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Posts Tagged ‘DECC’

Amber Rudd,DECC

Amber_Rudd_MP

Yes Minister, but….

ACE’s Director reflects on some of the comments in the Secretary of State’s speech to the Conservative Party Conference.

In her conference speech, the Secretary of State suggested that ‘our energy policy should once again be driven by the people who pay the bills.’  Yes indeed, but let’s not forget that we already have relatively cheap energy and our dissatisfaction with our bills is more effectively tackled by helping us to use this resource more wisely than by focusing obsessively on marginal reductions in the cost of a kilowatt hour. ‘Getting a grip to protect families from endless worry about their energy bills’ should start with ensuring that their homes are energy efficient, not with providing secure supplies.

We too are delighted that the new National Infrastructure Commission will look at energy: but it must recognise that our energy infrastructure does not stop at the meter.  Investment in demand side infrastructure needs to be fully and fairly considered alongside supply-side options.

We agree that the Government will help some people to keep their bills down by delivering its promise to insulate a million more homes over the next five years, and that is a good thing; but what about their heating systems, lighting and appliances? What if they need more than just the cheaper insulation options? And what about the other 25 million homes, give or take, that aren’t yet as energy efficient as they need to be?

The Secretary of State wants to get ‘the balance right between supporting new, low carbon generation and protecting bill-payers’: so she must enable energy efficiency to help her do this.  If we use less, we can afford to pay a little more for each unit if we need to, without being out of pocket.

She wants to ‘celebrate and back the businesses and innovators who will transform our energy system’: quite right, but why no mention of the high specification insulation systems that have been developed in recent years, of triple glazing systems that enable natural light to flood in without heat flooding out, of LEDs, of smart heating controls and ventilation… I could go on…

In closing, Ms Rudd invoked the spirit of Margaret Thatcher, to demand that we tackle climate change whilst being ‘tough on subsidies […] pro-innovation and pro-consumer’.  The energy efficiency sector is ready to do just this; it now needs the Government to notice this, and get on with setting the policy framework that will let this happen.

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DECC,energy and climate change committee

Priorities for the Energy and Climate Change Committee: ACE submission to the ECC Inquiry on priorities for holding Government to account

The Energy and Climate Change Committee is holding an inquiry to gather views on what areas of DECC’s policies will require particular scrutiny in the coming years.  Responses to the consultation will help to inform the Committee’s work programme.  Here are ACE’s answers to the two specific question posed.

Which DECC policy areas do you think require particular scrutiny over the next five years?

The balance of affordability, energy security and sustainability is often most effectively addressed by a focus on using less energy.  Work by the Association for the Conservation of Energy, and others, using DECC’s 2050 Calculator (http://2050-calculator-tool.decc.gov.uk/#/calculator/ace-example) demonstrates how an increased focus on demand side actions can reduce the cost of meeting climate change aims.  And, clearly, using less energy results in lower costs for energy consumers.

A clear priority for the Committee over the next five years should therefore be to scrutinise the extent to which all elements of energy infrastructure, including those on the demand side of the meter, are treated fairly in the policy decision-making process, and that investment in the demand side of the system is adequately supported by Government policy.

What should be the Committee’s scrutiny priorities over the next twelve months?

Many of DECC’s previous policies to support energy efficiency (for example, support for the Green Deal Finance Company and the scheduled timetable to zero carbon new buildings) have already been withdrawn.  Energy efficiency investments supported through the Energy Company Obligation will largely be delivered by the end of 2015, with no further obligation currently scheduled until April 2017.  And Treasury is currently reviewing the main planks of energy efficiency policy for non-domestic buildings.

The need for early action is therefore particularly acute in relation to energy efficiency policy: investor confidence in this sector is very low despite an energy sector-wide view that investment in energy efficiency has to increase significantly (https://www.energyinst.org/information-centre/energy-barometer) and this has the potential to compromise future delivery of carbon emissions and fuel poverty targets.  Ensuring that action on energy efficiency policy is taken soon, and taken effectively, should therefore be a priority for the Committee.

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DECC,Energy Policy,Green Deal,Pay As You Save

If not the Green Deal, then what?

The Government announced yesterday that no further public funding will be provided to the Green Deal Finance Company.  This leaves the energy efficiency supply chain at a loss to understand how the Government thinks it will meet its fuel poverty and climate change targets.  Yes, the Green Deal has not been as effective as the Government originally forecast, but the principle of a Pay as You Save mechanism to support energy efficiency investment remains sound.  Working to build on the existing framework, not pulling the rug from under it, was the way forward.

DECC are aiming to develop and establish a more stable, long-term, coherent framework for home energy efficiency: it is difficult to see how they can achieve this without finance options for the ‘able-to-pay’.  And we should not forget that this will include those on modest incomes who do not qualify as fuel poor: are we expecting them to turn to payday lenders?

The energy efficiency industry has invested significantly in the development of the Green Deal.  Government’s decision to undermine this core plank of home energy efficiency policy without first developing an alternative will in turn undermine the confidence of industry and its willingness to support whatever new framework is developed.

Energy efficiency investment remains the single most affordable way for Government to deliver on fuel poverty and climate change objectives.  So, yes, we will be working with DECC to develop a better framework for the future of home energy efficiency policy; but as of yesterday, our job and theirs became a lot harder.

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DECC,Fuel Poverty

ACE response to DECC consultation on a new fuel poverty ‘strategy’ for England

ACE has submitted a written response to the Department of Energy and Climate Change’s consultation on a new fuel poverty strategy for England. A strategy is widely held to encompass the following elements, elements which we would have hoped to see after four years of deliberation: identifying the nature and scale of the challenge at hand; setting goals to meet that challenge; laying out policies, programmes and actions to achieve those goals; and earmarking resources to execute the policies, programmes and actions. Instead, the consultation contained a series of important but ultimately small picture questions. In our response, we focused on answering big picture questions not posed in it.

In summary, the draft fuel poverty strategy proposes to set a target to ensure that as many fuel poor homes as is ‘reasonably practicable’ achieve a minimum standard of EPC Band C by 2030. ACE welcomes the Government’s recognition that setting a high standard for energy efficiency is the best long-term solution to tackling fuel poverty. However, we believe that all low income households – not just those that are fuel poor – should be targeted and that the Band C standard should be reached by 2025, not 2030. We also believe that the ‘reasonably practicable’ caveat should be removed or, at the very least, tightly defined so as to ensure that it cannot be used by future Governments as an excuse for failing to implement the Fuel Poverty Strategy. Finally, the interim targets of EPC Band E by 2020 and EPC Band D by 2025 should be removed, as it is far more efficient and effective to improve homes in one go straight to Band C, thus ‘fuel poverty proofing’ them and removing the necessity for expensive repeat visits.

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BIS,Building Regulations,Cabinet Office,DECC,Housing,supplier obligation

Review of energy efficiency policies in housing

Commissioned by the Green Construction Board’s Valuation & Demand Group, ACE Research, in partnership with Sweett Group, has delivered a comprehensive but high level qualitative and quantitative review of energy policies targeted at residential buildings over the last 20 years. Throughout, the work was informed and guided by stakeholders in government, industry and the NGO sector.

The main purpose of the work is to support the civil service to maintain a long view on ‘what works’ in residential energy efficiency programmes as staff are turned over. The outputs have been brought together in an interactive dashboard designed as a tool to bring officials up to speed on residential energy efficiency programmes quickly. This is accompanied by a full report and an executive summary. To date, the tool has been presented to, and tested with, DECC, BIS, the Cabinet Office.

Download the project’s resources below, and let us know what you think:

 

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DECC,Energy Company Obligation

The Future of the ECO: a £245m windfall for energy suppliers?

Today, we submitted our response to DECC’s consultation on the future of the Energy Company Obligation (ECO). This is the consultation which seeks to rubber-stamp cuts to the ECO, pledged in the run-up to last year’s Autumn Statement, amounting to £30-35 off the average energy bill. We, and many others, have consistently argued that cutting Britain’s only national energy efficiency programme – designed to reduce household energy bills and carbon emissions in the long term – to achieve a modest one-off energy bill reduction is completely perverse.

But our analysis with the Energy Saving Trust, the Centre for Sustainable Energy and the Cavity Insulation Guarantee Agency finds that the cuts amount to more: nearly £42 per household – yet energy suppliers are only handing back around £32.50, on average, to each household. This represents an aggregate windfall to energy companies of £245 million this financial year.

The cost of this windfall if the consultation’s proposals are implemented? Virtually no homes to be improved under the Energy Company Obligation this year. A terrible deal for consumers. A kick to the supply chain while it’s down. The loss of credibility for a Government which did not stand its ground in the first place, and is now about to line the energy companies pockets. We’re certain it does not want to do that.

We’ll rehearse the arguments about why the cuts were a terrible idea in the first place – even if they had turned out not to be excessive. The result is:

  • A very modest one-year rebate to households, easily swallowed up by a future round of gas and electricity price increases…
  • …at the expense of permanent energy bill reductions for at least 264,000 households in this year alone (compared to business as usual);
  • A regressive ‘double-dividend’ for those 50% of British households who have to date received energy efficiency improvements, and higher bills for longer for everyone else;
  • A terrible precedent of announcing pre-determined chops and changes to a programme:
    • Less than one year in;
    • Just as it was beginning to settle and run smoothly;
    • Absent any comprehensive, transparent data on what it actually costs (official data suggest it was roughly as much as anticipated).
  • An ever-widening gap between the carbon savings required from the residential sector under the Climate Change Act, and the carbon savings that will be delivered:
    • We recognise that new public money is being made available over the next three years to maintain overall carbon neutrality – but with the use thereof not being consulted upon as well, this ECO consultation is effectively being conducted in the dark.
  • Rag-doll treatment of the energy efficiency supply chain, which: took heavy losses following the awful transition from CERT and CESP to ECO and Green Deal; made very difficult decisions to successfully restructure, invest in and adapt to in the new delivery landscape; only to have this painfully recovered confidence even more thoroughly undermined – with attendant negative effects on investment and employment.
  • Powerfully undermined Government credibility – some energy companies are now calling for the whole of the ECO to be scrapped. The precedent set by the Autumn Statement suggests that it is very possible they will have their way. Despite fully understanding the purpose and benefits of energy efficiency programmes, there has been no backbone and no firmness of principle on the Government’s part.

Our analysis has garnered a lot of press attention, links to which can be found below.

Utility Week
Big six ‘to get £245m windfall’ from Eco changes (15.4.14)
Building.co.uk
Government’s ECO cuts ‘£250m deeper than first thought’ (16.4.14)
ENDS Report
Investor interest in ECO collapses in April (16.4.14)
Daily Telegraph
Energy companies ‘in line for £245m windfall’ from green levies deal (17.4.14)
Business Green
Are the Big Six set for £250m windfall from ECO reforms? (17.4.14)
The Times
Let households share £250m energy windfall, Big Six told (22.4.14)
Business Green
Labour slams government over Big Six’s £250m ECO windfall (23.4.14)

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DECC,Energy Performance Certificates,Fuel Poverty,Fuel Poverty Advisory Group

Ending cold homes

Consumer Futures commissioned ACE Research to model the cost and impact of introducing ambitious new fuel poverty targets. This new report presents the results of the research, as introduced by William Baker, Head of Fuel Poverty Policy at Consumer Futures, below.

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Climate Change,DECC,Energy Bills,Energy Company Obligation,Private Rented Sector,Public Buildings

Questions for DECC on proposals tabled 2.12.2013

In response to recent announcements regarding changes to energy efficiency policies (including this DECC press release), ACE have asked DECC to answer the following questions:

1.  On the announcement of a “Stamp duty rebate” for home-movers who install efficiency measures:

  • Is this really a stamp duty rebate (implying a return of money at some point after purchase for homeowners who can prove they have installed measures) or is it just a cashback by another name?  What will the delivery mechanism be?
  • Does this money come out of the existing £200m cashback pot, or does it come from somewhere else?  Is this Exchequer funding?
  • It is anticipated that 60,000 homes a year will be helped.  But what if a large number of homeowners opt to have more expensive measures installed?
  • If the share of the £450m allocated to this scheme runs out prior to April 2017, does this mean that the scheme will be closed?

2.  Help for private landlords:

  • The press release talks of a “scheme to support private landlords” and promises a share (unspecified) of £450m will be available to fund this.  However, the press release goes on to say that this scheme will  consist of “funding available through the Green Deal”.  It is therefore confusing as to whether this will be Government funding channelled through the Green Deal, or else some “tweaking” of Green Deal finance, or else some extension of the LESA scheme?
  • In an article in The Sun newspaper (1st December), Nick Clegg and David Cameron refer to “cash incentives to landlords of the least energy efficient properties”; the press release meanwhile talks of “helping landlords bring their properties up to minimum standards” – the implication of both of these statements is that the funding for landlords will only be available to landlords of F and G rated properties.  Can this be clarified/confirmed?
  • In the article in The Sun, Nick Clegg and David Cameron talk about the incentive being available to landlords “when they are between tenants” – will the incentive only be available during void periods?
  • Government is claiming this will deliver 1.8Mt of carbon savings .  If it is geared to existing F and G-rated homes,  surely all these savings must already be built into Government carbon estimates from the time the Energy Bill 2011 made it mandatory to outlaw F & G rated properties.  Therefore there will be no new carbon saved – it will just be a sweetener for landlords to get them to obey the law.
  • There are 440,000 F & G rated properties in the private rental sector. The new scheme will incentivise just 45,000 of them over three years,  e.g 10% of the total.  Can this be confirmed?

3. Spending breakdown:

  •  We’re told that there will be £450m of new investment for the two new measures above.  What is the breakdown of spending as between the two measures?

4. Carbon savings and public buildings:

  • What are the carbon savings associated with each of the above, and how much additional carbon saving is assumed to come from the £90m being allocated to schools, hospitals and other public buildings? What shape is deployment of this £90m – is it a grant? Or an extension of a finance mechanism (presumably Salix)?

 

We hope DECC will soon provide clarification on these important points.

 

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DECC,Ed Davey,Energy Company Obligation

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November 6 letter to Ed Davey on the Energy Company Obligation and ‘green levies’ review

Dear Secretary of State,

Yesterday afternoon the Governing Council of the Association for the Conservation of Energy held an emergency meeting, to discuss the devastating impact already being caused to our industry from the fallout from the Prime Minister’s announcement on ‘green levies’ made just a fortnight ago.

Initially, knowing the conclusions of the regular assessments that your Department publishes concerning the consumer implications of decarbonising the economy, which is so dependent on the role of improved energy efficiency to reduce overall consumer bills (a far more important measure than prices per unit), we had been confident that your Government’s main supportive policy, the Energy Company Obligation, would be recognised as a sacrosanct component of the policy package.

It has become very clear over the past fortnight that this logical assumption was entirely wrong. Inevitably our member companies have been made aware of the threat to ECO’s continuation: not least because of the orchestrated attack upon the existence of the Obligation by the six power companies required to deliver it. This has been most obvious in terms of much of the reporting in newspapers, which has singled out ECO as being in the firing line. Many of these articles have been written by journalists known to be regularly used by the Big Six, and are largely intended to deflect attention from the enormous unit-cost increases announced last month.

However, discussions at our Council meeting yesterday – which as you will recall from past visits, involves the CEOs of the main energy efficiency companies – revealed that already the PM’s announcement is having a completely devastating impact upon this marketplace. Not only are no new ECO-related contracts being signed, committed programmes are being withdrawn, and the power companies are now refusing to honour payment for many that have been completed in good faith – even those involved with the brokerage system.

The consequence is that we are in danger of the Big Six effectively deciding the result of the PM’s investigation, by unilaterally terminating their activities under the ECO. The consequences of this for those in our industry operating in this marketplace are deeply alarming, with devastating losses of business confidence.

You will know that there are already some seven thousand people fewer working in insulation businesses alone than this time last year. We are now undertaking calculations of the further job losses across heating, renewables and insulation that will occur if the status quo remains, which we will report to you shortly; one aspect we do know is that the vast majority of these are from not just SMEs, but from precisely the kind of micro-businesses and start-ups which the Government is ostensibly relying upon to ensure our economic recovery.

ACE members are now preparing a robust alternative package to present to you and your Cabinet colleagues. It will demonstrate clearly that only by continuing with an ECO-type policy can we ensure that, in a decarbonised landscape, every household will enjoy lower overall fuel bills.

Throughout this century, the British government has run obligated programmes via the Big Six. The result to date has been massive improvements in the energy efficiency of around half of British homes: those who have benefitted previously are already less troubled by heavy unit-cost increases. Any price rebate paid to them could be construed as essentially ‘double-dipping’. In contrast, abandoning an assistance programme like ECO would be grossly discriminatory against those households yet to see their homes made energy efficient.

This package will include details showing how the existing ECO could be refined and improved; at present its return on investment at 3:1 is less than half that achieved by the (more effective) previous programme CERT. We are aiming to have this with you by the middle of the month at the latest.

Kind regards

Andrew Warren

Director, Association for the Conservation of Energy

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DECC,Energy Savings Opportunity Scheme

DECC: Consultation on Energy Savings Opportunity Scheme

ACE has submitted a written response to the Department of Energy and Climate Change consultation on the Energy Savings Opportunity Scheme.

Article 8 of the EU Energy Efficiency Directive requires all Member States to introduce a regime of regular energy audits for ‘large enterprises’ (non-SMEs) to promote the uptake of cost-effective energy efficiency measures. These audits must be undertaken by 5 December 2015, and then every four years thereafter.

The consultation sought views on the UK’s approach to meeting this requirement through implementing a new Energy Savings Opportunity Scheme (ESOS). The Government’s ambition is to “develop a proportionate and better regulation approach, which yields real energy efficiency rewards”.

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