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Posts Tagged ‘Energy Company Obligation’

Energy Company Obligation

All the arguments for the ECO

Thursday's SunAs you know, the Energy Company Obligation is smack in the  Government’s firing line as the main target of David Cameron’s demand to “get rid of the Green crap”, according to the front page of Thursday’s Sun.  Plans are being made for a dramatic reduction in  its already inadequate size, even  total eradication, in the Autumn Statement on December 5.

We have prepared the attached magnum document , seeking to collate all the arguments, statistics etc. which might help the case for the ECO. We hope you find the ammunition useful.

Can somebody please explain why a drive to cut fuel bills is seeking to cut the only scheme designed to cut fuel bills?

ACE (November 2013) Energy efficiency – fighting to keep bills down permanently

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Energy Company Obligation,Energy Policy,Green Taxes

Who are the real losers from green taxation?

It all got started at a rowdy session of Prime Minister’s Questions late last month in the House of Commons. Large price rises had just been announced by many of the energy suppliers. So David Cameron promised to instigate a hard look at the impact green taxes might be having upon fuel bills, with a view to announcing changes in the Chancellor’s Autumn Statement.

This perfectly reasonable announcement instantly prompted a quite unseemly hubbub of misinformation and special pleading. Initially, all the focus was placed upon the specific requirements placed by government upon the large electricity and gas retailers, which the Department of Energy & Climate Change said, categorically, was adding just 7 per cent at most to an average household bill.

DECC continuously examine these figures. These reviews consistently show that these particular “green taxes” ultimately ensure our bills are on average lower in the years to come than they would be without them, thanks to energy efficiency and reduced reliance on imported gas.

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DECC,Ed Davey,Energy Company Obligation


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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Energy Company Obligation,hard to treat cavities,Ofgem

Ofgem: consultation on requirements for hard-to-treat cavities under the ECO

In late August 2013 Ofgem published a consultation seeking views on its proposed requirements under the Energy Companies Obligation (ECO) for demonstrating the characteristics of a hard-to-treat cavity (HTTC) wall to which insulation has been installed.

The consultation put forward proposals to address concerns that a significant number of HTTC measures installed under ECO may have been installed to cavity walls that do not meet the statutory definition of ‘hard to treat cavity’. ACE’s and others’ views, put to Ofgem, is that its proposals are very poorly thought through.

Ofgem says they received a high number of responses to the consultation, many of which (including ACE’s) suggest changes to the proposals. In order to properly review all of the responses and consider modifications to our consulted position, Ofgem no longer intend to publish the outcome of the consultation by 1 October 2013 or to implement any new requirements relating to HTTCs from 1 October 2013.

Ofgem will confirm the ‘date of effect’ for any new requirements relating to HTTCs in its response to the consultation and additional guidance on HTTCs. These documents will be published at least one month before the new requirements come into effect. The date of effect for any new requirements will be no earlier than 1 December 2013.

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Edward Davey,Energy Company Obligation,Green Deal

Green Deal and ECO: Operational Issues – A View from the Industry

Purpose of this paper

The genesis of this paper was the speech made by the Secretary of State for Energy & Climate Change, the Rt Hon Edward Davey MP, at a reception on the Terrace of the House of Commons on September 3 hosted by this Association.

In his speech, he challenged the Association, on behalf of our industry, to put forward recommendations as to how the effectiveness of the Green Deal/ECO programmes might be improved immediately. This paper sets out a series of practical proposals regarding ways in which a series of operational issues should be addressed.

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CERT,CESP,Energy Company Obligation,Green Deal

Urgent action needed to boost Green Deal take-up and tackle plummeting insulation rates

Reacting to today’s publication by DECC of the Green Deal statistics up to June, the Association for the Conservation of Energy called the figures “disappointing”, highlighting in particular the 88% drop in insulation installations compared with the same period last year. They called for a raft of interventions to help boost the Government’s flagging flagship scheme.

Jenny Holland, Head of ACE’s Parliamentary Team, said:

“The Government was bracing itself for today’s statistics – and rightly so. Over 38,000 assessments have yielded only 245 requests for Green Deal plans, with only 4 of these actually signed. Given earlier Government predictions of 10,000 Green Deal plans in 2013, the scheme would need to ramp up 2,500-fold in the next six months in order to achieve these dizzy ambitions.

“As we have warned for many months, the insulation industry has been particularly badly hit – with installations of cavity wall, loft and solid wall insulation dropping by around 88% on the equivalent period last year. These installation rates are respectively only 5%, 8% and 7% of what the Committee on Climate Change told us yesterday we need to be achieving to be on track to meet our 2022 carbon target.GDstats“Today’s statistics reveal how urgent it is to launch a rescue package for this flagging flagship scheme. The Government need to take a long hard look at how high interest rates are deterring consumers. They should urgently consider introducing council tax or stamp duty incentives to help boost take-up – something they have been considering for years, but have apparently kicked into the long grass.

“They should also ditch the requirement for measures delivered under the cash-back scheme to be installed by an approved Green Deal provider, thereby excluding many reputable local builders and heating engineers from participating. Finally, they should reverse their perverse decision not to go ahead with plans to require householders who erect extensions or convert their garages to make further energy efficiency improvements to the original building – a policy that they themselves said would lead to energy saving improvements to 2.2 million homes.

“It’s not surprising that DECC chose to bury today’s statistics under seven other announcements. The Green Deal is falling well short of being the “game-changer” that Government Ministers promised us it would be – they must act swiftly and decisively to put it back on track.”

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Energy Company Obligation,Green Deal,jobs

Short term employment and economic implications of GD/ECO framework

Next year marks a sea-change in the way energy efficiency measures are delivered in Britain, with the Carbon Emissions Reduction Target, the Community Energy Saving Programme and Warm Front coming to an end, and the Green Deal and Energy Company Obligation (ECO) framework commencing.

Using the Government’s Impact Assessment of the framework as its starting point, this briefing paper outlines the short term employment and economic implications of the transition as it currently stands, encompassing job and Government revenue losses that stand to be made in the interim, particularly in 2013. The paper further outlines how, given the overall ambition for the Green Deal and ECO in the medium term, such losses in the interim need not become a reality by making a few simple adjustments entirely in keeping with the spirit of the new framework.

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Energy Company Obligation,Ofgem

Ofgem consultation on Energy Affordability: helping develop Ofgem’s Vulnerable Customers’ Strategy

ACE has submitted a written response to Ofgem’s consultation on its Vulnerable Customers’ Strategy.

ACE supports the four themes of Ofgem’s strategy but points out that little emphasis has been placed on the coverage, by these themes, of environmental obligations. At least £540 million of the Energy Company Obligation’s notional annual budget will be spent supporting vulnerable households with energy efficiency measures. ‘Monitoring and enforcement’, ‘encouraging best practice and research’, ‘knowledge and influence’ and ‘information for consumers’ based on all the activities under the ECO must form a central plank of Ofgem’s new strategy – especially in the absence of (in England) any continued public expenditure on energy efficiency for vulnerable households after March 2013.

Find ACE’s consultation response here.

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Carbon Emissions Reduction Target,Energy Company Obligation,Green Deal



Framing a sustainable transition to the Green Deal and the Energy Company Obligation

The ACE Research Team is today publishing its report on the implications of the transition from CERT to Green Deal and the new Energy Company Obligation after 2012 – to coincide with the deadline to the Government’s Green Deal consultation.

The ‘Dead CERT’ project’s focus is on the main contributors to the Carbon Emissions Reduction Target: cavity wall and loft insulation. Its aim is to understand the implications of the move from CERT to Green Deal and ECO for the markets for these measures, and to make recommendations to support a well-managed transition which ensures carbon budgets, fuel poverty targets, and the wider ambitions for the Green Deal can be met.

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Energy Company Obligation,Green Deal

Green Deal & ECO Consultation

Alongside ACE Research’s ‘Dead CERT’ report, published today, ACE has submitted its response to the Government’s consultation on the Green Dea; and Energy Company Obligation. Addressing all aspects of the consultation, the main thrust of our response is that the outcomes envisaged by the £1.3 billion expenditure proposed for the ECO fall far short of what is required to meet Carbon Budgets and eradicate fuel poverty.

Furthermore, this level of spend is also less than historical levels of expenditure under CERT and Warm Front – despite Ministerial assurances that the ECO would “bring a far greater level of resource to bear on the fuel poor” than previously. With the ECO’s limited ambitions for tackling fuel poverty, the consultation concedes that a mere 325,000 households will be assisted by the end of March 2015. In the context of at least 5 million households in fuel poverty, we believe that the Government has abdicated any serious attempt to meet its 2016 duty to eradicate fuel poverty.

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