HOME ENERGY EFFICIENCY PROGRAMMES FOR SCOTLAND - AREA BASED
SCHEMES
2014-15 PROGRAMME
GUIDANCE ON SCHEME DESIGN AND DELIVERY
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Contents
Introduction
Home Energy Efficiency Programmes for Scotland: Area-based Schemes –
Programme Structure
Outline Process
Funding for Area-based Schemes – Basis of Proposed Allocations
Rules – all proposals
Criteria – all proposals
Looking Forward – 2015/16 onwards
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Introduction
1.
This paper sets out the guiding principles and process for the design and
delivery for the 2014/15 Home Energy Efficiency Programmes for Scotland: Areabased Schemes (HEEPS: ABS).
2.
Scottish Ministers have approved the following key objectives for the areabased schemes, as follows:

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
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3.
To reduce fuel poverty;
To reduce carbon emissions;
To encourage ECO activity in Scotland; and
To support the local economy and sustainable local economic
development
We therefore have two aims for the design of the schemes:
1. To achieve the maximum impact across Scotland in terms of meeting
HEEPS objectives; and
2. Within this, to make it as fair, speedy and straightforward as it can be.
Home Energy Efficiency Programmes for Scotland Area-based Schemes –
Programme Structure
4.
As in 2013/14, the 2014/15 HEEPS: ABS programme is made up of two
distinct parts:
i.
ii.
The Core Allocation Programme (CAP) element
The Proposals for Additional Funding (PAF) element
The criteria for both elements of the programme are the same and are set out below.
5.
Dividing the programme ensures that all councils have a core allocation based
on a needs-based assessment, while enabling the Scottish Government to provide
additional funds to councils who are in a position to deliver larger scale and/or more
ambitious projects which will achieve the key objectives of the HEEPS: ABS.
6.
Following discussions with COSLA, Ministers approved £42m of the total
£60m budget be distributed through the CAP. £18 million will be available for
councils to request additional support from the PAF element. We will assess
applications for both the CAP and the PAF before awarding any funding.
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Outline Process
7.
The proposed process and timetable is as follows:
By 7 March
11 April
25 April
w/c 5 May
Distribute guidance on HEEPS:ABS including indicative
allocations and invite councils to submit proposals
Deadline for submission of proposals
Complete appraisal of proposals
Offers of grant distributed
8.
Councils are free to make proposals for their core allocations only. Councils
submitting proposals for CAP funding only will have their bids assessed, and a
decision made, within two weeks of receipt (where no further information is required).
9.
We expect local authorities to prioritise schemes in line with the domestic
energy efficiency strategy set out in their LHS (Local Housing Strategy). HEEPS:
ABS funding is allocated to councils to cover their area and in their role as the
strategic housing authority. It is not solely for council’s own stock. They should
liaise with Registered Social Landlords (RSLs) to identify opportunities for them to
benefit from HEEPS:ABS funding (both for ‘blockers’ in their own schemes where
they can demonstrate that no other funding is available and/or to extend the benefits
of their ECO schemes to nearby owner-occupiers). When prioritising schemes,
councils should consider all proposals (council mixed tenure schemes, RSL mixed
tenure schemes and wholly private sector schemes) against the criteria set out
below.
Funding for Area-based Schemes – Basis of Allocations
10.
Awards of core funding have now been published. Information on allocations
of core funding can be found here.
11.
Ministers have agreed with COSLA that a needs-based model should be
adopted to allocate the CAP. The model is based on:
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20% for national fuel poor households within a local authority area;
30% for total local authority area population which is fuel poor;
30% for national share of dwellings which have solid walls; and
20% for national share of dwellings with hard-to-treat cavity walls.
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HEEPS Area-based Schemes – eligibility for funding
12.
All applications (for both CAP and PAF) should meet the following:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
They should clearly target fuel poor areas, beginning with those
households in most need of assistance.
Funding can only be used for private sector properties (including private
sector properties in mixed tenure blocks). Private rented properties will be
eligible. Park homes are eligible only where the local authority treats
them as permanent homes and they are the sole residence of the
occupant. Holiday homes, and second homes, are excluded from
receiving support through the HEEPS: ABS programme.
They should be for programmes to be delivered in 2014/15, but can also
include an outline programme for 2015/16.
They should provide substantial evidence supporting the choice of area
and mix of measures being put forward to meet the funding criteria (see
below for further information).
Programmes should have a focus on solid wall insulation and hard-to-treat
cavities. However there can be an element of additional support for basic
loft and cavity measures where ECO does not cover the full cost of the
installation. Where loft and cavity measures are being offered on a local
authority-wide basis, we expect HEEPS: ABS support to be restricted to
houses in council tax bands A-C. Houses in higher bands can benefit
from the council’s procured contract for lofts and cavities, but any enabling
or other costs not covered by ECO will need to be covered by the
householder for houses in council tax bands D and above. This ensures
HEEPS: ABS continues to be focussed on households more likely to be at
risk of being fuel poor.
Councils will be able to spend up to 15% of their grant on administrative
and enabling costs (see below for further information).
Councils will be able to contractually commit up to 20% of their core
2014/15 allocation for drawdown in 2015/16 (for the avoidance of doubt
this does NOT mean it will be possible to carry forward underspend – all
2014/15 grant MUST be spent by 30 September 2015 and drawn down by
31 October 2015. Projects may, however, continue into 2015/16/17 using
ECO or other leveraged funding.
The focus of programmes should be measures identified by DECC as
eligible for ECO. Secondary measures are only eligible where the
relevant primary measure has been installed under the relevant ECO
obligation. Measures not eligible for Green Deal and ECO (for example,
work to communal areas in blocks) can be funded by HEEPS: ABS but
only where ECO has been secured for the bulk of the proposed
programme and on a proportionate basis for owners to social landlords.
Proposals MUST be deliverable, i.e. works must be completed by 30
September 2015 and all grant drawn down before 31 October 2015.
Proposals should demonstrate that they have considered all available
funding options to achieve the proposed work. This would include, where
appropriate, any contributions expected from owners and the Green Deal.
Schemes should be designed to maximise carbon reductions.
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xii.
Schemes should be designed so as to support the local economy and use
local installers as far as possible, within the framework of procurement
legislation and best practice.
13.
For councils who submit proposals for the Core Allocation Programme only
we will assess to ensure that all the criteria are met. If a proposal doesn’t meet the
criteria, we will liaise with the council in question to help them understand what
additional information is required to meet the criteria.
14.
For those requesting additional funding (PAF) we will evaluate proposals on a
comparative basis. If requests for additional funding (that meet the criteria) exceed
the amount available, some requests may not be met or not met in full.
Deliverability will be a key concern.
Weighting of the criteria
15.
A core objective of HEEPS: ABS is to lever as much ECO into Scotland as
possible. This is to maximise our ability to tackle fuel poverty, reduce emissions and
boost the local economy.
16.
In assessing proposals we will look carefully at the funding requested and
what it is intended to achieve. We will take into account average levels of grant
requested across the scheme to determine viability and value for money.
17.
However, in some circumstances specific leverage rates will be lower, in
particular for the more expensive measures. We envisage that authorities will still be
able to achieve leverage in any of the following ways:
 By expanding social sector schemes to blockers and adjacent/nearby owners
and counting all ECO funding levered
 By utilising other funding sources
 By designing schemes which achieve leverage across the scheme as a
whole in any one of the 3 categories of ECO (ie, they don’t have to lever
ECO for each and every individual house benefitting from HEEPS: ABS)
Evidence in support of choice of area
18.
We are happy to accept a broad range of evidence in support of the
area/measures mix put forward, for example:

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
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EST Home Analytics data model
Local house condition and survey information
Evidence from HEED
Evidence from SIMD and CACI
Evidence from Local Housing Strategy and Community Planning strategies
19.
It is important to note that we do not expect councils or other social landlords
to provide clear evidence that every household in a selected area is in fuel poverty. It
is often necessary to use proxy information to identify low income areas and blend
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this with other knowledge or data about the housing stock. Scottish Government
officials are available to discuss applications prior to submission.
Priorities for 2014/15 Scheme Design:
i. Solid Wall Insulation,
20.
Following the announcement made by DECC in December 2013, making
changes to the Energy Company Obligation, we have reviewed the implications of
these for the design and delivery of HEEPS: ABS.
21.
Scottish Ministers have agreed that a key area of concern is that these
changes, combined with the market-driven approach which continues to underpin the
ECO regime, gives rise to the risk of significant market failures in key delivery areas.
These are support for the installation of solid wall insulation, and support for delivery
of the Home Heating Cost Reduction Obligation (HHCRO) element of ECO in rural
areas.
22.
We therefore expect that the focus of HEEPS: ABS programmes should in
the main be solid wall insulation (internal or external), and possibly hard-to-treat
cavities. Given that ECO funding should be readily available to install measures such
as loft and standard cavity wall insulation we do not expect HEEPS funding to
contribute significantly towards these. HEEPS proposals can, however, contain a
blended mix of measures across households.
ii. HHCRO Top-up Funding In Rural Areas
23.
To support delivery in off gas and rural areas, we propose that, for 2014/15
only, a limited amount of HEEPS: ABS funding ( set at a maximum of 20% of the
council’s HEEPS: ABS programme in 14/15) may be used to deliver heating and
insulation improvements for low-income and vulnerable households eligible to
receive the HHCRO obligation. This would supplement the Affordable Warmth
element of ECO, recognising that in practice many eligible householders have not
been providing assistance from ECO providers where the cost of the installation is
not considered cost-effective. The maximum subsidy level for this group is £7,500
per household but we expect typical grants for this work to be well under that level as
it should be used to supplement ECO subsidy. Councils should ensure that the order
of instalment of the measures maximises the ECO which can be generated and
appropriate procurement is in place
ECO Leverage
24.
ECO leverage remains a key objective for the HEEPS: ABS programme and
leverage rates will be a key consideration in the allocation of PAF element of
HEEPS: ABS. Please note that there is no specific ECO target which must be
met for the 2014/15 Programme. But we do expect councils to maximise the
ECO they bring to projects.
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25.
Leverage of investment from other sources will also be taken into account,
including:
 Investment made in mixed tenure estates from social landlords’ capital
programmes
 Other in-house resources, eg the local authority’s energy efficiency officers
 Investment through other Scottish Government programmes, contributions
required from owners. Note however that we expect these to be kept at a
level consistent with encouraging take up by fuel poor households.
26.
We have developed a simple spreadsheet to assist councils in looking at the
effect (in terms of leverage) of different combinations of higher and lower cost
measures which will be circulated alongside any final guidance.
Administrative/Enabling Costs
27.
Following discussion with COSLA we have agreed that up to 15% of the total
cost can be spent on administrative and enabling costs. This is to assist in building
capacity to deliver HEEPS schemes and is for a short-term period only. Requests for
HEEPS funding should clearly set out how it will be used and you should discuss
enabling funding with Scottish Government officials prior to making submissions. In
general enabling funding can be used to cover the costs of the following:
i.
ii.
iii.
iv.
v.
vi.
Scheme marketing, promotion and publicity;
Scheme development costs, including resident consultation, sample
physical surveys, etc.
Transport costs (for remote and rural areas);
Scaffolding costs;
Scheme management costs, including quality control, sampling etc.; and
Complaints procedures.
Determining the level of HEEPS: ABS funding required
28.
The level of HEEPS: ABS funding required for projects should equate to the
total costs of the works minus any other sources of funding such as ECO or
household contribution. For example:
Total cost
ECO
Owner contribution
HEEPS Required
£10 000
£4000
£1000
£5000
29.
The level of HEEPS funding required should not be determined by assuming
that each property or project will receive the maximum level of HEEPS funding
available (£7500). It is important that HEEPS: ABS funding is used effectively to
support as many of Scotland’s households as possible. For that reason we expect
typical requests for HEEPS funding to come in at less than the maximum grant.
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Cap on total HEEPS: ABS contribution per household
30.
It is anticipated that for private households, a cap of £7500 per property will
operate unless there are exceptional circumstances. Where the HEEPS:ABS
funding required to enable schemes to proceed exceeds this amount, or where costs
increase after a project has commenced, discussion should take place with Scottish
Government.
Looking Forward – 2015/16 onwards
31.
We expect that allowing councils to commit up to 20% of their core 2014/15
allocation, for drawdown from their 15/16 funding award will be of considerable help
in forward planning schemes. We envisage carrying out a further assessment round
for 14/15 towards the end of 2014, in order that grants awards can be made prior to
the beginning of the financial year.
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ANNEX 1
Energy Company Contacts
Energy Company
Scottish Gas
Contact Name
Allison Swan
e-mail address
alison.swan@britishgas.co.uk
SSE
eco@sse.com
EDF
No direct name - use
e-mail address for
first contact and you
will then be
contacted.
David Gray
Npower
Brian McRobert
brian.mcrobert@npower.com
Scottish Power
Heather Watts
Fiona McGrory
Crispin Jones
Heather.Watts@ScottishPower.com
Fiona.McGrory@ScottishPower.com
crispin.jones@eonenergy.com
E.ON
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David.gray@edfenergy.com