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Posts Tagged ‘Energy Company Obligation’

data,Energy Company Obligation,Green Deal

DECC’s Household Energy Efficiency Statistics: the good, the bad and the whaa…?

Liz Warren is a founder and director of SE2, a small consultancy helping individuals, communities and organisations build their capacity to respond to climate change. You can find out more about their work at www.se-2.co.uk.

DECC recently published statistics on the take-up of energy efficiency measures by households during 2015.  In this blog post, we unpick some of the data, exploring the good, the bad and the frankly baffling within the rich data set provided. How did policy announcements affect the market? Have whole-house energy assessments unlocked energy efficiency opportunities? And could we have found the elusive answer for improving the private rented sector?

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Energy Company Obligation,Supplier Commitment

Delivering the best deal for energy consumers: options for the next supplier commitment

For the benefit of consumers and the supply chain, and unlike the Energy Company Obligation (ECO), longevity, simplicity and flexibility must be at the heart of the next supplier commitment’s design (read full position paper). Its objective must be to serve as an important and stable plank to meeting carbon budgets within a wider framework of policies and measures that support a nationwide transformation of the housing stock through staged deep retrofits. It should be capable of delivering a wide range of measures to a large number of households, and drive the best possible outcome for consumers by lowering their bills and improving their health and comfort, both in the medium and long-term. A separate and new fuel poverty programme should be established alongside it, delivered in every locality by working with the devolution agenda and preferably funded through public expenditure. This must be fit for the purpose of meeting England’s new fuel poverty targets and flexible enough to mesh with existing fuel poverty programmes in Scotland and Wales. The next supplier commitment (SC) needs to:

  • Inter-operate with a long-term policy framework for low carbon housing (which is currently lacking with respect to finance, structural tax incentives (e.g. Stamp Duty, Council Tax) and regulation) – which must also be characterised by longevity, simplicity and flexibility
  • Be set in lifetime carbon terms over a five-year time horizon, to 2022, with the five-year time horizon extended every 2.5 years and transparent penalties for non-compliance
  • Be required to satisfy customers, not respond to tick boxes in over-long and costly paper trails
  • Include the able-to-pay and have a robust but broad distributional safeguard for fairness
  • Use deemed carbon scores to enable consistent and stable offers to be made to consumers while reducing administrative cost
  • Deliver and employ individual home retrofit roadmaps to make staged deep retrofit a reality
  • Not constrain any part of the SC to only particular measure classes (such as the Carbon Emissions Reduction Obligation and insulation) and be allowed to install any Green Deal approved measure across insulation, heating and controls, lighting and renewables
  • Deliver an ambitious solid wall insulation programme with a minimum of 500,000 installations for the first five-year period, concentrating on houses and guided by quality of installation
  • Include mandatory minimum delivery through brokerage, the level of which should be kept under review

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Energy Bill Revolution,Energy Company Obligation,Fuel Poverty

Government betrays Britain’s fuel poor

  • Political spin a ‘cover up’ for 80% decrease in help to make  cold homes more energy efficient
  • 4 million poor families left out in the cold with no support in next decade
  • Energy Bill Revolution demands that the next Government makes home energy efficiency the UK’s priority infrastructure spending priority

February 3, 2015 (London): Inefficient and unambitious Government programmes have resulted in a dramatic 80% decrease in help available for those with freezing homes.

Fuel poor households will  be some of the worst hit, with the number of major energy efficiency delivered dropping from 112,000 in the winter of 2011/12 to a mere 22,000 this winter, a new report has revealed.  The big drop occurred after the introduction of two new energy efficiency programmes, the Green Deal and the Energy Company Obligation.

The research by the Association for the Conservation of Energy, commissioned by The Energy Bill Revolution, the world’s largest anti-fuel poverty campaign group found that, at current rates, less that 30% of 6 million poorly insulated low income homes will receive energy efficiency support in the next decade.

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Carbon Emissions Reduction Target,CESP,Energy Company Obligation,Energy Efficiency Commitment,Fuel Poverty,Green Deal,Warm Front Scheme

ECO and the Green Deal – not enough is not enough

Today ACE and the Energy Bill Revolution publish a set of slides and a briefing which assess the impact of the Government’s current energy efficiency policies and compare them against past performance and what needs to happen to effectively tackle fuel poverty and meet the recommendations of the Committee on Climate Change.

We find that the Energy Company Obligation (ECO) and the Green Deal represent a significant loss of momentum in the deployment of energy efficiency measures compared to previous energy efficiency programmes, especially when considering the large energy efficiency potential still available in the housing stock.

The recent cuts proposed to the ECO are exacerbating this loss of momentum, and the introduction of the Green Deal Home Improvement Fund is not enough to turn it around. This means that carbon targets recommended by the Committee on Climate Change will be missed and that fuel poverty will worsen.

We are calling for:


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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)
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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Energy Company Obligation,Green Deal

ECC Committee: ACE evidence submitted to Green Deal watching brief (part 2) inquiry

ACE has submitted written evidence to the Energy & Climate Change Select Committee’s inquiry into the Green Deal (watching brief part 2). In May 2013, the Committee published its first watching brief report, in which it outlined its concerns about the lack of clarity regarding the outcomes that DECC expected from the Green Deal and how it would measure the its success. The Committee identified key areas in which scrutiny would be beneficial, and outlined its intention to review the performance of the Green Deal and ECO at a later date – hence Part 2 of this Green Deal watching brief inquiry.

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carbon savings,Energy Company Obligation,Energy Policy

Replacing all that ‘green crap’ won’t be an easy task

As most EiBI readers will know, the only nationwide subsidy programme for residential energy efficiency, the Energy Company Obligation (ECO), took a hammering in last month’s Autumn Statement. Its main energy/carbon saving component was cut overnight by 34 per cent.

This occurred in the wake of the Prime Minister’s pledge to reduce environmental levies (“all that green crap,” as the Sun’s front page quoted him as saying), in order to cut domestic fuel bills. Perversely, the only such policy to be cut happened to be the only programme specifically designed to cut fuel bills.

However, the government intends to introduce this April some new schemes, which Energy Secretary Edward Davey maintains will entirely restore the carbon dioxide savings of 2.9m tonnes which the scrapped part of ECO had been set to deliver.

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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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Energy Company Obligation

Statement on the 50% reduction in the Energy Company Obligations

It is absolutely disgraceful that the big energy companies have orchestrated this unscrupulous campaign, that appears to be succeeding in blackmailing the UK government into cutting by half its established policy to require energy companies to help customers stop wasting money by wasting fuel.

There has been no increase whatsoever in the levels of social and energy saving obligations placed upon the Big Six this year. This concerted attack on the Energy Company Obligation is predominantly a distraction technique, designed to draw attention from the price gouging they are practising. The extent to which the Big Six currently overcharge customers is estimated by the founder of one of their smaller competitors, Ovo, at £3.7bn a year.

Home energy use has dropped by a quarter since 2005, largely owing to the installation of energy saving measures. This has cut the energy companies’ turnover badly. That is why they are trying to destroy the only nationwide energy saving programme. But because the costs per kilowatt hour have more than doubled over the same period, the proportion of household budgets spent with the Big Six energy companies has risen sharply.

It is completely perverse logic , to help cut fuel bills, to cut the one programme that helps householders cut fuel bills. There are already 7,000 fewer people employed today than in November 2012 in delivering energy efficiency in homes. The result of halving the ECO programme will be that at least 10,000, possibly 13,000, fewer people will be employed in our sector next year than anticipated. These are mostly not in household name companies, nor even in SMEs. Decimating the ECO hits hardest at precisely the kind of micro start-up businesses which the UK has been dependent upon to lead us out of recession.

Andrew Warren
Association for the Conservation of Energy
Westgate House, 2a Prebend Street
London N1 8PT
Tel: +44 20 7359 8000
Fax: +44 20 7359 0863
Email: andrew@ukace.org
Web: www.ukace.org

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Employment,Energy Company Obligation

How ECO cuts could leave the sector with under 1,000 jobs

The following is an article published in Building magazine on the 22nd November 2013.
At the Association for the Conservation of Energy we’ve done the maths on what a cut to ECO would mean to jobs, it’s not pretty.

I was going to write this week’s blog on the implications of proposed cuts to the Energy Companies Obligation on jobs in the sector. However, my colleagues at the Association for the Conservation of Energy and I, have already put together a detailed analysis as part of a report to government on the issue.

I couldn’t say it any better than that. So here, in full, is the analysis of the impact on jobs from ECO cuts taken from our report.

In July 2012 we projected and today still estimate that 33,000 people are employed this year  in delivering insulation under the Energy Companies Obligation. Many more are employed in delivering heating systems, boilers and heating controls. We do not currently hold the necessary data to make robust estimates of the number of jobs supported by heating improvement activity under the ECO (which takes place principally under the Affordable Warmth and Carbon Saving Communities Obligations).

Our employment estimates are made by looking at projections from the government’s own Impact Assessment  on ECO and Green Deal: of how many insulation measures need to be delivered by the ECO, and using government assumptions, also from the Impact Assessment, of how many people are needed to deliver them. These assumptions relate to the number of installers required (direct jobs), and the number of people employed as a result across the supply chain (indirect jobs). The supply chain encompasses manufacturing, supply, distribution and development. All jobs estimates are expressed as full-time equivalents (FTEs) – one FTE is one person employed full-time for one year.

We have modelled a number of new scenarios based on watering down or removing the ECO. These are:

·         Halving the Carbon Emissions Reduction Obligation (CERO)

·         Extending the ECO by two years to March 2017, without increasing the size of the obligation

·         Removing the CERO

·         Scrapping the ECO

As a reminder prior to presenting the employment implications of weakening the ECO, we present in Figure 1 the original estimates from our earlier July 2012 study. The 2012 estimate has been updated as we now know the actual number of measures delivered by the CERT and CESP programmes over the course of 2012. In that year, we estimate nearly 57,000 people to have been employed to deliver insulation under CERT and CESP. We estimated that 33,000 would be employed full time to deliver insulation under the ECO in 2013, based on the final impact assessment’s projection of the number of insulation measures required. As the ECO has been expected to ramp up gradually, the number of FTEs increases in our estimates to 2015: 40,500 in 2014, and 46,000 in 2015. DECC say that up to 60,000 could be employed in the industry by then.

The insulation industry has already been through a very tough time adjusting to the abrupt transition from CERT and CESP to the ECO.As can be seen in Figure 1, there are approximately 24,000 fewer FTEs in 2013 compared to 2014 as is. According to the National Insulation Association, this has resulted in 5,500 mostly direct  job losses by June alone. It is hard to track wider supply chain job losses, but these are likely number many more than 5,500.


Halving CERO

Assuming that the ECO is watered down by halving the size of one of its obligations from 2014 (the Carbon Emissions Reduction Obligation, CERO), and that half the number of measures get delivered under CERO as a result, then 23,000 people would be employed in delivering ECO and the Green Deal next year: 10,000 fewer than in 2013. If the ECO were to continue as originally planned, then ACE estimates 40,500 people would be employed in delivery in 2014. So, 10,000 jobs would be lost compared to 2013, and an additional 7,500 new jobs in delivering ECO and Green Deal would be foregone. Indeed, these 7,500 jobs foregone in 2014 apply to each of the scenarios presented in this section.



Extending the ECO by two years to March 2017

This scenario sees the ECO extended without its target being increased, in essence diluting the level of activity required to meet its targets. As shown in Figure 3, the effect on employment is worse than in the scenario above, with just 20,000 FTEs required to deliver the ECO in 2014, a loss of 13,000 jobs compared to 2013.



Unlike the previous scenario, this one dilutes the delivery of all three obligations, not just the Carbon Emissions Reduction Obligation. It results in half the number of measures being delivered under the Affordable Warmth and Carbon Saving Communities Obligations – i.e. to those people who need support the most.

Scrapping CERO

This scenario sees the loss of 28,000 FTEs in 2014, and leaves the ECO a true shadow of what it has been to date and could have been. Affordable Warmth and Carbon Saving Communities Obligations are in principle fully maintained. However, it is quite likely that this level of activity reduction sees the loss of economies of scale in installation, delivery and administration costs, with the result that value for money worsens.



Scrapping the ECO

This scenario sees the loss of 32,000 FTEs in 2014. Just under 1,000 people would remain employed in delivering loft and cavity wall insulation via Green Deal finance. This is based on making the perhaps generous assumption that 20% of the lofts and cavities projected to be installed under the Green Deal and ECO framework would still be delivered by Green Deal finance on its own. To date, 219 Green Deal finance plans have been completed.



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