Challenge 7.7: How can technology help communities and households understand their energy needs and work with local suppliers towards sustainable energy solutions?

Key information for applicants

Please note: you must apply for this Challenge via Public Contracts Scotland

Launch date
Tuesday 31 May 2022

Questions may be submitted until
16:00, Tuesday 21 June 2022

Closing date
Midday, Tuesday 28 June 2022

Exploration Stage interviews
Wednesday 27 July 2022

Exploration Stage
15 August to 2 September 2022

Accelerator interviews
Monday 5 September 2022

Accelerator Stage
3 October 2021 to 27 January 2023

Maximum contract value
£350,000

What does this mean?

Q&A session

A live Q&A session was held with the Challenge Sponsor team on Thursday 9 June 2022 at 11:00. A recording of the session can be viewed here:

Why does this Challenge need to be solved?

Decarbonising energy is critical to reducing carbon emissions in the South of Scotland as homes and workplaces account for around a fifth of Scotland’s total greenhouse gas emissions.  Energy bills are rising fast and are set to rise even further this Autumn, when the energy price cap will be further reviewed - collective, co-ordinated and sustained effort is needed to address these challenges. 

South of Scotland Enterprise wants to take action to improve information flow between individuals, communities and businesses and stimulate the supply chain.  Key to this will be providing a technology solution that allows communities to understand their energy demands and options for energy efficiency and decarbonisation while supporting community collective purchase through:

• Providing a technology solution that allows individuals and, through aggregation, communities (of interest) to understand their energy demands and requirements and options for energy efficiency / decarbonisation / renewable generation through user friendly presentation of data

• Allowing individuals, through coming together as communities, to explore collective purchase options and negotiate bulk purchase discounts for installations from suppliers

• Allowing the South of Scotland (and out of region) supply chain to have improved visibility of the pipeline of work and understand and respond to the scale of demand for energy efficiency retrofit, micro renewable heat and electricity technologies in the region

• Empowering individuals, communities and businesses to make informed decisions on energy efficiency and micro renewable options, alongside accessing appropriately qualified suppliers to provide surveys and quotes for work to be carried out

This challenge is designed to bring communities and local supply chain together to both respond to the energy crisis and accelerate the South of Scotland towards net zero. And in doing so:

• Accelerate the South of Scotland’s decarbonisation and transition from fossil fuel (energy) consumption to renewable energy

• Create a sustainable energy efficiency and micro generation sector in the South of Scotland, capable of delivering on community and net zero needs

• Stimulate long term growth in the South of Scotland through demand and supply side development

• Boost local economies by creating new jobs and increasing local spend with the supply chain

• Potentially provide individuals with monthly energy cost savings, that they can then utilise (that spend) on other priorities

Background and supporting Information to the Challenge

A Net Zero Target and the South of Scotland’s Ambition 

Scotland’s world-leading climate change legislation sets a target date for net zero emissions of all greenhouse gases by 2045 which still requires a large reduction (56% as of 2019 [See footnote 1] ) in greenhouse gas emissions through a Just Transition to a net zero economy. [See footnotes 2 and 3]

A just transition is one that considers the impact on individuals and communities, and is fair for all, leaving no one behind. It is also a transition to net zero that makes the most of the opportunities that will present themselves, for example ensuring changes are transitioned in (rather than out) of key sectors and industries.

The South of Scotland Regional Economic Strategy sets out our region’s bold and compelling vision for the South of Scotland – to be Green, Fair and Flourishing by 2031; with South of Scotland Enterprise (SOSE) looking to lead and facilitate the region’s Just Transition to Net Zero.

In delivering its vision of a thriving and prosperous wellbeing [See footnote 4] economy, SOSE supports and encourages entrepreneurs, businesses, social enterprises and enterprising communities throughout Dumfries and Galloway and the Scottish Borders to fulfil their potential and make the most of the opportunities of this transition.

The importance of decarbonising energy in our homes and buildings 

Decarbonising energy is critical in reducing our carbon emissions - in 2020, 76.2% of greenhouse gas emissions in the UK [See footnote 5] came from the use of fossil fuels associated with energy use, across industry, transport or in buildings.

According to Scottish Government’s Heat in Building Strategy, homes and workplaces account for around a fifth of Scotland’s total greenhouse gas emissions; with the Scottish Government’s vision that by 2045 homes and buildings are cleaner, greener and easy to heat, with homes and buildings no longer contributing to climate change.

Transforming energy use in homes and workplaces will be very challenging, requiring action and a fundamental shift for everyone right across society and the economy.  For example, poor energy efficiency in buildings leads to higher energy use and cost which can push households into fuel poverty and present unnecessary financial burdens for businesses and the public sector.

Scotland’s 2.5 million homes account for around 13% of the nation’s total greenhouse gas emissions. Only 11% of households currently are heated using a renewable or low carbon system and while the energy efficiency of Scotland’s homes is improving, around 55% of properties are still rated below the recommended minimum Energy Performance Certificate (EPC) of C. [See footnote 6]

By 2030 Scottish Government want to see a large majority of buildings achieving a good level of energy efficiency.  This will help ensure energy costs in future are affordable.  At the same time, there is a need to rapidly scale up deployment of zero emissions heating systems so that by 2030 over 1 million homes (including up to 170,000 off gas grid homes) and the equivalent of 50,000 non-domestic buildings are converted to zero emissions heat. [See footnote 7]

The task of decarbonising heating in off gas grid homes will be particularly challenging in the South of Scotland with 28% [See footnote 8] of homes off gas in Scottish Borders and 27% [See footnote 9] off gas in Dumfries and Galloway (compared to the Scottish average of 17%). [See footnote 10]

Investment required 

Scottish Government will make available at least £1.8 billion of capital funding for heat and energy efficiency in buildings across Scotland and a substantial proportion of this investment will be targeted at supporting those least able to pay for the transition, including those in fuel poverty. [See footnote 11]  The estimated total investment required to transform Scotland’s homes and buildings to reach net zero by 2045 is likely to be in excess of £33 billion. It is clear that this cost cannot be borne by the public sector alone. Scottish Government have established a Green Heat Finance Taskforce and within their priorities is the aim to explore and potentially pilot new and value-for-money innovative financing mechanisms for individual and community level investment. 

Understanding our energy needs and the Challenge’s importance to the South of Scotland

Energy bills are rising fast and are set to rise even further this Autumn, when the energy price cap will be further reviewed. This arises not least in part due to concerns about energy security and market effects. 

Even before the recent energy price increases, pressures were building on customers. The 2017-2019 Scottish House Condition Survey shows that 29% of households in the South of Scotland are living in fuel poverty (compared to an average of 24% for the whole of Scotland) and 14.5% are living in extreme fuel poverty (compared to an average of 12% for the whole of Scotland). [See footnote 12] With forecast energy price rises in the coming months the number of households in fuel poverty will only increase. [See footnote 13]

Looking to the future, those living and working in the South of Scotland will need to change the way they think about energy, becoming smart consumers and active prosumers (consuming and producing energy). This needs to be supported with honest, clear and consistent information – data and technology will underpin this.

There are diverse opportunities for different communities (of residents, businesses, sectors etc.) to get involved in this agenda and drive change, maximising the different approaches to decarbonisation and finding ways to address fuel poverty. For example, individual communities are often best placed to engage and raise awareness, deliver education and share learning with their community (of place). 

Within the ambition to transition to net zero greenhouse gas emissions by 2045, there is a need to support communities to take a fabric first approach to reduce demand for energy, make homes warmer and easier to heat to prepare them for net zero emissions technologies.[See footnote 14]  There is also a need to increase both demand and supply for micro renewable heat and electricity technologies in the region by improving the awareness and understanding of opportunities.

While progress on commercial scale renewable energy projects has been excellent - with the South of Scotland hosting some 16% of Scotland’s renewable energy generation - the take-up of domestic renewable energy technologies by households and small-scale renewables is an area of underperformance, and therefore opportunity.  

Creating Collective / Community Scale – stimulating and mobilising demand

SOSE published the ‘Powering Change’ report in March 2021 following the establishment of an Energy Transition Group, which brought together diverse partners from across the public, private, education and third sectors, to explore the opportunities and challenges and identify actions required to use energy as an enabler.   

The Powering Change report focused on the particular circumstances of a rural area, to which our communities are central – and acknowledged that collective, co-ordinated and sustained efforts are needed to build on energy opportunities. Change is coming and working with communities to understand what this could mean for them and the benefits it can bring is vital. 

For example, there is an opportunity to look at how to support and share learning from community energy projects, community involvement in the Local Heat and Energy Efficiency Strategy [See footnote 15] (LHEES) process, community ownership of assets (including community benefit and shared ownership in developer led projects) etc.

Developing Capacity to Deliver – stimulating and mobilising the local supply chain

A relatively small group of firms operate in the South of Scotland specialising in energy efficiency retrofit and renewable energy work and the majority of this sector are made up of SMEs and microbusinesses. The Change Works in Peebles project in the Scottish Borders reported a lack of supply chain as a barrier to the uptake of domestic energy efficiency measures and noted that local trades reported that they do not see the demand from householders for energy efficiency and low carbon heat work and many already have a steady alternative workload. The report stated that this has resulted in a supply chain gap for householders, where larger, national contractors are unwilling to travel to rural areas for smaller, one-off jobs and local contractors do not have the required skills or accreditation.

Barriers to growing this market include lack of customer awareness and lack of capacity within the supply chain to deliver. The SOSE Powering Change report also recognised the significance of aggregating opportunities to attract and maximise inward investment and create the confidence for supply chain growth.

In Scotland, particularly in the rural areas we have in the South, a significant proportion of homes were built long before energy efficiency standards were introduced, and different approaches will be needed for different types of building.  This represents a huge opportunity for the local construction sector supply chain.

SOSE wants to take action to improve information flows between individuals, communities and businesses and stimulate the supply chain; mapping the aggregated opportunities and the longevity of those opportunities. We want to support the development of the supply chain, providing the confidence to invest now so that local firms can benefit from future but imminent opportunities and take the action now to develop the skilled workforce they will require.

Footnotes

1. 2021 Committee on Climate Change Report to Scottish Parliament

2. Scotland's 2018-2032 Climate Change Plan

3. Scottish Government Just Transition

4. An economy that is inclusive and that promotes sustainability, prosperity and resilience, where businesses can thrive and innovate, and that supports all of our communities across Scotland to access opportunities that deliver local growth and wellbeing. Source: Scottish Government

5. 2020 UK Greenhouse Gas Emissions, Final Figures

6. A 2045 Pathway for Scotland’s Homes and Buildings

7. Scottish Government Heat in Building Strategy

8. Borderslands Energy Masterplan (awaiting publication)

9. Borderslands Energy Masterplan (awaiting publication)

10. Scottish House Condition Survey

11. Green Heat Finance Taskforce

12. Scottish Government Fuel Poverty Act

13. Domestic Energy Prices UK

14. A fabric first approach is a relatively simple concept —focusing on reducing a home's heat loss to achieve a low carbon, sustainable house that's affordable to heat

15. A local heat and energy efficiency strategy is a long-term strategic framework for the improvement of the energy efficiency of buildings in the local authority’s area, and the reduction of greenhouse gas emissions resulting from the heating of such buildings. Source: https://www.legislation.gov.uk/sdsi/2022/9780111053935

How will we know the Challenge has been solved?

• Increased take up of energy efficiency measures, micro-renewables technologies and associated power and heat storage technologies

• Evidence of communities making decisions around energy on a collective basis and coming together to negotiate bulk purchase discounts for installations from suppliers

• Increase in community wealth building activity – including a closer relationship between local production and local consumption of power

• Technology solution being well used with positive feedback from service users (communities and supply chain) on the efficiency and potential for the solution

Who are the end users of the solution likely to be? title

• Individual homeowners

• Communities

• Landlords (private rented sector)

• Businesses and social enterprises

• Local Authorities

• Registered Social Landlords

• Installation and maintenance energy supply chain

Has the Challenge Sponsor attempted to solve this problem before?

No

Will a solution need to integrate with any existing systems or equipment?

Applicants may wish to:

• Explore the potential of presenting data at a community level to inform and inspire community net zero actions (including community energy generation)

• Explore potential to integrate with other relevant data sets and services

• Enable a solution to signpost easily to other relevant support agencies who can provide advice, support, funding and check for eligibility of appropriate schemes

Any technologies or features the Challenge Sponsor wishes to explore or avoid?

The Challenge Sponsor would be keen to see solutions that consider the following technologies, however they are open to innovative ideas, so proposals that fully solve the challenge without one/ both the proposals below, will not automatically be discounted.

The Challenge Sponsor would be interested to see solutions that:

• Consider use of mapping tools to demonstrate solar viability and/or heat pump opportunities for suitable housing archetypes

• Consider use of sensor and imaging technology to support the collation of data and setting context

What is the commercial opportunity beyond a CivTech contract?

• Same approach could be taken / rolled out across rest of Scotland or rest of UK

• Revenue opportunities within the solution once commercially viable

• The focus on enabling communities to come together to make collective decisions may have applications in other sectors.

Who are the stakeholders?

• South of Scotland Enterprise

• CivTech

• CENSIS

• Scottish Borders Council

• Dumfries and Galloway Council

Others who should be potentially consulted as the challenge progresses include:

• Scottish Government

• Energy Saving Trust (Home Energy Scotland)

• Local Energy Scotland

• Registered Social Landlords

• Users and communities

Who’s in the Challenge Sponsor team?

• South of Scotland Enterprise – Challenge lead and internal subject specialists supported by SOSE Community and Place experts.

• CENSIS

What is the policy background to the Challenge?

• UK to be Net Zero by 2050

• Scotland to be Net Zero by 2045

• Scotland to meet a 75% carbon emission reduction by 2030

• Scottish Government Heat in Building Strategy

• South of Scotland Regional Economic Strategy