Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group (RHG) Report 2008

Transcription

1 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group (RHG) Report 2008

2 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group (RHG) Report 2008 The Scottish Government, Edinburgh 2008

3 Crown copyright 2008 ISBN: The Scottish Government St Andrew s House Edinburgh EH1 3DG Produced for the Scottish Government by RR Donnelley B /08 Published by the Scottish Government, February, 2008 Further copies are available from Blackwell s Bookshop 53 South Bridge Edinburgh EH1 1YS The text pages of this document are printed on recycled paper and are 100% recyclable

4 Contents CONTENTS Section 1: Vision and Goals 2 Section 2: Recommendations 4 Section 3: Introduction 8 Section 4: Strategic Policy Context 10 Section 5: Market Size 12 Section 6: Technologies 18 Section 7: Indicative Heat Demand Map 21 Section 8: Targets and Mechanisms 24 Annex A Membership List 38 Annex B Indicative Heat Demand Map 39 Annex C Case Studies 43 Annex D Glossary and List of Abbreviations 44 Annex E References 48

5 Section 1: Vision and Goals

6 Section 1: Vision and Goals VISION The Forum for Renewable Energy Development Scotland s (FREDS) vision is for a smarter, greener, warmer Scotland, building a commercially viable, diverse renewable heat industry to serve Scotland s heat needs. This vision is driven by both the need to tackle climate change and the potential for renewable heat to deliver sustainable economic growth. Renewable heat should be taken forward within the context of an overall heat strategy, contributing to a low carbon and energy efficient future. GOALS The group believes that the goals of a renewable heat strategy should be to: create diverse, stable, viable, sustainable heat markets and associated industry; Renewable heat markets will include a wide range of energy sources and should have the principles of sustainability at their core. develop a supportive policy, planning and regulatory framework; Renewable heat policy encompasses a range of regulation, planning and legislation issues a coordinated framework which will support sustainable options and discourage unsustainable choices through building standards, planning and regulation is critical. support the development of integrated local and regional community energy and utility cross-sectoral partnerships; New partnerships must be forged across a range of sectors, including communities, local authorities, business and industry, to deliver effective renewable heat services in Scotland. create a flexible, future-proofed delivery infrastructure (allowing for technological, financial and structural innovation). A wider heat strategy should consider the options for combined heat and power (CHP) and district heatinginscotlandbothintheuseofexisting waste heat, and how such schemes can be future-proofed so that renewable feedstock/ technologies can be utilised now or in the future. set a target for the minimum percentage of heat to come from a mix of renewable technologies by 2020; A target provides a benchmark against which progress can be measured and strengthens the case for renewable heat projects. 3

7 Section 2: Recommendations

8 Section 2: Recommendations The Group recognises that the renewable heat take-up in Scotland is in its infancy and that there is a long way to go before reaching the levels experienced in countries like Denmark and Austria. Consumers expect heat to be cheap, convenient and clean. We have not reached this stage in terms of all renewable heat technologies and must address this if renewable heat is to take off. The small scale and fragmented nature of renewable heat markets in Scotland, and the obstacles to development resulting from the economies of scale and infrastructure enjoyed by the incumbent fossil technologies (particularly gas) mean that there is a very strong case for intervention and support to enable fair competition for renewable heat. However there are particular opportunities in Scotland because of the extent of areas off the gas grid, and the existence of clusters of potential heat demand and existing waste heat or potential renewable heat sources. As a result the group very much welcomes the opportunity to work with the Scottish Government to develop a vibrant renewable heat sector in Scotland. The recommendations outlined below cover a wide range of policy tools and mechanisms which the Group believe are key to realising the vision and goals set out earlier. DEVOLVED RESPONSIBILITY AND RENEWABLE HEAT clarifies that it has devolved responsibility for the promotion of renewable heat in Scotland. TECHNOLOGIES That Scottish Renewables: produces a consumer information pack outlining what the key renewable heat technologies are as well as explaining the important factors to bear in mind when considering which may be appropriate for specific applications. HEAT MAP develops a consistent approach to heat mapping and disseminates this to all local authorities in Scotland. TARGETS urgently conducts further analysis of the potential heat markets in Scotland and the respective barriers and costs in order to inform the identification of an appropriate target for renewable heat, taking into consideration the impact of energy efficiency and heat loss reduction on the overall market size. 5

9 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 POLICY AND REGULATION Wider Heat Strategy develops a wider heat strategy for Scotland and takes into account, in the strategy, the measures needed to develop the renewable heat sector. as part of a wider heat strategy, supports and promotes district heating, taking into account the technology support and regulatory reform needed. Fuel Poverty supports the roll out of renewable technologies within its Central Heating Programme, subject to the success of the current Renewable Heat Pilot. Public Procurement takes a lead in its own public procurement practices in adopting renewable heat within its own estate, and requires local authorities and other public bodies to do the same. Heat from Waste Biomass charges SEPA to prohibit the dumping of waste biomass from industrial and commercial processes to landfill in order to promote its use for energy production. puts in place a policy to prevent the combustion of any form of waste without the recovery of heat, via CHP and/or district heating, and ensures that the regulatory and planning powers necessary to enforce this are adequate. undertakes to establish a fuel standard(s) for materials from waste derived sources to enable appropriate materials to be treated as non waste fuel. Low Carbon Buildings includes renewable heat as part of the process of progressively tightening and fully enforcing building regulations to accelerate progress to deliver zero-carbon new building stock. reviews, as a matter of urgency, all options for improving the existing building stock in order to maximise uptake of renewable heat and minimise heat demand. promotes the value of CPD for all stakeholders in the property market to raise awareness. Air Quality recognises the benefit of renewable heat technologies to improving air quality, particularly where they replace oil and coal heating. ensures, as part of a supportive planning and regulatory framework that, air quality management does not disproportionately penalise biomass or other renewable technologies. 6

10 Section 2: Recommendations LOCAL PLANNING supports the implementation of measures within SPP6 on the installation of microrenewables. legislates to require local authorities and housing associations to promote and support district heating using renewable technologies. FINANCIAL INCENTIVES Renewables Obligation (Scotland) amends the Renewables Obligation (Scotland) to allow ROC-banding in line with the proposals being considered under the UK Energy Bill; in particular to award double ROCs to biomass CHP schemes, and for advanced conversion technologies for waste, but only where this is based on CHP and/or district heating. Financial Mechanisms urgently reviews ongoing work by the UK Government on financial mechanisms, and carries out additional analysis to determine the most appropriate mechanism(s) for developing a Scottish heat market, taking into consideration scale, technology, capital and fuel costs, innovative financial models, and market price to ensure no undue burden is placed on the end user. CAPACITY BUILDING Continuing Professional Development (CPD) runs CPD workshops and/or seminars involving the Royal Incorporation of Architects in Scotland (RIAS) and the Institution of Civil Engineers (ICE), to ensure that all players are in tune with sustainable development principles, give proper consideration to renewable heat, and fully implement planning and building standards. Training instructs the Scottish Funding Council, Sector Skills Council and Skills Agency to develop a co-ordinated training programme incorporating: microgeneration, energy efficiency, and renewable heat. Best Practice investigates the promotion of renewable heat within other countries, to consider how they have achieved a well-developed renewable heat market, and ensure benchmarking against best practice abroad, with a view to adoption of best practice, subject to statutory competence. General Awareness Raising That the Scottish Government and the sector as a whole: promotes the benefits of renewable heat in a coordinated and easily accessible fashion, including through web promotion by appropriate agencies and other general awareness raising activities. 7

11 Section 3: Introduction

12 Section 3: Introduction Renewable Heat is simply heat (rather than electricity) produced from renewable sources such as biomass, ground source heat pumps, air source heat pumps, water source heat pumps, solar heating, wind to heat, geothermal, heat from waste biomass, anaerobic digestion and landfill gas. Background The FREDS Renewable Heat Group was established by the Scottish Government in 2006 to help inform the content of a Renewable Heat Strategy for Scotland. Membership was drawn from a wide range of public and private sector organisations with a range of experience in renewable heat. Annex A contains the full membership. Remit To identify and develop recommendations for the key components of a Scottish renewable heat strategy, including: clarification of size of baseline market; review of the potential of the various technologies within the Scottish Government s renewables energy policy and the barriers to growth; consideration of the merits of existing and proposed mechanisms for supporting renewable heat, including delivery agencies; development of targets for the production of renewable heat up to 2020, with monitoring proposals. To take into account parallel strategic work at a Scottish and UK level, as well as best practice in Europe and elsewhere. The Group also highlighted several related issues including fuel poverty, waste heat, district heating, and heat mapping. Whilst the Group recognises that energy efficiency is a key part of an overall energy strategy, it is not included in the remit of this report. The Group does however recognise that renewable heat and energy efficiency are closely linked and recommends closer integration of these policy areas. Structure The main sections are: Recommendations Strategic Policy Context Market Size Technologies Indicative Heat Mapping Targets and Mechanisms 9

13 Section 4: Strategic Policy Context

14 Section 4: Strategic Policy Context Purpose Part of the Group s remit was to consider the overall policy context of Renewable Heat. This section summaries the strategic policy context at a European, UK and Scottish level which we consider impacts on the development of renewable heat. European Context The European Union recently agreed a target for 20% of overall EU energy consumption to come from renewables by 2020, including heat and transport along with electricity. The target for the UK contribution has been set at 15%, and it is clear that this overall target will impact on the need to encourage renewable heat. The EU has also laid down strict requirements for waste and landfill under the Landfill Directive which encourages Member States to reduce as far as possible material going to landfill. UK Context Renewable energy is an integral part of the UK Government s longer-term aim of reducing CO 2 emissions by 60% by It has set a target of 10% of electricity supply from renewable energy by The UK Government has recently outlined its aim for greater use of renewable heat, through greater use of energy derived from waste, biomass and microgeneration. This year, the UK Government is calling for evidence to bring forward new measures for greater use of renewables to heat our homes and our buildings. The Energy White paper and the Renewables Obligation (RO) consultation published in May 2007 set out a range of measures to address the future energy needs of the UK. The proposed banding for biomass as used in combined heat and power (CHP) plants should help renewable heat by increasing the incentives for the use of biomass CHP. Scottish Context The promotion of renewable energy is devolved to the Scottish Government. The Government s policy support to date has played a major role in the development of renewable electricity in Scotland. The Scottish Government has set a target that 50% of the demand for electricity generated in Scotland must be met from renewable resources by 2020, with an interim milestone of 31% by Alongside that, the proposed Scottish Climate Change Bill will set a target for reducing greenhouse gas emissions by 80% by We consider there is potential to set a Scottish renewable heat target and this is further considered at section 8. The group is encouraged by these proposals which could create a structure for investment in clean and low carbon technologies, contributing to sustainable economic growth and helping to create a greener Scotland. Section 8 considers a range of mechanisms to further support the development of renewable heat across a range of policy areas. The group understands that renewable heat is a devolved matter for the Scottish Government. However it would welcome a statement to clarify this position and the role of the Scottish Government in promoting renewable heat in Scotland. Devolved Responsibility clarifies that it has devolved responsibility for the promotion of renewable heat in Scotland. 11

15 Section 5: Market Size

16 Section 5: Market Size In developing its recommendations to the Scottish Government, the group considered the potential size of the renewable heat market in Scotland within the wider heat market. The key policy findings are: Switching to renewable heat requires investment in completely new infrastructure, either individually or through the installation of renewable heat networks which requires substantial capital investment. Heat markets have a number of characteristics that create a different set of issues for increasing renewable heat use, compared to renewable electricity. The key difference is that heat energy is generated at the end user location, rather than at a distant energy plant. There is no single market. Gas is the major existing fuel for heating, and there is already a major infrastructure in place for delivery. In areas off mains gas grid, where fuel poverty in particular is of increasing concern, the heat market is especially fragmented with a large number of fuel suppliers delivering mainly oil and LPG to individual users. There are some limited heat networks in place, such as the district heating scheme at Seaton in Aberdeen, which use underground pipes to carry heat around the heating grid. Further examples include some small-scale distribution networks which are now up and running in areas such as the Fyne Homes development in Whitegates or the district heating network in Lerwick. Most of these networks provide heating for social housing and do not integrate private housing, industrial use and public sector buildings. The Lerwick project has 592 domestic and 91 non domestic customers including the Clickimin Leisure Complex, Gilbert Bain Hospital and two primary schools. The Caithness Heat & Power project in Wick is the first such major infrastructure project which will link the local distillery, public and private sector housing and the hospital to a district heating network, with energy generated from a biomass CHP plant. The following table shows the estimated energy consumption by sector. Table 1: Estimated annual heat energy consumption Total energy consumption (TWh/yr) Estimated heat energy for space heating (TWh/yr) Estimated heat energy for industrial processes (TWh/yr) Estimated heat demand for hot water (TWh/yr) Estimated total heat demand (TWh/yr) Electricity used as heat (TWh/yr) Domestic Industry Service and public TOTAL

17 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 The total energy consumption for Scotland is taken from the Scottish Energy Study (Scottish Government, 2006) 1 and is based on figures for This study also provides figures for domestic and public service space heating. Figures for hot water and total heat demand in the domestic and service/public sector are based on the total figures given in the Study for heat, hot water and catering, less the assumed amount used for catering, taken from the Energy Consumption in the UK 2 catering (DTI, 2002) (5% for domestic and 9% for service/public). Figures for industrial space and process heat demand, including high and low temperature process, drying and separation, are based on percentage given in the DTI report (10% and 66% respectively). The amount of electricity used for heating in the domestic and service/public sector is taken from the Scottish Energy Study and for industry is estimated based on the difference between non-electric energy consumption and heat demand (total non-electric fuel consumption is 70% whereas heat demand is 76%). To put the above figures in perspective, there are around 2.4 million households in Scotland, using on average 20 megawatt hours of heat energy (MWh th ) each per year. At a larger scale, the 44 MW e E-On power station at Lockerbie will produce around 0.1 TWh of electricity per year while a 25 MW e CHP plant could produce around 0.05 TWh of electricity as well as 0.2 TWh of heat per year. Figure 1: Estimated Energy Use Transport 28% Service & public sector 21% Industry 29% Heat & hot water 57% Domestic 50% Electrical equipment & other 15% 14 1 Scottish Government, Scottish Energy Study, Volume 1: Energy in Scotland: Supply & Demand. Report by AEA Technology for the Scottish Government, Edinburgh. 2 UK Government, Energy Consumption in the UK. DTI, London

18 Section 5: Market Size Current use of Renewable Heat The Scottish Renewables Forum estimates in its Delivering the New Generation of Energy report in 2006 that around 6% of Scotland s total energy use comes from renewables, of which around half of which is renewable heat. This includes heat from renewable electricity and from traditional energy sources, such as wood fires. This would suggest that up to 4% of Scotland s heat demand is currently provided by renewables. As discussed above, future heat demand is not expected to increase substantially by Targets should consider both this and the current proportion of heat supplied by renewables when setting ambitious targets for renewable heat use. Domestic around 87% of energy used for heat and hot water In general, most domestic consumers expect heating to be cheap and convenient, something that cannot currently be delivered by all renewable heat technologies. Even where the fuel itself is comparatively cheap, or free as in the case for solar heating, installations can be capital intensive and disruptive. The easiest and cheapest option is usually to fit renewable technologies during construction, though the level of heat demand from existing buildings is of course much greater. Existing households solutions to retrofitting The domestic heat market is estimated to be around 47 TWh per annum, with nearly two thirds of households in urban areas and predominantly owner occupied. The bulk of the remaining domestic properties are owned by housing associations and public authorities. In terms of the total estimated heat energy usage, private householders account for around 31 TWh of energy consumption for space and water heating, and the public/community housing sector accounts for the remaining 16 TWh. The largest segment of the heat market is high density housing in urban areas (flats or terraces), either privately owned or rented. This can be a difficult sector to tackle in terms of support and coordination of retrofitting, but there is a good example of what can be done in the Edinburgh Top of the Tenements case study linked to from Annex C. Planning and space issues may make some types of technology unsuitable and the number of individual owners and types of tenure can make a comprehensive programme of retrofitting more complex. Particularly for district heating, issues such as siting of the plant, disruption caused during retrofitting and getting agreement from individual householders to sign up can create some additional barriers. Only 6% of the Scottish Community and Householder Renewables Initiative (SCHRI) grants to householders are within the four city local authority areas (Aberdeen, Edinburgh, Glasgow and Dundee). However, based on the experience of local authorities in Shetland and Caithness, there is significant demand from private householders to connect to local heating networks established by the local authority (e.g. 75 applications for SCHRI funding to connect to the Lerwick District Heating scheme), where heating costs are significantly reduced. A key driver for retrofitting heating systems is fuel poverty. Around one third of Scottish houses are off-mains gas mainly in small towns and rural areas of which roughly one quarter will be local authority/housing association properties. This sector therefore comprises around 9% of households and could be a strategically significant target for renewable heat. 15

19 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 New build promoting renewables in the private sector The rate of new build in Scotland is currently around 1% of the existing housing stock per annum. The Scottish Government has signalled that it wants to see the rate of development of new housing increased from the current level of 25,000 per year to 35,000 per year by the middle of the next decade, meaning that the opportunities for using renewable heat technologies in new properties will increase. This suggests that over 10 years all new build properties could account for at least 10% of the total domestic heat market. However, energy consumption in new properties is likely to be lower compared to existing housing stock due to tougher building regulations and the estimated heat market from this sector is likely to be around 0.3 to 0.4 TWh per annum. The vast majority, nearly 90%, are built by and for the private sector and this is therefore a key market sector to address. Housing associations have built several flagship district heating schemes with renewable heating but market penetration of renewable heat must reach the private sector to deliver significant renewable heat capacity. Whether or not this elevated building rate is achieved, the new build market stimulated by the Merton rule, SPP6 and efforts to bring forward the provision of zero carbon buildings offers a critical opportunity for the development of a renewable heat industry subsequently able to provide technology at a cost which makes it commercially viable for retrofit into existing dwellings. Where developments with a total cumulative floor space over 500m 2 are planned, the introduction of SPP6 raises an expectation that developers will explore fully the opportunities for the installation of low and zero carbon equipment to contribute to at least an extra 15% reduction in carbon emissions beyond the 2007 building regulations standard for carbon dioxide emissions. There is limited consensus on which technologies will be favoured by the effects of building regulations and planning rules, but broad agreement that appropriate technologies such as biomass CHP will need active support to scale up to the levels of demand anticipated. Table 3: New build properties by owner (2006) Type of builder Number of properties %oftotal private sector 20, % housing associations 4, % public authorities 6 0.0% 24,765 Industry demand for process heat It is difficult to get a detailed breakdown of industry heat consumption. Based on figures from the Scottish Energy Study, it is estimated that heat consumption is around 24 TWh per annum (67% of total industrial energy consumption). This energy is used for a wide variety of processes and each sector has specific requirements for heat. Two key areas to consider when looking at targeting support and appropriate technologies are: type of heat requirement (low to medium temperature/high temperature) sectoral distribution (large individual point sources/dispersed) Large-scale point sources major industry users Most of the large-scale point sources of heat emissions and hence energy use are chemical industries, including refineries. Other key point sources are large-scale timber industry plants (pulp and paper, chipboard), the seven large grain distillers and individual large-scale energy consumers. 16

20 Section 5: Market Size Key sectors major industrial heat users in Scotland Some of the key industry sectors already use renewable energy. Alcan in Lochaber use large amounts of hydro-electricity; the timber industry uses biomass fuel, and two of the major paper producers, have biomass projects in the pipeline: It is estimated that the paper and timber industry currently uses around 92 thousand oven dried tonnes of domestically derived biomass per annum for energy, equivalent to nearly 2% of total industrial heat energy usage. The installation of large scale biomass plants currently underway will increase significantly the proportion of renewable heat used by the industry over the next five years. The chemical sector, including oil refineries, has a very high heat demand. Boiling, distilling and various chemical processes have a low-medium temperature requirement which could be met by a variety of renewables. The food and drink sector is a significant market segment in Scotland. In particular, whisky distillers use an estimated 8% of heat energy in Scotland just over half in 7 large grain distilleries. The remaining demand is split over 80 locations, predominantly in rural areas and often close to local populations. Distilleries also produce a significant amount of biomass co-products and waste heat, which could be a key opportunity to address both industrial and domestic heat use. Service Sector This includes commercial, public and agricultural energy use and the Scottish Energy Study estimates that energy used for space, water heating and catering is around 17 TWh per annum. Major energy users in this sector are leisure facilities, schools, hospitality and commercial offices. Future heat demand Domestic improved energy efficiency balances increases in consumption Between 1990 and 2002 domestic energy consumption across the UK increased by around 12% due to a number of factors: an increasing amount of electrical appliances in the home; more people living alone, increasing the number of households; an increase in the average temperature in the home (estimated 3 to be around 1.5ºC between 1991 and 2000). This is counterbalanced by increasing energy efficiency and insulation, and as housing stock improves, by 2020 overall heat demand should be starting to decrease, assuming that improvements in the existing stock outweigh the net effect of additions to the stock. The higher the standards of new dwellings the less demand will be added, and the easier it will be for reduced demand in existing buildings to result in net reductions in demand. Industrial declining demand Between 1990 and 2002 consumption in the industrial sector decreased by around 31%, largely due to a decline in heavy industries. However, some sectors are experiencing growth, for example food and drink remains a key sector for Scotland. Growth in sectoral energy use will also be counterbalanced by targets set under the Climate Change Levy. Services improved energy efficiency in public buildings Between 1990 and 2002, energy consumption increased by about 10% mainly due to increases in the use of electricity for office equipment, etc. Again, improvements in the energy efficiency of buildings, particularly new buildings, will reduce the energy consumption per m 2. 3 Energy its impact on the environment and society (DTI 2005) 17

21 Section 6: Technologies

22 Section 6: Technologies Introduction The range of renewable heat technologies available for use today is extremely diverse. The principal technologies considered are: Biomass combustion (burning biological material) Heat pumps (using a small amount of energy to extract a larger amount of energy from the air, water or the earth) Solar heating (using energy from the sun to heatwaterorair) Geothermal aquifers (using heat pumps to extract energy from waters deep underground, for example, disused mine workings) Renewable energy from waste (a subset of biomass; using biomass which would otherwise be discarded. The technology options here include anaerobic digestion, gasification and standard open kiln incineration) Anaerobic digestion (producing combustible methane gas from biomass for direct combustion or the option to use fuel cells) Landfill gas (harvesting the methane gas produced by natural biomass decomposition in landfill sites) Wind-to-heat (using devices to turn wind energy to heat, e.g. via mechanical forces and friction or electricity) Some of the key factors which differentiate these technologies are: Descriptor Fuel Fuel Capture Fuel Process Output Energy Biomass Combustion Renewable Energy from Waste Biomass Waste (EfW) biomass Harvest Crop Municipal/ Commercial/ Industrial Procedure Combustion of gas or solid phase fuel. Gas conversion in fuel cells Anaerobic Digestion Biomass Biological Gas combustion or fuel cells Air Source Heat Pump Heat in Air Heat Exchange to Heat Pump Ground Source Heat Pump Heat in Ground Water/Coolant Water Source Heat Pump Heat in Water Heat or Heat and/or electricity Heat and/or electricity Solar Thermal Solar Heat n/a Heat Wind to Heat Wind Wind Turbine Generator Heat and/or electricity Heat 19

23 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 Applications Some technology types may be suitable for domestic, commercial and industrial uses at a range of scales from individual homes or facilities to whole towns, industrial estates or districts. Others may have more restricted applications. The table above shows some of the factors influencing which technology may suit particular applications. For example, anaerobic digestion and landfill can produce relatively large amounts of biogas, but the equipment which is readily available requires considerable space and regular maintenance, limiting its suitability. In contrast, heat pump technologies are unable to supply the high temperature heat required for combined heat and power or district heating systems and are more suited to residential applications. Whereas a detailed analysis of the various technologies and the roles each can play is beyond the scope of this report, the group sees value in developing an information pack for members of the public. Barriers The barriers to the deployment of individual technologies vary, but can be categorised broadly as follows: Lack of trained installers and maintenance personnel Consumer confidence High up-front capital costs Maintenance charges Consumer time required Availability of fuel Procurement Installers may only have a good technical understanding of specific models. They may also lack experience in the range of interactions with the building envelope which can be crucial. Consumer confidence could easily be eroded through media coverage of bad examples e.g. exaggerated claims for performance, poor quality installation work, damage to building fabric or injuries sustained. Renewable heating technologies may have considerably higher capital costs than comparable fossil-fuel equipment with a well established market e.g. gas. To sustain good performance, some technologies may require regular maintenance that end users are unable or unwilling to carry out e.g. cleaning flues, lubricating automated fuel supply systems etc. Consumers can quickly and easily locate information and advice on fossil fuel technology e.g. go to a gas showroom. Renewable technologies are less familiar and consumers may have to spend more time tracking down additional information. Some technologies are constrained by the availability of fuel. For example, landfill gas needs a landfill site. Local woodfuel supply chains may not exist in some areas. Procurement processes may be closely focused on direct capital costs with less consideration given to the wider social and environmental costs of carbon emissions from cheap fossil fuels such as coal or gas. Investor confidence on the reliability of technologies and stability of fuel supply chains in the longer term can also be an issue. Section 8 examines the various mechanisms that can address these barriers. Technologies That Scottish Renewables: Produces a consumer information pack outlining what the key renewable heat technologies are as well as explaining the important factors to bear in mind when considering which may be appropriate for specific applications. 20

24 Section 7: Indicative Heat Demand Map

25 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 The previous sections have looked at the demand from a range of heat users and the potential renewable supply options available. To better understand how to develop linkages between supply and demand, the group commissioned a heat map of Scotland. The purpose of the heat map was to: Help to identify what locations offer the best potential for developing the renewable heat sector Provide a snapshot of key heat users and location Show where there is potential to use waste renewable heat Show the differentiation between rural and urban areas (on gas grid/off grid) Aggregate other relevant data The base heat map was produced in a Geographic Information Systems (GIS) format to enable layering of relevant spatial information. This then allows users to examine a wide range of potential issues from location of heat users to sources of heat energy. It can then be used as a planning tool to identify potential target clusters and appropriate renewable heat technologies. The base heat map is included in Annex B. FREDS is not responsible for the accuracy of the data which is indicative only. This heat mapping exercise was conducted at a national level and the map may be used to develop scenarios worthy of further investigation, rather than as a decision making process in its own right. At a national scale, a heat map provides a very broad-brush indication of heat demand and potential supply. However, it demonstrates how such a tool could be developed to identify potential renewable heat clusters, and opportunities for cross-sectoral partnerships to provide heat energy services. At a regional level, it can also identify available resources and facilitate promotion of local technology clusters. At a Local Authority level, heat mapping could provide a useful planning tool, in considering existing heat use and zoning of new developments. A hypothetical local heat map scenario is illustrated below. More detailed data would be required to develop an effective decision-making tool, but much of this data may be available at a local level. For example, zoning of areas for housing and business development. 22

26 Section 7: Indicative Heat Demand Map Figure 2: indicative heat demand map A further example of heat mapping was carried out by the former DTI and DEFRA, the aim of which was to assist power station developers to explore fully opportunities to use CHP, including community heating, when developing proposals for new power stations. The industrial heat map website can be found at Heat Map develops a consistent approach to heat mapping and disseminates this to all local authorities in Scotland. The group agrees there is merit, particularly at a local level, in developing heat maps to give a strategic overview of potential sites. However, there needs to be consistency in the approach adopted across all local authorities and the Scottish Government should provide the necessary guidance to achieve this. 23

27 Section 8: Targets and Mechanisms

28 Section 8: Targets and Mechanisms TARGETS As discussed in Section 5, annual heat usage in Scotland is estimated to be around 95 TWh per year, the equivalent of approximately 57% of our total energy demand in Scotland. Scottish Renewables estimates that around 6% of total energy demand and up to 4% of heat is generated by renewables. A proportion of that heat comes from electricity and will therefore be from renewables sources, because Scotland is making good progress towards meeting its milestone that 31% of electricity demand is supplied from renewables by In addition, the Scottish Government has set a new and challenging target of 80% carbon emissions reduction by At an EU level, the Commission has agreed a target of 20% of energy consumed in the EU to come from renewables by 2020, with the UK contribution set at 15%. FREDS would like to see similarly ambitious targets set for renewable heat for 2020 whilst recognising this needs to take account of what is achievable and how it will help to deliver other targets. A range of targets could be considered offering various levels of carbon emissions reduction and challenges. For example: Indicative Heat Targets Total energy % Target for renewable heat (TWh/yr) consumption (TWh/yr) 5% 10% 15% 20% 25% Domestic Industry Service and public Scotland is already moving towards the new EU target with targets for renewable electricity generation and is currently committed to a UK-wide target of 5% use of biofuels by 2010 (with an aspiration set out by the EU to achieve 10% use of alternative transport fuels by 2020). Comparing the targets is complex. The agreed target for the whole of the EU is based on total energy consumption (encompassing transport, heat and electricity sectors). So, looking at Scotland specifically and assuming the energy targets already set for 2020 are met, if 50% of electricity consumed and 5% of transport fuel consumed is from renewable sources, then at least 20% of heat would need to come from renewable sources to achieve a target in line with the EU. To consider the level of challenge represented by setting a target, an approximate level of market penetration in terms of installed capacity is considered below. Using assumption on average heat load for each sector, an indicative installed capacity for each sector to achieve a 20% renewable heat target would be: domestic: 3,736 MW th : around half a million households (assumes 30% heat load) industrial: 765 MW th : e.g. around 300 distilleries (assumes 80% heat load) 25

29 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 service and public: 1,309 MW th :e.g.around 2,000 secondary schools or 1,500 leisure centres (assumes 30% heat load) (Figures for energy consumption taken from Carbon Trust, and DEFRA, ) It is difficult to quantify current renewable heat capacity as this is not necessarily monitored (e.g. on-site generation of energy in the timber processing sector). In the domestic sector, some heating is provided by woodfuel and current heat capacity installed under SCHRI is around 14 MW th. Around 17 MW th installed biomass capacity is already in place in small-medium scale installations, with an additional 20 MW th to be installed under the SBSS by March 2008 and a number of other large-scale CHP projects in the pipeline. As discussed in Section 5, based on Scottish Renewables estimate, up to 4% of heat demand currently comes from renewable sources. However, further data needs to be gathered to understand where we are currently and the level of support required to deliver against any target set by the Scottish Government. The group recommends that a new heat target is set, to complement existing renewable electricity targets and contribute to the UK share of the EU target for renewable energy generation by However, insufficient data is available at the time of this report to set a appropriately ambitious target and the level of support required to achieve it. Therefore, the Scottish Government should carry out further work to identify an appropriate target, taking into account the fact energy efficiency has the potential to reduce overall heat demand, making a renewable heat target easier to achieve. Targets conducts urgently further analysis of the potential heat market in Scotland and the respective barriers and costs in order to inform the identification of an appropriate target for renewable heat, taking into consideration the impact of energy efficiency and heat loss reduction on the overall market size. MECHANISMS The Report has considered some of the key drivers for renewable heat and some of the barriers. This section makes recommendations on a number of mechanisms to tackle the barriers to growth of a buoyant renewable heat market in Scotland. The mechanisms are grouped into the following categories: Policy and Regulation Local Planning, including heat mapping Financial Incentives Capacity Building, including training General Awareness Raising POLICY AND REGULATION The group considers that further action is required across a number of policy and regulatory areas to develop the renewable heat sector in Scotland, as follows: Wider Heat Strategy FREDS considers that a renewable heat strategy must form an important part of a wider heat strategy for Scotland. This will be especially 4 Carbon Trust, The UK Potential for Community Heating with Combined Heat & Power. Report prepared by BRE for the Carbon Trust. 5 DEFRA (formerly DETR). Umbrella Climate Change Agreement for the Spirit Drinks Sector. DETR,

30 Section 8: Targets and Mechanisms important if we are to reach the targets on renewable energy and climate change, proposed at a European, UK and Scottish level. The Group s view is that district heating will play a key role in developing a renewable heat sector but it needs to be considered as part of a wider heat strategy, integrated with energy efficiency policy. In addition, if district heating is to make an impact then the technology support and regulatory reform will need to take account of the large number of tenements buildings that are typical in Scotland. Wider Heat Strategy develops a wider heat strategy for Scotland and takes into account, in the strategy, the measures needed to develop the renewable heat sector. as part of a wider heat strategy, supports and promotes district heating, taking into account the technology support and regulatory reform needed. Fuel Poverty The Scottish Government has provided 1 million funding overa2yearperiod(april2006-march 2008) to pilot the installation of renewables-based central heating systems in properties that are off the gas grid across Scotland. The pilot will enable Ministers to make informed decisions on whether to mainstream renewables technologies with the Scottish Government s Central Heating Programme in order to target fuel poverty. The Fuel Poverty Renewable Heat Pilot aims to assess the impact of renewables technologies on fuel poverty; assess people s reactions to using these technologies; and to evaluate the potential costs and benefits of including them in fuel poverty programmes. The final report on the pilot is expected in July An interim report was published in November 2007, and this highlights that heat pump systems may be an effective technology for improving the energy efficiency of a range of hard to heat properties, and for lifting households out of fuel poverty. One significant issue identified is the cost, as renewables systems are significantly more expensive than installing a traditional system. Nonetheless, FREDS considers that renewable heat can play a key role in helping to tackle fuel poverty but only if the Scottish Government provides the necessary support to overcome the high capital start-up costs. Fuel Poverty supports the roll out of renewable technologies within its Central Heating Programme, subject to the success of the current Renewable Heat Pilot. Public Procurement The Scottish Government has announced the establishment of a National Procurement Centre of Expertise which will lead to collaborative procurement of common goods and services on behalf of the wider Scottish public sector and develop a sustainable procurement plan. FREDS recognises that within current public procurement legislation it is possible for public bodies to specify renewable sources of heating in both new buildings and refurbishments, provided that they think doing so is likely to be affordable, fit for purpose and a value for money solution for public 27

31 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 funds. This has already been demonstrated in a number of exemplar projects such as biomass heating installations at the offices of Scottish Natural Heritage in Aviemore and in three Forestry Commission Scotland offices at Huntly, Dingwall and Inverness. Local authorities are also pushing forward a number of renewable heat projects, particularly in schools, and North Lanarkshire Council has led the way, with installations in four council premises. FREDS welcomes the establishment of the National Procurement Centre of Expertise. The Scottish Government has a role to play in demonstrating leadership, in all aspects of sustainable public procurement. Public Procurement takes a lead in its own public procurement practices in adopting renewable heat within its own estate, and requires local authorities and other public bodies to do the same. Renewable Heat from Waste Biomass Waste biomass comes in many forms including materials in household and commercial residual waste and from a wide range of industrial processes including agriculture and forestry. This material is a common constituent of waste that is land-filled where it biodegrades to produce methane, a powerful climate change gas. SEPA estimates that this material, if used in CHP or district heating, could produce energy equivalent to over 500 MW of installed capacity of carbon neutral energy. The Scottish Government has committed to focus waste policy around the framework of zero waste. Zero waste means designing waste out of the system, preventing waste, and reducing the amount of waste sent to landfill while encouraging high levels of recycling and composting. The Government has outlined a vision where energy from waste is to have a significant role up to 25% of all waste could go to this sector, focusing on high efficiency plants such as those generating combined heat and power. Where energy from waste is proposed, there are clear environmental arguments for ensuring that plants have high levels of efficiency, such as Combined Heat and Power. FREDS would wish to see the Scottish Government recognise the potential that exists in the efficient recovery of energy, including heat, from waste and the contribution this will make to reaching any target set for renewable heat. Small scale local facilities, utilising a range of available technologies including anaerobic digestion and powered by waste biomass could make a significant contribution to the heating cost of public facilities, industrial premises and new build housing whilst offsetting the negative climate impacts of land-filling waste biomass. Such an approach would be consistent with a Zero Waste policy and would have in-built flexibility to take primary and secondary biomass in future as waste levels fall owing to the impact of recycling and waste prevention measures. Heat from Waste Biomass charges SEPA to prohibit the dumping of waste biomass from industrial and commercial processes to landfill in order to promote its use for energy production. 28

32 Section 8: Targets and Mechanisms puts in place a policy to prevent the combustion of any form of waste without the recovery of heat, via CHP and/or district heating, and ensures that the regulatory and planning powers necessary to enforce this are adequate. undertakes to establish a fuel standard(s) for materials from waste derived sources to enable appropriate materials to be treated as non waste fuel. Low Carbon Buildings The Scottish Building Regulations incorporate minimum energy standards that apply when a new building is constructed or an existing building is extended, altered or converted. Revised standards came into effect 1 May ( These energy standards could encourage, but do not yet require the incorporation of low and zero carbon technologies such as heat pumps, solar water heating and biomass boilers into building design. Further revisions to the energy standards in Scottish building regulations will be made on a four-yearly cycle. FREDS recognises the work ongoing in this area, for example it is aware of the panel appointed by Scottish Ministers to advise on a Low Carbon Building Standards Strategy for Scotland. Their Report was published on 12 December but was too late for the Group to consider its recommendations in any detail. This is a positive step, and highlights Building Standards as one of the key policy tools that can accelerate the move towards low carbon buildings. Low Carbon Buildings includes renewable heat as part of the process of progressively tightening and fully enforcing building regulations to accelerate progress to deliver zero-carbon new building stock. reviews, as a matter of urgency, all options for existing building stock in order to maximise uptake of renewable heat and minimise heat demand. promotes the value of CPD for all stakeholders in the property market to raise awareness. Air Quality New Air Quality Standards published in July 2007 set stringent targets for local authorities, particularly for levels of small particulate matter. The potential harm to human health via the emission of small particles from biomass combustion (PM10 and PM2.5) has caused concern and levels of these particles are a serious issue in some urban local authority areas. This could impact on the installation of biomass boilers, which can have a higher level of particulate emissions than modern gas boilers. Work is currently ongoing to assess whether or not increased numbers of biomass boilers, particularly in domestic scale systems, are likely to impact on air quality. Local Authorities, under the Environment Act 1995, are required to review and assess air quality in their area against a set of health-based objectives for certain pollutants. These objectives are outlined in the Air Quality Strategy (AQS) for England, Scotland, Wales and Northern Ireland. If this work suggests that any objective will not be achieved by the required date, the local authority concerned must declare an Air Quality Management Area (AQMA) and produce an action plan outlining how it intends to tackle the issues identified. 29

33 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 Most of Scotland s air quality problems identified to date have been in large urban areas and are caused by vehicle emissions. Industrial emissions are already more strictly regulated. Emissions from biomass heating systems are currently the subject of ongoing work to assess the potential impacts of substantial deployment in AQMAs. FREDS recognises that any action to develop and expand the renewable heat sector, in particular bioenergy, will need to consider carefully the potential impact of this increase in use on air quality and of pollutants on public health. SPP6 highlights that Scottish Ministers are keen to see a major increase in the smaller-scale production of heat and electricity from renewable sources. For example, there is significant potential for decentralised energy supply systems and small, medium and large scale biomass heating plants for businesses, public buildings and community/housing schemes. Planning authorities are asked to identify sites appropriate for new biomass plants in areas with either existing long-term secure resources or new opportunities to harness local resources. Air Quality recognises the benefit of renewable heat technologies to improving air quality, particularly where they replace oil and coal heating. ensures, as part of a supportive planning and regulatory framework, air quality management should not disproportionately penalise biomass or other renewable technologies. LOCAL PLANNING Planning Scottish Planning Policy 6 (SPP6) sets out how the planning system should manage the process of encouraging, approving and implementing renewable energy proposals when preparing development plans and determining planning applications. The planning framework set out in SPP6 will help to ensure the delivery of renewable energy targets and help to mitigate the effect of climate change. Development plans should provide clarity on the criteria that should be met to enable development to take place in a satisfactory manner. FREDS supports SPP6, but considers that the Scottish Government can do more to encourage local authorities to embrace a low carbon future. More detailed heat mapping could provide a useful local planning and decision making tool to assist local authorities and that is why the group has made a recommendation on heat mapping at section 7. In addition, FREDS is keen to see Local Authorities deliver local fuel and heat strategies, tied to local economic development functions and asks that the Scottish Government works with Local Authorities to make it happen. Planning supports the implementation of measures within SPP6 on the installation of microrenewables. legislates to require local authorities and housing associations to promote and support district heating using renewable technologies. 30

34 Section 8: Targets and Mechanisms FINANCIAL INCENTIVES In general, FREDS recognises that fiscal and capital incentives will be important in delivering higher penetrations of renewable heat. This can be especially crucial for major infrastructure developments, for example, district heating networks, where access to finance can be difficult to obtain as some financial institutions view renewable heat projects as high risk. That said, financial incentives should consider all the different scales and applications of renewable technologies, as each may require a different intervention. The diagram below illustrates the range of financial support which can be applied to renewable heat deployment. Existing Incentives Exemption from personal income tax on exported electricity from microgen Soft loans for energy efficiency Landfill tax Capital Grants (e.g. SCHRI, LCBP) Zero and reduced rate VAT Enhanced Capital Allowances Capital Grants (e.g. SBSS) Zero Stamp Duty on zero carbon homes Energy Efficiency Commitment (EEC) Renewables Obligation Energy Performance Commitment (EPC) FREDS is aware of the report produced for the Department of Business and Regulatory Reform (BERR) by Ernst and Young as part of the UK Government s development of renewable heat policy. This report highlights that a support mechanism (or range of support mechanisms) will be required to compensate renewable heat producers for their avoided external costs. Avoided external costs include emissions outputs as well as wider environmental, ecological and societal benefits. 31

35 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 Discussions of some of the key mechanisms identified in the Ernst and Young report, and their application in Scotland, are considered below, including a number of recommendations by FREDS on what the Scottish Government needs to do. Renewables Obligation (Scotland) The revenue support to energy developers available through the Renewable Obligation Certificate (ROC) mechanism has, to date, had limited impact on development of renewable heat provision through CHP. To address this slow development, the recent Energy Review has proposed increasing the support for biomass CHP to 2 ROCs. This may incentivise development of CHP plants, but the primary incentive is still to maximise generation of electricity to earn maximum ROCs. FREDS is encouraged that, while the Scottish Government has still to consult on the review, it has stated publicly that it welcomes banding in principle. Although the proposed incentive would only reward metered electricity generation and not the quantity of heat generated by CHP, it could still be beneficial to the development of the biomass supply infrastructure which will be required for renewable heat-only projects. Renewables Obligation (Scotland) amends the Renewables Obligation (Scotland) to allow ROC-banding in line with the proposals being considered under the UK Energy Bill; in particular to award double ROCs to biomass CHP schemes, and for advanced conversion technologies for waste only where this is based on CHP and/or district heating. Financial Mechanisms Capital Grants Grants such as the SCHRI, the Highlands & Islands Woodfuel Development Programme and the Scottish Biomass Support Scheme (SBSS) will result in around 50 MW th installed heat capacity by Grants have been particularly successful in promoting installation of small-medium scale (less than 5 MW th ) renewable heat installations. The SBSS will deliver around 20 MW th installed capacity in a range of heat only applications, the average size of which is around 350 kw th. This capacity will be delivered in the space of a year, and will use around 30,000 tonnes of woodfuel to reduce emissions by nearly 20,000 tco 2 per year. The compares very favourably with the timescale, resource use and emissions reductions from large-scale power plants. The main issue with capital grants is their short-term, stop-start nature. Grants may not be available at a critical point in project development, which means that opportunities to incorporate renewable heat systems are lost at the design or planning stage. Grants have been available to support renewable district heating infrastructure. Taxation The Ernst and Young report identifies a number of taxation mechanisms which can provide an additional incentive, but are not in general sufficient to incentivise installations alone. The key barriers identified are that they do not overcome the capital costs for small-medium scale installations, nor provide the revenue support which can incentivise large-scale installations. They also do not apply to district heating infrastructure. 32

36 Section 8: Targets and Mechanisms Carbon trading/obligations The Ernst and Young report identifies existing and proposed carbon emissions reduction mechanisms such as the EU ETS, Carbon Emissions Reduction Target (CERT) and Carbon Reduction Commitment (CRC). Renewable heat projects can generate carbon credits under these schemes; however a key barrier is that they generally support the lowest cost options for emissions reductions, which may make renewable heat projects unattractive. Further details on carbon obligations/trading schemes are discussed in the Energy Review and the Ernst and Young report on renewable heat. Credit Guarantee Schemes An additional support mechanism considered by the group was a Credit Guarantee Scheme. This mechanism would help to finance large-scale, complex heat only or CHP projects and the establishment of Energy Supply Companies (ESCOs). Such a scheme may also facilitate cross-sectoral partnership in creation of new ESCOs to provide energy services, particularly in development of district heating networks. Furthermore, credit guarantee schemes could also bring in private finance to support development of renewable heat and could work alongside existing finance mechanisms. Experience elsewhere suggests that an energy services company model could help promote renewable heat. The Group trusts that the Scottish Government will collaborate with the UK Government to ensure that any regulatory reform to enable ESCOs incorporates provisions to support the development of renewable heat technologies and markets. Choosing a support mechanism for Scotland The potential support mechanisms set out above demonstrate the range of options available. Looking in particular at the Ernst and Young report, the Group felt that the report contained good analysis on large-scale projects, but the same was not available for the smaller to medium scale project (under 5 MW th ), which would be the likely size of projects being developed in Scotland. This was the case for projects supported under SBSS and SCHRI. The Ernst and Young report however, does conclude that different scale technologies are likely to require different levels of support: grant based mechanisms are likely to be more appropriate for household scale installations, while larger scale, standalone heat projects would suit revenue-output based mechanisms. However, whatever financial support structures are chosen other regulatory mechanisms relating to building regulations and planning need to provide support and incentives. The Group concluded that this is a complex area and that without further analysis it would be difficult to reach an informed view on detailed recommendations. It is therefore recommending that more work is carried out by the Scottish Government to review existing work in this area and assess what support mechanisms will work best in Scotland alongside existing regulatory and support structures. 33

37 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 Financial Mechanisms urgently reviews ongoing work by the UK Government on financial mechanisms, and carries out additional analysis to determine the most appropriate mechanism(s) for developing a Scottish heat market, taking into consideration scale, technology, capital and fuel costs, innovative financial models, and market price to ensure no undue burden is placed on the end user. CAPACITY BUILDING Continuing Professional Development The installation of renewable heat technologies relies on appropriate knowledge and skills being in the hands of the right people, and there being sufficient numbers of these to increase the adoption rate. The design stage is the earliest stage in the lifecycle of a building or community where decisions having a bearing on sustainable energy adoption are taken. The key actors here are architects, engineers and mass-market housebuilders. There is growing interest in renewable heating systems from these stakeholders but take-up is still not the norm. Training can build confidence in the building sector and help change perceptions about the benefits and long term cost effectiveness of renewable heat systems. Continuing Professional Development (CPD) runs CPD workshops and/or seminars involving the Royal Incorporation of Architects in Scotland (RIAS) and the Institution of Civil Engineers (ICE), to ensure that all players are in tune with sustainable development principles, give proper consideration to renewable heat, and fully implement planning and building standards. Training After design, the implementation stage requires the availability of skilled installers to deploy the equipment. The availability of trained personnel to carry out ongoing post-installation maintenance is also crucial to ensuring users retain confidence in renewable systems. Training availability is currently rather limited. Inverness College provides some courses for installation. Other colleges are showing interest in developing courses further across Scotland (Dumfries & Galloway, Glasgow, Dundee, Moray, Shetland, Eilean Siar) looking to Inverness College as an exemplar. However, interest so far is more of a groundswell than a driven, centrally coordinated programme. It is not for government but for colleges themselves to determine the need for training and the profile of the courses offered. The Sector Skills Council is now taking an interest and incorporating Renewables into National Occupation Standards, looking at how existing qualifications can be enhanced. 34

38 Section 8: Targets and Mechanisms Colleges could have an important role to play in providing generic training required by all heating engineers (refrigeration, air conditioning, boilers, health and safety, plumbing, energy auditing, technologies, new and retrofit, Euro handling certificate, maintenance etc), but rather than being bolted on to existing conventional training, FREDS would wish to see more renewables-focused training. Courses could be SQA approved, and facilities would have a number of devices for training purposes, funds for student places and finance for set up costs. The courses could be developed alongside organisations like the regional construction industry fora. FREDS would wish to see better coordination of training across the key stakeholders groups in order that it can begin to reach the penetration levels needed to grow the sector in a meaningful way. Training instructs the Scottish Funding Council, Sector Skills Council and Skills Agency to develop a co-ordinated training programme incorporating: microgeneration, energy efficiency, and renewable heat. There is also a case to consider training to promote cross-sectoral partnerships between the public, private and voluntary sectors, in order to develop successful renewable heating schemes. There are existing working partnership models in Scotland, such as Wick, which illustrate the importance of cross-sectoral framework agreements, and which have also benefited from having a competent intermediary to negotiate such agreements. Best Practice A number of European countries are well ahead of Scotland when it comes to the use of renewable heat as show in the following table. The heat markets in these counties are more mature having been developed over a number of years. Good examples include Denmark, where the use of district heating systems is compulsory in selected areas, making the most of waste heat from industrial processes and volume efficiencies. Another example is Austria, where grant support has been effective in encouraging take-up of renewable heat as part of a wider package linked to building standards improvement and to energy efficiency. The group has not had the time to explore such examples in any depth, but considers that such exploration will be very useful in the development of any Scottish strategy. The group recognises that differences in regulatory regimes elsewhere, and the limits of Scotland s devolved powers may constrain what could be reflected here from successful examples abroad, but judges that international best practice is nevertheless worth exploring. 35

39 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 Market % share for renewable heat Key Drivers Denmark 13% Widespread use of district heating to supply residential and commercial sectors Installation of heat transmission network mandated through planning legislation; obligatory connection of small to large CHP to heat network (renewable and gas CHP); and a ban on electric heating Germany 5% Largely CHP-led, with generous feed-in tariffs for biomass/biogas under the EEG Sweden 26% Extensive deployment of district heating, primarily biomass-led CHP Belgium 2% Green certificate mechanism similar to the Renewables Obligation, but revenues based on carbon savings to incentivise the use of CHP (particularly renewable CHP) Source: Sustainable Development Commission (Scotland) Best Practice investigates the promotion of renewable heat within other countries, to consider how they have achieved a well-developed renewable heat market, and ensure benchmarking against best practice abroad, with a view to adoption of best practice, subject to statutory competence. General Awareness Raising Consumers find it hard to get good quality independent advice on the relative benefits of different types of technology, their suitability for a particular heat demand and their relative carbon savings. This can result in completely inappropriate installations, without necessary maintenance and support services in place, resulting in project failures often with a degree of associated bad publicity. The market is developing and there are now a wide range of highly successful installations of all types of technology, delivering real cost savings, carbon emissions reductions and other benefits to a range of consumers. To address some of these issues, the sector as a whole needs to promote the benefits of renewable heat in a coordinated and easily accessible fashion. Consumers need access to good quality independent advice, across a whole spectrum of technologies and applications. More work needs to be done on learning the lessons from poor installations, ensuring the appropriate skills and standards are in place to ensure these are not repeated and promoting successful projects as best practice case studies. Good quality independent advice can come from a range of sources such as handbooks and guides or professional advisors. The group has already recommended that Scottish Renewables develops guidance explaining the various roles that different technologies could fill, which will help. 36

40 Section 8: Targets and Mechanisms One of the most easily accessible sources is the internet. FREDS conducted some internet searches and came to the following conclusions: It may be better to channel customers through a single web site with consistent identity than send them through never-ending chains of links to others Any site needs to be sympathetic to difficulties facing people with no specialist knowledge The site needs strong graphical design to promote trusted identity, and be accessible to all The site needs to be independent from industry General Awareness Raising That the Scottish Government and the sector as a whole: promotes the benefits of renewable heat in a coordinated and easily accessible fashion, including through web promotion by appropriate agencies and other general awareness raising activities. 37

41 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 ANNEX A Membership List Name Organisation Rebecca Carr Forestry Commission (Scotland) Eric Dodd Highlands & Islands Community Energy Company John Ferguson Scottish Environment Protection Agency Samantha Fuller Jenny Hogan Sue Kearns Ernest Kidney Kerr MacGregor Elizabeth Marshall Christine McKay James McKenzie Duncan McLaren Jason Ormiston Richard Palmer James Pendlebury Maf Smith Liz Stewart Fergus Tickell Henk Verweijmeren Margaret Watson Scottish and Southern Energy Plc Formerly Scottish Renewables, now Forward Scotland Scottish Government Chair Balcas MacGregor Solar Formerly The Highland Council, now Biox Consultants Limited Scottish Government Secretary Scottish Government Co-secretary Friends of the Earth (Scotland) Scottish Renewables AW Jenkinson Formerly Forestry Commission (Scotland), now Forestry Commission Sustainable Development Commission (Scotland) Invisible Heating Systems Northern Energy Developments Ltd Invisible Heating Systems Scottish Enterprise 38

42 ANNEX B Indicative Heat Demand Map Annexes 39

43 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 ANNEX B Indicative Heat Demand Map 40

44 Annexes ANNEX B Indicative Heat Demand Map 41

45 Scotland s Renewable Heat Strategy: Recommendations to Scottish Ministers Renewable Heat Group Report 2008 ANNEX B Indicative Heat Demand Map 42