In 2016 Energy Saving Trust commissioned Amec Foster Wheeler to carry out some research into the energy efficiency and low carbon market in Scotland. Funded by Scottish Enterprise and the Scottish Government with the support of Zero Waste Scotland, the research has provided us with a ‘snapshot’ report from both a demand and supply perspective.
A total of 95 buyer organisations and eighty suppliers participated in the research. These included local authorities, housing associations, commercial buyers, installers and energy assessors.
Housing Associations: EESSH targets continue to drive demand from Housing Associations for insulation works and low carbon heating services (an estimated 17% of stock held by survey respondents doesn’t presently meet EESSH standards). Average expenditure per respondent is projected at £864,000 over the next three years.
Local authorities: Local authority buyers expect to purchase insulation works and low carbon heating services in the next three years. Within their own estates this could value up to £850,000 per local authority in the next three years.
Higher / further education (HFE): The HFE sector anticipates expenditure of approx. £550,000 in the next three years per institution. This will be targeted predominantly at insulation works and low carbon heating services.
Other public sector: Across the public sector in Scotland, gaps in buyer procurement skills and short-term funding models restrict the scale of low carbon works undertaken.
Industrial / commercial: Industrial / commercial buyers continue to seek energy efficiency cost savings via low carbon works. However, their projected modal expenditure is modest (less than £10,000 per organisation).
Buyers are inconsistent in their means of procurement (single / multi-lot frameworks; overlapping funding leading to multiple tenders for similar works; revised tender specifications etc), particularly where opportunities are spread across multi-lot frameworks as it is much easier for larger suppliers to bid across lots. Therefore, buyers need to consider how to engage more fully and effectively with the supply chain, particularly SMEs, through more consistent procurement routes.
Of respondents to this survey, suppliers typically have 10 employees or less and an annual turnover below £500,000. A total 44% of respondents offer services across all areas of Scotland. While most suppliers deliver services in-house there is also significant use of sub-contracting to meet specific project needs. Suppliers remain cautious in terms of the scale of market opportunities available to them in the next three years. In addition, around one third of the supply chain is not engaged with public sector buyers.
The research yielded 12 recommendations:
- For future market delivery, encourage consortia working amongst the supply chain.
- Provide procurement guidance for suppliers to engage with public sector buyers.
- For advertising opportunities, explore supplier attitudes to multi-channel advertising of opportunities.
- Offer consolidated service offering profiles of suppliers to buyers.
- Provide procurement guidance and training programme for all local authority buyers.
- Encourage buyers to publish forward plans and/or prior information notices.
- Encourage more buyer and supplier engagement events.
- Provide guidance for buyers on assessment of value for money.
- Encourage consistent procurement routes among buyers including a dedicated SEEP category in PCS.
- Provide buyers with clear routes to obtaining funding (particularly over the mid to long term).
- Avoid time constrained funding allocations.
- Provide suppliers with a clear overview of the scale of funding available to buyers.
Energy Saving Trust will be working closely with the project partners including the Scottish Government to take forward the recommendations arising from this research.
Energy Saving Trust held a webinar on 11 October 2017, which gave an over view of the key insights gained from the research. This included insights into:
- The future demand for energy efficiency measures from key buyers in Scotland.
- Supply chain characteristics in Scotland.
You can read a copy of the webinar slides here.
If you would like to request a copy of the full research report then please email us on firstname.lastname@example.org.