2. Housing
Approximately 75% of the UK’s housing stock was built before 1975.
•Huge variety in types and styles of properties
•Huge variety in construction types and materials used
•Government policies must acknowledge the facts
•Needs retrofitting to bring up to modern standards
•More expensive to retrofit renewables than in a new-build
3. Energy efficiency
UK’s housing stock is notoriously energy inefficient and amongst the worst in
the Western world. Historically, little has been done to improve it.
•Property is expensive in the UK, especially in city centres
•People move frequently for economic & social reasons
•Financial priorities
•Energy has long been regarded as ‘cheap’, until more recently…
4. Energy is cheap (Really!)
North Sea oil & gas meant that energy in the UK was cheap. Only recently
have the public thought energy has become expensive, but…
“The reality is we have some of the lowest energy prices in
Europe. We could get them even lower. The country with the
lowest energy prices at the moment happens to be France”
- Chris Huhne, 10th July 2011
Is he right?
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9. Fuel Poverty
A household is classed as being in fuel poverty if it needs to spend more than
10% of it’s income on fuel to maintain a satisfactory heating regime.
In 2009 approximately 5.5million households in the UK were classed as being
in fuel poverty, representing about 21% of all UK households.
Since then, the impact of the recession and increases in fuel costs will have
made this situation worse.
10. Energy Mantra
As well as fuel poverty and energy cost increases, the government has CO2
emission reduction targets to consider too. Accordingly, the energy mantra
takes centre stage:
3.Be Lean – improved insulation, energy efficient products, etc…
5.Be Mean – switching off, etc…
7.Be Green – renewable & low carbon energy sources
Leading to the creation of FITs, RHI & the Green Deal
11. Feed in Tariff (FIT)
Launched in 2010, a scheme that provides a payment for every kWh of
electricity generated from sub 5MW generating capacity installations of the
following technologies:
•Solar PV
•Wind
•Hydro
•Micro CHP
•Anaerobic digestion
12. Feed in Tariff (FIT)
The future…?
•Significant breakdown in trust in the scheme following the Solar PV changes –
change towards market caps driving tariffs rather than schedules?
•Proposed links between installing technologies (eg, PV) and compulsory
insulation/energy efficiency measures?
•Community projects & multi-installation tariffs for social housing providers
and community groups?
13. Renewable Heat Incentive (RHI)
The first scheme in the world to provide a financial incentive (based on
achieving 12% returns) for generating heat from the following renewable
energy sources:
•Solar thermal (hot water)
•Biomass (inc energy from waste)
•Ground source heat pumps
•Biomethane (grid injection or combustion)
Phase 1: non-domestic installation launched November 2011
Phase 2: domestic installation (due to launch in 2012)
14. Renewable Heat Incentive (RHI)
“The Renewable Heat Incentive (RHI) will only support useful heat. It is not
practical to provide an exhaustive list of all the acceptable heat uses which will
be eligible. Instead, we can outline the broad principles of what we want to
support:
• The utilisation of useful heat;
• The heat must be supplied to meet an economically justifiable heating
requirement i.e. a heat load that would otherwise be met by an alternative form
of heating e.g. a gas boiler;
• This heat load should be an existing or new heating requirement i.e. not
created artificially, purely to claim the RHI; and
• Acceptable heat uses are space, water and process heating where the heat is
used in fully enclosed structures.
The only exception to this approach is for biomethane injection, where we will
not specify how the biomethane should be used, given it will be injected into the
existing gas grid.“
15. Renewable Heat Incentive (RHI)
Similar to FIT:
•Administered by OFGEM
•Installers must be MCS certified
•Banding, eg small, medium, large biomass (<200kWth, 200-1000kWth,
>1000kWth)
•20 year duration of tariff
•Index linked
•Disallows public funded grants
16. The Green Deal
What is it?
“Put simply, the Government is establishing a framework to enable private firms
to offer consumers energy efficiency improvements to their homes, community
spaces and businesses at no upfront cost, and recoup payments through a
charge in instalments on the energy bill.
At the heart of the Government’s proposals is the “Green Deal plan”, an
innovative financing mechanism which allows consumers to pay back
through their energy bills. This means consumers can see the Green Deal
charge alongside the reductions in energy use which generate savings on their
bill. It also means that if they move out and cease to be the bill-payer at that
property, the financial obligation doesn’t move with them but moves to the next
bill payer: the charge is only paid whilst the benefits are enjoyed. In this way,
the Green Deal differs from existing lending – it is not a conventional loan since
the bill-payer is not liable for the full capital cost of the measures, only the
charges due whilst they are the bill-payer. This is a market mechanism, funded
by private capital, which we believe will deliver far more to consumers than any
sort of top-down Government programme.”
17. The Green Deal
Where did it come from?
The Energy Act 2011 made provision for the Green Deal and the Energy
Company Obligation (ECO). Due to launch Autumn 2012.
Green Deal and ECO will replace the Carbon Emissions Reduction Target (CERT)
and the Community Energy Savings Programme (CESP) to be the main drivers
of the improvement of the UK housing stock and the route for energy companies
to fulfil their obligations.
ECO will target low-income and vulnerable households as well as hard to treat
properties…very relevant to Stoke!
18. The Green Deal
What is it not?
It is not a guarantee of energy savings – it only predicts savings
It is not linked to a homeowner or resident – it is attached to the property
Linked to gas bills – it is paid via the electricity bill although the gas usage
forms part of the initial assessment
It is not a grant – no public funds are used, it is like a private loan
It is not compulsory – homeowners can still install insulation or renewables
other ways, but it is intended to offer an affordable finance option
19. The Green Deal
It includes a number of measures and rules to protect consumers, including the
following prerequisites:
•The expected financial savings must be equal to or greater than the
costs attached to the energy bill, known as “the golden rule” of the Green
Deal.
2. The measures must be approved and the claimed bill savings must be
those accredited through this process.
3. The measures installed must have been recommended for that property by
an accredited, objective adviser who has carried out an assessment.
4. The measures must be installed by an accredited installer.
5. For householders, the Green Deal provider must give appropriate advice
within the terms of the Consumer Credit Act and take account of the
individual circumstances of the applicant.
20. The Green Deal
Continued…
6. The Green Deal provider must have consent from the relevant parties,
including the express consent of the current energy bill-payer.
7. The presence of a Green Deal must be properly disclosed to subsequent
billpayers (e.g. new owners or tenants) alongside energy performance
information.
8. Energy suppliers must collect the Green Deal charge and pass it on within the
existing regulatory safeguards for collecting energy bill payments –
including protections for vulnerable consumers.
21. The Green Deal
How does it work?
3.Unlocking demand – marketing via various channels
5.Accredited Assessment – provision of EPC + Green Deal recommendations
7.Finance at no upfront cost – financed according to preference
9.Accredited Installation – MCS approved installer, Quality Mark
11.Repayments – via electricity bills
13.Moving on – disclosure of Green Deal to prospective house buyers
22. The Green Deal
30 technologies are eligible:
NB: For ECO, the key technology is Solid Wall Insulation
23. The Green Deal
How does it work for SMEs?
“SMEs will be able to play a key role in delivering the Green Deal. Their local
customer base and ability to engage them through other works will be a major
link between potential customers and the Green Deal.
We would expect to see SMEs in the role of advisors (carrying out building
assessments) and installing measures. We have also designed the Green Deal
so that any size of organisation can become a Green Deal provider as long as
they can fulfil the authorisation requirements and ongoing obligations. The main
role of the Green Deal provider is to arrange the Green Deal finance plan under
which the customer makes repayment for installation of works, so those
ongoing obligations include responsibilities under the Consumer Credit Act
1974. SMEs who do not want to be Green Deal providers will be able to partner
with a larger Green Deal Provider either to act in their supply chain or to act on
their behalf.”
25. The Green Deal
1. SMEs entering the supply chain for Green Deal Providers (GDP): One model, based on
existing practice, is for larger companies to use local suppliers of goods and services.
Under this model a GDP would market the Green Deal to customers and then pass on
the installation work to companies engaged in its supply chain. This could also work
with Local Authorities becoming GDPs and then creating local supply chains to
maximise the local economic benefits.
3. SMEs working in partnership supply chain with GDPs: Under this model SMEs would be
the face of the Green Deal and make full use of their local networks and customer
base. The GDP would, effectively, become a silent partner behind the scenes, providing
the financing. One or a number of SMEs could discharge the ongoing obligations of the
Green Deal Provider including assessment, installation, customer services and ongoing
customer relations.
5. SMEs in partnership as agents with GDPs: SMEs could become agents for these GDPs
and would be able to offer their customers access to Green Deal financing following an
assessment. They could find clients for GDPs thus providing access for their customers
and at the same time, increasing the remit of their business. This model could involve
SMEs directly becoming agents of GDPs, or becoming agents through their trade body
(who could partner with a finance provider on their behalf). Alternatively, trade bodies
or trade suppliers could become GDPs on behalf of their members/customers
26. The Green Deal
Accreditations & Qualifications
Above all will sit the Green Deal Code of Practice which applies to everyone
participating in the Green Deal.
To be an Advisor, will require building upon energy assessor qualifications (EPC
provider). It will add Green Deal specific requirements, eg finance and
communication skills. The qualification is still being developed.
To be an Installer, will require becoming a registered installer, requirements for
which are contained in PAS 2030. It will require additional training – still being
developed.
27. The Green Deal
Quality Management
The Green Deal Mark: to cover all energy efficient measures in PAS 2030
Green Deal Providers to provide guarantees & warranties
Green Deal Providers to have an obligation to put things right where faulty or
poorly installed – including obligations on the installer
Possible ‘Carding of Operatives’ as a means of quality assurance
28. The Green Deal
Lessons learned from the pilot scheme (67 homes in Sutton):
Most popular measures included:
•Boiler upgrade (75%)
•Loft insulation (73%)
•Solid Wall Insulation (73%)
•Draught proofing (72%)
•Heating controls & double glazing (50%)
Average spend was £13,000 (Maximum was £33,000)
28% chose a 10 year payback period, 72%, chose the 25 year option
Only ¼ met the Golden Rule, ¾ had bills averaging £256 higher then fuel
savings
Average CO2 savings of 26% (maximum achieved was 52%)
