Balancing investment in clean heat and energy efficiency in Scottish housing retrofit

There is conflicting information about the level of fabric performance needed for a home to be suitable for clean heating. Some studies focus on whether a heating system can maintain a comfortable indoor temperature during the coldest expected weather. Others consider running costs, aiming to avoid higher heating bills than the home’s existing heating system. Scotland’s climate and housing stock must be considered to fully understand efficiency and costs.

Improving a home’s fabric can reduce peak heating demand, helping heating systems operate more efficiently and lowering running costs. The evidence also suggests other ways to support clean heating where fabric improvements may be limited, including:

• radiator upgrades
• high-temperature heat pumps
• shifting energy use through Time-of-Use tariffs
• self-generation of power via solar panels
• alternative heat pump systems, such as hybrid or air-to-air heat pumps

The cost-effectiveness of these measures will vary by tenure, and the suitability of different options will depend on circumstances:

• Owner-occupiers may prefer solutions with lower lifetime costs.
• Renters may favour options that do not increase energy bills.
• Some households may prioritise minimising disruption or loss of space.
• For social landlords, economies of scale may be the most important factor.

There has been limited research on the impact of balancing fabric improvements and clean heating measures on fuel poverty. No studies appear to have assessed these impacts using the Scottish Government’s approach to measuring fuel poverty. However, retrofit can improve health and wellbeing, while helping to reduce energy bills and fuel poverty risk. Many households at risk of fuel poverty, or with particular health needs, may require more extensive retrofit measures.

Stakeholders identified several opportunities to support retrofit delivery:

• Using retrofit ‘trigger points’, such as planned home improvements or renovation work, can make upgrades more practical and cost-effective.
• Raising awareness of the health and comfort benefits of retrofit may be more effective than focusing on carbon emissions or cost savings.
• Greater focus on commissioning and aftercare for new clean heating systems could improve efficiency and customer satisfaction, and may reduce the need for more extensive measures to achieve acceptable heating costs.

Recommendations

• Policies should remain flexible and avoid prescribing a single retrofit pathway for all homes.
• Households experiencing fuel poverty, or at significant risk of it, should be supported with more extensive retrofit measures to reduce running costs and improve comfort.
• A modelling exercise should assess the measures needed to lift Scottish households out of fuel poverty, or significantly reduce the gap, while supporting decarbonisation.

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