. 
  • There is a lack of MCS enforcement ‘on the ground’. 
  • MCS Quality Management Systems (QMS) requirements are regarded by some as too onerous for micro-sized companies. 

Key recommendations - microgeneration workshop

The microgeneration workshop identified 10 recommendations for overcoming these barriers.  These include:

  • MCS to provide a standardised approach/template for installers to ensure householders are given consistent information.
  • EST to discuss with the Scottish Government further ways in which to promote the benefits of installing renewables to householders.
  • EST to review the loan scheme support levels with Scottish Government.
  • MCS should audit installers more whilst ensuring greater enforcement of the scheme. MCS should also publish a timetable outlining the steps it is taking to address this (for example when it plans to appoint an independent company to carry out audits and verification).
  • MCS should review and adapt if necessary QMS requirements to make it more relevant to micro-sized businesses.

Next steps

Energy Saving Trust has provided the Scottish Government with copies of these final reports  which  will be used to help inform the development of key policy areas including the Scottish Government’s Energy Strategy and the development of Scotland’s Energy Efficiency Programme (SEEP).

Energy Saving Trust will work closely with the Scottish Government to develop an action plan outlining  what is required to help overcome the barriers identified in these reports.

Latest update - October 2016

To tackle the issue relating to awareness, cost and support available for modern apprenticeships the Energy Saving Trust has organised a seminar and webinar in November for suppliers.

Energy Saving Trust also launched a two week campaign in collaboration with Trading Standards Scotland and Citizens Advice Scotland to raise awareness amongst householders of the tactics used by rogue companies operating in the energy efficiency market.

Previous findings

Microgeneration industry workshop feedback

Energy Saving Trust organised a microgeneration workshop in May 2015 to identify what the key barriers are facing the industry in Scotland. Attendees included MCS installers, manufacturers, distributors and trade bodies. A report from the Microgeneration industry workshop was produced and shared with the Scottish Government’s Microgeneration Task Group.

Supply chain analysis of remote rural and island areas of Scotland

Background

A report was commissioned in 2014, to analyse the supply chain in remote rural and island areas of Scotland.  The report funded by the Scottish Government was partly in response to feedback suggesting householders in these areas may struggle to get certified installers and assessors to carry out work on their properties.  It was also to identify what the key barriers were for companies in these areas, in particular barriers to certification. The research covered the following local authority areas:

  • Highlands
  • Aberdeenshire
  • Scottish Borders
  • Western Isles
  • Shetland Islands
  • Orkney Islands 

Interviews with installers and assessors both certified (MCS and Green Deal) and non-certified, and householders with experience of installing, or seeking to install, energy efficiency and renewables technologies were carried out as part of the research.

Supply chain analysis of remote rural and island areas March 2015 – Executive Summary

Supply chain analysis of remote rural and island areas March 2015 – Full Report

Key findings

  • There are more MCS installers than Green Deal Approved installers in these areas.
  • Micro-sized businesses (six employees or fewer) are common in these areas: more than half of the businesses surveyed are this size.  Given their size, these businesses can find it more difficult to adapt to changing government schemes.
  • Non-certified businesses have still to be convinced to get involved with this market. Assessors think it’s not a key business area and installers see no market or expect no return. 
  • There’s  a significant lack of awareness of financial support schemes amongst the supply chain, particularly for the Home Energy Efficiency Programmes for Scotland (HEEPS) and the Resources Efficient Scotland (RES) SME loans.
  • Administration and paperwork relating to training and certification are barriers for businesses.
  • The Green Deal Orb website and tools are perceived to be barriers both for householders and businesses.
  • The customer journey is confusing for householders, with too many agencies involved and too many steps to go through.

Key recommendations

  • Identify and promote clear reasons for businesses to become involved with the energy efficiency and renewables market
  • Raise awareness of financial support schemes and develop routes for SMEs to get involved with these schemes
  • Develop targeted support and training for businesses and deliver them in these areas
  • Work with MCS, BSI and GD Orb to explore routes to reduce paperwork
  • Make improvements to the GD Orb website so that it more accurately reflects where GD Approved companies operate.  

Next steps

We will share the key findings coming out of this report with key stakeholders including trade bodies, Green Deal Orb and other key organisations involved with the supply chain. We will then seek to work with these organisations to act on the recommendations coming out of the report. 

The Scottish Government have already acted on some of these recommendations through the new HEEPS cashback and loans scheme.  The recommendations will also help shape the Scottish Government funded Sustainable Energy Supply Chain programme’s activities in 2015-16. 

Green Deal market insight report for Scotland

We have produced a dashboard report providing Green Deal market insights for Scotland (March 2015) in terms of both supply and demand. This report provides data on the supply chain, including the number of Green Deal participants operating in Scotland along with demand side data including Occupancy Assessments and Green Deal plans.  Comparisons are also made with UK data based on DECC’s monthly Green Deal and ECO reports

The report also shows a breakdown of Green Deal Approved (PAS2030) measures against the number of installers able to offer them.

Contact us

Enquiries?

If you have any questions in relation to these reports or have any comments you would like to share, please contact our dedicated team.

Email us