Download our ‘Companion to the Green Deal Consultation’ documents here:
The full consultation documentation can be downloaded from the DECC website here
AECB members all have their own areas of expertise, and this consultation could be an opportunity to shape the Green Deal/ECO in such a way as to ensure it does help deliver truly sustainable refurbishment of our leaky building stock.
It is by no means certain that the Green Deal/ECO will be fit to deliver the kind of refurbishment that AECB members want to deliver – and it is up to everyone with an interest in the process to cast a critical eye over the government’s proposals, and to feed back to government where changes should be made.
Ministers and civil servants have made clear on numerous occasions that this is to be the opportunity to shape the detail. To start the process off, we have picked out some critical areas in the consultation where questions remain.
The documents attached at the top and bottom of this page give a flavour of DECC’s proposals, but certainly do not fully reflect everything in the new consultation documents. These articles should be taken as a companion, rather than as a guide. AECB will be perusing and commenting a little more on DECC’s proposals in the coming weeks, in these pages and on the forum – but DECC has produced an extremely weighty set of documents, so any response will need to be a collective one, sourced through the joint input of membership.
So take a look at the proposals, in the light of the articles attached (as you see fit), and post your observations, suggestions and responses on the AECB forum here – and of course, share them with DECC.
Our coverage of this subject is inevitably incomplete, given the complexity of the proposals. Therefore if there is an aspect not covered here it is all the more important that you flag it up on the forum. Thanks!
We quote from the main DECC consultation document: The Green Deal and Energy Company Obligation Consultation (with page numbers given, generally), and some reference has also been made to The Green Deal and Energy Company Obligation Impact Assessment – an interesting and revealing document which is only touched on here. A range of additional documents are also available from the same DECC link (given at the top), some of which are referred to in these articles.
What is the Green Deal?
The Green Deal is being described by the Government as a ‘mechanism’ rather than a single, government promoted programme. Put simply, the Green Deal itself is a legal provision to allow the repayment of capital spending on energy efficiency measures to be collected through the electricity bill of the property on which the capital was spent.
This will only be allowed as long as:
- the repayments (of capital plus interest) are calculated to be less than or equal to expected energy cost savings in the same property (the ‘Golden Rule’),
- the assessment and the installation have been carried out by accredited suppliers,
- other criteria relating to allowed measures are met.
DECC’s idea is that by going through the approved ‘Green Deal’ process, it will be possible for participants to access capital to spend on their homes more cheaply/easily than they would otherwise. The government is however looking to private sector finance, and interest will certainly be charged (see the discussion on finance and access). The charge will be attached to the improved property (through its electricity bill) rather than staying with the individual instigating the changes; the idea being that people would thus be readier to install measures which may not fully pay for themselves until after they have moved to another property.
Clearly the ‘Golden Rule’ limits the kind of measures that can be paid for – and the budget is further limited by the finance charges will have to be paid, in addition to the capital cost of the works. However, in some circumstances, additional, grant funding will be available to extend or even replace Green Deal finance, allowing ‘deeper’, more expensive energy saving measures to be installed, as well as more basic measures in the homes of some in fuel poverty. These grants will form the Energy Company Obligation (ECO)
The Green Deal will be available for both domestic and non-domestic buildings. While the measures permitted under the domestic Green Deal will (generally) be restricted to those that can be assessed by an updated version of RdSAP, for non-domestic buildings a more tailored assessment and package of works will be permissible. See the attachment on Assessments for more information.
What is the Energy Company Obligation?
In the domestic sector, the Green Deal is to be accompanied by a new ‘energy company Obligation’ or ECO. This obligation will replace the CERT and CESP schemes which have, for example, seen numerous low-price and free loft and cavity wall treatments carried out in the past few years.
The ECO, which will, like CERT and CESP, be funded out of energy bills by the ‘big six’ energy companies, will have two arms:
- Carbon Saving ECO for ‘hard to treat’ homes: Subsidies to increase the uptake of measures that are likely to be too expensive to meet the Golden Rule, in ‘hard to treat’ properties, proposed to be mainly or entirely those with solid walls
- Affordable Warmth: Subsidies for energy efficiency measures for selected fuel poor households, who have little or no fuel saving to make as they under-heat
Much of the detail of the ECO is up for consultation, however.
In practice the Green Deal and ECO have to be considered together, as the intention is that many projects are likely to be financed by a combination of two – and indeed, customers & providers may not know until an assessment has been done, whether the ECO is relevant to their property or not.
DECC proposes a total annual ECO spend of £1.3 billion. According to the UK Association for Conservation of Energy (UK ACE) this is a cut from a previous spending level of £1.8 bn on the combined CERT , CESP and Warm Front efficiency programmes.
Energy Companies will be given targets to achieve with ECO spending, as they were with CERT and CESP. Early interpretations of the consultation have suggested that 3/4 of the ECO funds are expected to go on solid wall insulation packages and just 1/4 to “Affordable Warmth”, with a quota within the solid wall segment also allocated to fuel poor households.
The consultation contains a formal list of questions (collected together on p 35 of the consultation document) and at numerous points in the text, DECC also says that ‘views/evidence’ would be welcomed.
At this very early stage we certainly have not been able to offer an exhaustive analysis even of the questions, never mind the answers, but below is a summary of some of the areas that have been identified by AECB as important to the likely outcomes of the initiatives.
- Financial/technical/scope of the mechanisms – Will the approaches for assessing buildings and recommending actions deliver adequate predictions, and guide wise courses of action? Are the proposed ‘eligible measures’ the right ones?
- Administrative/commercial/marketing – is this offering a ‘real deal’ to potential suppliers (ie assessors, installers, manufacturers etc)? Who will be delivering the work in practice? And anyway, will it be an attractive package to customers?
- Social and political – are these the right measures at the right time, are they socially equitable, how are fuel poverty alleviation and carbon abatement to be balanced?
- Overarching/strategic – Might this approach inadvertently ‘sterilise’ or ‘block’ buildings against necessary future, deeper lower energy retrofits? What is the best that could be done within the constraints of the financing arrangements? Where might the effort and money be most productively directed? How in the bigger picture, does the GD and ECO sit alongside renewables subsidies, the national energy strategy, issues around energy costs, big energy companies and banks, and the optimal path towards overall carbon targets?
Download our ‘Companion to the Green Deal Consultation’ documents here:
Please post your observations, suggestions and responses on the AECB forum here
Please see our formal response here