Energy efficiency programme could boost economy

Row of traditional filament lightbulbs with one energy-saving lightbulb hanging lower.

A Scottish Government programme to improve the energy efficiency of homes across Scotland could ultimately boost the economy by £7.8 billion and create 6,000 jobs, according to a new study.

The Centre for Energy Policy (CEP) at the University of Strathclyde modelled the potential economic returns of an estimated £8 billion investment via the Energy Efficient Scotland programme, announced by the First Minister Nicola Sturgeon at the All Energy conference in Glasgow on 2 May.

The researchers suggest the combination of spending, energy efficiency gains and increased household spending could deliver a cumulative boost of £7.8 billion to the Scottish economy over 30 years and a sustained increase of 0.2% in Scottish GDP in the long term.

Fuel poverty

For the purpose of the modelling, the research assumed what would effectively be a continuation of existing real funding for residential energy efficiency, estimated to total around £8 billion over 20 years, where 20% comes from Government, 15%  via the Energy Company Obligation, delivered by energy companies, and the remaining 65% from household contributions via interest-free loans.

The funds will be spent on activities such as retrofitting energy efficiency measures, insulation and installation of new heating technologies to make to make homes warmer, reduce energy bills and address fuel poverty.

Using data from the Scottish Government and The Energy Savings Trust the researchers estimate the 20-year programme of improvements could lead to an average 9.6% reduction in the energy required to run Scottish households.

The researchers believe the retrofitting and insulation programme combined with the outcome of making Scottish households more energy efficient could create around 6,000 sustained full-time jobs and represent a return on investment for the government in the form of about £5 in GDP per £1 of public money spent.

Professor Karen Turner, Director of the Centre for Energy Policy, said: “From its initial stages, a programme that includes the retrofitting and insulation of Scotland’s housing stock to contribute to improving the quality of both the Scottish domestic and non-domestic building stock will certainly help to drive GDP and job creation.

"This is underpinned by the fact that Government are announcing a 20-year framework that will give certainty and confidence to households and the sector to invest in improving energy efficiency.

The fact that more energy efficient Scottish households will have higher real income and spending power to put into the economy should result in a long-term sustained boost to jobs and GDP.”

The analysis also focused only on the residential sector. To keep the modelling exercise manageable, the researchers did not consider the investment that will be triggered by Energy Efficient Scotland in commercial and industrial buildings.