British homes could cost-effectively halve energy demand by 2035

British homes could cost-effectively halve energy demand by 2035, according to a new report.

A version of this article appeared on The Fifth Estate on 18 September.

In Britain, as a result of efficiency savings in products and efforts to make homes more efficient, homes now use 23 per cent less gas and 17 per cent less electricity than in 2008. Moreover, the average dual fuel household bill was £490 lower in 2015 than it was in 2004, according to the report from the UK Energy Research Council (UKERC).

The report says homes could save a further average of £270 a year at current energy prices, totalling about 140 terawatt-hours (TWh) – or the rough equivalent of the output of six Hinkley C-sized nuclear power stations – in heat and electricity.

This implies that the UK government would be much better off rekindling its home energy efficiency program – moribund for six years – than investing in new nuclear power stations – although much more electricity will be needed to charge the growing number of electric vehicles.

The report (using the government’s own guidance for policy appraisal) says that such investments would deliver net benefits worth £7.5 billion to the UK economy. This could rise to £47 billion if benefits such as health improvements and additional economic activity are counted.

The UKERC is therefore calling for the government to set a long-term target for energy efficiency – as it did on 26 July with a target to ban petrol and diesel cars by 2040 (a target beaten by eight years by the Scottish Government’s announcement to phase them out in 2032, made five days later).

The Committee on Climate Change believes that as much as 85 per cent of potential carbon emission savings in buildings are at risk of not being realised due to poor take-up of measures, implementation or standards enforcement.

The UKERC report makes an estimate of which of these savings are achievable under three scenarios of increasing ambition:

This makes clear that more efficient appliances and boilers are easy wins – mostly thanks to EU policies (we won’t mention the ironies of Brexit here) driving greater efficiency in household appliances and boilers, and a new EU Regulation setting a framework for energy labelling, which simplifies and updates the energy efficiency labelling requirements for products sold in the EU.

The tough ones are help with insulation – particularly of walls and floors – and heat pumps. It is here where government support could therefore be most usefully targeted.

This graph shows where savings could be made over the next 18 years, and how much impact savings in different areas will make, compared with making no savings at all (the top dotted line):

Source: CCC dataset

What is the cumulative value of this investment in the energy efficiency of the housing stock? The report analyses this in the “cost-effective” scenario. In the graph below, anything below the horizontal line is a cost compared to current levels, and anything above is a saving.

It shows that while the core savings come from energy use and a reduction in emissions and pollution, this has a knock-on benefit in health savings and GDP.

Source: produced from BEIS, 2016 using outputs from CCC dataset model

The headline takeaways are that “one quarter of the energy currently used in UK housing could be cost-effectively saved by 2035”, and that, “allowing for falling equipment costs and including the wider benefits of energy efficiency improvements, it should be possible to cost-effectively halve energy demand in UK homes.

“With innovation in technology and delivery, appropriately supported by government, it is likely we can go significantly further than this too.”

But to do so there needs to be significant policy change and public investment. The report points to the forthcoming opportunity in the expected (and delayed) Clean Growth Plan and National Infrastructure Assessment. Plus, to fill the current policy vacuum a new white paper on heat and energy efficiency is urgently required.

Two years after the government scrapped its Green Deal energy efficiency loan scheme, it has yet to announce a replacement. The company which bought the Green Deal Finance company (and some of the Green Investment Bank's investments from Macquarie) is also yet to announce a new scheme.

David Thorpe is the author of Energy Management in Building and Sustainable Home Refurbishment.

The Green Deal is to rise from the dead

[Note: This is an updated and partial version of the article published last week on The Fifth Estate website.]

The UK Government’s sale of the Green Deal Finance Company, which finances energy efficiency retrofits, has slipped through almost unnoticed – and the Green Deal is to be relaunched by the private sector.

The GDFC’s new owners, Greenstone and Aurium, have stated their intention to commence the financing of new Green Deal loans by the end of the current quarter.

The sale

The sale was ordered by the Conservative MP George Osborne when he held the post of Chancellor of the Exchequer in an attempt to reduce government debt.

Like the Green Investment Bank, the Green Deal Finance Company was set up in 2012 (this was the year when the Conservative-Liberal Democrat alliance wanted to be “the greenest government ever”). It was a not-for-dividend company whose job was to provide low-cost financing to households for energy efficiency improvements to their homes.

It failed.

Originally, its 55 members came from the public and private sector and included energy companies, trade associations, local councils and potential green deal installers. They provided some of the start-up cash, with the rest provided by the Green Investment Bank and the European Investment Bank.

It had expected to deliver around £300 million of financing for Green Deal Plans before 2014. But it was an abysmal failure, and I have documented why here.

Last year it was lambasted by the Public Accounts committee, whose chair, Meg Hillier MP, said: “This blinkered approach resulted in a truly dismal take-up for Green Deal loans and a cost to taxpayers of £17,000 for every loan arranged. Savings in CO₂ were minimal.”

The Energy and Climate Change Department (DECC – since abolished) oversaw the Green Deal and believed that the Green Deal Finance Company would provide loans of over £1.1 billion by the end of 2015. The actual figure was £50 million!

The finance company incurred large financial losses as a result of the low demand resulting in DECC writing off £25 million of the cash it loaned to it. It stopped offering new Green Deal Plans in July 2015.

The new owners

The board of the GDFC last week announced the sale of its wholly-owned subsidiary, GDFC Services, for £40 million.

The new co-owners are Greenstone Finance, which invests in organisations focused on financing in renewable energy and energy efficiency, and Aurium, which describes itself as “a structured finance boutique with a focus on renewable energy”.

They say they will continue to service the existing Green Deal loans and will commence financing of new Green Deal loans this quarter.

Richard Twinn, policy advisor, UK Green Building Council, welcomed the sale, commenting that “the limitations of the Golden Rule mean it will only be attractive to a specific part of the able-to-pay market. But in the absence of a policy alternative from government, the possible reignition of a pay-as-you-save mechanism could provide a viable option for households on moderate incomes to make improvements to draughty homes.

“However, one of the big failures of the Green Deal the first time around was the lack of incentives from government to drive uptake. Unless government grasps the nettle this could well become a problem once again.”

The Green Deal was established to address the fact that the UK has some of the most thermally inefficient housing in Europe. Its loans let customers, including landlords, improve their homes by installing energy efficiency products.

The loans are repaid as part of a customer’s electricity bill, which may (critics say: only if heating was provided by electricity) be reduced by the savings generated from the measures the loan financed – a “Pay-As-You-Save” scheme. The loan remains with the property – ensuring the payments are made by the person who benefits from the energy saving.

Kilian Pender, founder and chief executive of Greenstone Finance, commented on the acquisition and the relaunch by saying, “We believe that the concept of repaying your loan as you save on your energy bills is an excellent one and with the significant private investment that we have secured, we’re looking forward to rolling the Green Deal finance scheme out across the country. We will provide homeowners a cost-effective way to improve their homes and quality of life.”

Energy assessment company Elmhurst said it looked as if the new organisation was willing to breathe new life into the pay as you save model, observing that “the private rental market is certainly an opportunity for Green Deal”.

It said that some commentators believed that the legislation on Minimum Energy Efficiency Standards – which make it unlawful for landlords to grant a new lease on properties that have an energy performance certificate rating below E, from 1 April 2018 – actually allow some landlords to avoid bringing up their properties to the required E rating. But “with the re-launch of the Green Deal, this loophole looks like being closed”, it said. “The first task for the organisation will be re-launching the loan scheme and getting traction in the market place. This is definitely one to watch this year.”

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David Thorpe is the author of:

• Earthscan Expert Guide to Sustainable Home Refurbishment
• Earthscan Expert Guide to Energy Management in Buildings
• Earthscan Expert Guide to Energy Management in Industry
• Earthscan Expert Guide to Solar Technology
• The One Planet Life
• Best Practices and Case Studies for Industrial Energy Efficiency Improvement (with Oung, K. and Fawkes, S., UNEP)

The Green Deal & Germany's EnEv, and how to properly promote energy efficiency

The Green Deal, the British government programme supposed to assist the uptake of energy efficient retrofits and recently cancelled, was a disaster. Here's why.

Households in Europe are responsible for 26 per cent of total final energy use. Reducing energy use has multiple benefits, not just saving money for consumers, and carbon emissions, but improving comfort, health and creating jobs. So clearly it is a desirable thing, but you wouldn’t think so from the British government’s attitude.

To see why, let’s compare it to an extremely successful German version of the same scheme.

Pay as you save

The Green Deal was an example of a “pay-as-you-save” type scheme, where loans are taken out to pay for the energy efficiency measures, and repaid over time from the financial savings created by these measures.

It seems like a no-cost solution and an obvious winner. But not the British government’s version of it.

One of the reasons for this failure was pointed out right at the start by critics, but ignored by government officials responsible for designing the scheme. This was that the 7-10 per cent interest rate on the loan to householders was too high – in fact several percentage points higher than ordinary loans available on the high street. It was simply not affordable.

It also made many measures unaffordable within its own context – the “Golden Rule”. This rule was embedded into the legislation and stipulated that the savings generated by energy efficiency measures must lie within the cost of the measures.

The Green Deal was initiated in 2013 under the 2011 Energy Act. It came with no target or grants. It combined accredited energy advice and installation with finance to be repaid in a period up to 25 years. Finance was attached to the property, and recouped through extra charges on the electricity bill (even if the savings were made on a different fuel, say gas).

The result? 300,259 total Green Deal assessments resulted in only 1815 “live” plans – a conversion rate of just 0.6 per cent!

The government’s goal for the first 12 months of the scheme alone was 10,000 installations.

After seven months and 58,124 assessments, only seven households had taken out plans.

Upfront high property assessment costs (up to £100) made the scheme inaccessible to lower income households and those uncertain of their eligibility for measures.

The German experience

Contrast this with the EnEv programme in Germany, implemented from 1 February 2002 then amended in 2007 and 2009, and replacing the flagship CO2 Building Rehabilitation Programme.

Here, the interest rate on a loan of up to €50,000 from the public bank KfW for the replacement of the heating and domestic hot water systems of a residence (and ventilation and cooling systems installed earlier than 2009) was 1-4 per cent.

The goal here is to use public policy to refurbish the entire housing stock and all public buildings in Germany by 2030.

A million old homes have been retrofitted and 400,000 new highly efficient homes built (this is not just a retrofit scheme). Annual energy consumption was reduced by 900 gigawatt hours as well as energy costs of participating companies by €150m a year.

Here’s how the two schemes compare:

	UK Green Deal (2013–present)	German EnEv (2006–2010)
Interest rate on loan	7.9–10 per cent APR	Publicly subsidised low interest rate (1-4 per cent)
Accessibility	Low – high customer dropout rate – 0.6 per cent successful conversion rate	High – extensive marketing campaigns
Main target market	Homeowners	Landlords and public bodies
Total cost of scheme (annual)	Value of investment: €380–€525 m	Average of €1.4 bn. Value of loans and grants: ~€3bn
Attachment point of loan	Electricity meter	Person or organisation
Outreach	1,815 homes in total	200,000 homes per year
CO2 emissions savings (Mt CO2 per year)	0.3 total	19

Source: Unlocking the Energy Efficiency Opportunity, Element Energy for the SEAI, 2015

The scale of the problem

Now compare the UK scheme’s failure to the scale of the job required. To achieve 2050 carbon emission reduction targets, the UK’s 28 million domestic properties would need to be renovated to a high energy efficiency standard at a rate of 700,000 a year in order to have renovated them all by the year 2050. They also need to be renovated to a high standard, what is called a “deep retrofit”.

Neil Morgan, who was the project director of Retrofit for the Future, set up several years ago by the UK government to find the best ways of meeting this challenge, is on record as saying that around £60-£70,000 is needed for such a renovation. The typical amount under the Green Deal was one-tenth of that.

In Germany under the EnEv scheme, costs in the region of £20,000-£40,000 per property were common.

Given that most homes are only renovated once every 30 years on average, not to do a complete job while the builders are in is a wasted opportunity as total costs would be lower.

But the Green Deal was only meant to take care of the low hanging fruit – efficient boilers, cavity wall and loft insulation. The German scheme goes much further.

Of course, in the UK there is still the Energy Company Obligation program, which requires energy suppliers to undertake retrofits for those in fuel poverty. But this again is only aimed at low hanging fruit.

Meanwhile the country is waiting for an urgently needed replacement for the Green Deal to help bring down exorbitant energy bills.

The UK fails to deliver: fuel poverty is up, support for energy efficiency down

The UK is letting down its population by failing to deliver on energy efficiency. As a result, fuel poverty is up at the same time as fuel prices, and support for energy efficiency has plummeted and will continue to do so at the current rate.

This is happening under the watchful eye of Ed Davey, UK Secretary for Energy and Climate Change (right).

The most expensive and exclusive homes in Britain are the least well insulated, while the majority of the UK’s local authorities (LAs) are in breach of European regulations, and needlessly wasting energy, according to new research.

Not only that, but despite a year of public outcry about the cost of energy, the number of energy efficiency installations around the country has plummeted and Government has told energy companies that they can get away with insulating far fewer homes than before.

Whereas 1.61 million lofts were fully insulated in 2012, in the year to the end of October 2013, just 110,000 had been treated - a staggering 93% drop.

The same kind of drop has happened with cavity wall insulation, from 640,000 in 2012 to 125,000 in the year to October 2013, a pro-rata fall of 77%. These figures are official, from the Department of Energy and Climate Change (DECC).

The reason is because grants for such measures were dropped when the Government launched the Green Deal, a loan system that was intended to see a swathe of energy efficiency makeovers across the country, but which has so far failed to ignite public enthusiasm.

This is all despite the country having a Climate Change Act and an Energy Efficiency Strategy, which has an aim of cutting energy use by 196TWh by 2020 (an 11% cut), and carbon emissions by 41 MtCO2.



The Rich Don't Seem To Care

The rich don't seem to care about saving money, heat or climate change. In the exclusive parts of London, most occupied by millionaires, a staggering 83% of homes in Kensington and Chelsea and 79% in Westminster have uninsulated walls and a lack of loft insulation, coming at the bottom of a national league for energy efficient homes.

At the other end of the country, in colder Aberdeenshire and the Outer Hebrides, homes are insulated to the highest standard, with 65% and 66% respectively having installed wall insulation.

Utility company npower found these figures in data licensed from the Energy Saving Trust. They reveal that over half the 26 million homes in Britain allow too much heat to escape through the building fabric.

As a result, together with rising fuel prices, fuel poverty is higher than ever in the UK, with seven million people, including 2.2 million children, living in fuel poverty in England, a rise of 26% compared to a year ago. People are going without food in order to pay their energy bills. No wonder they can't afford the insulated their homes. This is exactly why they need help.

A telephone survey by npower found that just 20% of households asked have insulated their domestic hot water storage tank. When asked, the main reasons given for not installing energy efficiency improvements were:

• 42%: not being able to afford it;
• 36%: lack of government support;
• 33%: I can afford to waste energy (or words to that effect).

On the positive side, one third of those asked said they had made some improvements, such as installing loft insulation (39%), a new boiler/furnace (33%) and cavity wall insulation (30%).

The Green Deal Flop

The UK Government launched the Green Deal last year as a flagship policy to enable households to invest in home energy efficiency at little cost to them. But it has been a shambles, due to the difficulty of finding assessors, lack of publicity, and the cost of getting an assessment done.

This week, Greg Barker (right), an Energy Minister, claimed that: "It has been an encouraging first year for the Green Deal. It has not exactly developed in the way we anticipated [but] together with the ECO, the Green Deal has improved over 400,000 homes in their first eleven months".

He puts a nice spin on it. The ECO is the Energy Company Obligation under which utilities are forced to install energy efficiency measures in their customers' homes. The detailed figures show that 98% of those 400,000 homes' improvements were conducted through ECO, and not through the Green Deal.

The figures actually show that just 1,612 households had Green Deal Plans up to the end of 2013.

At this rate it would take 16,000 years to treat all of the nation's homes.

It Will Get Worse

The situation is going to get worse, not better. The Chancellor George Osborne announced in his Autumn Statement that the energy companies’ ECO target for insulating solid wall homes will be slashed by two thirds – meaning they are now only required to tackle 100,000 homes by 2017.

This change in policy comes after profits of the 'Big Six' energy companies (British Gas, Npower, Scottish & Southern Energy (SSE), Scottish Power, E.ON and EDF) rose 75% in 2012 on 2011, according to the regulator, Ofgem. The same companies complained to George Osborne before his Autumns Statement about 'green tariffs' such as the ECO adding to their costs.

The Green Deal has been slammed by many, such as the members of the Federation of Master Builders (FMB), whose chairman, Brian Berry, has politely said that the scheme "has not achieved the desired results in its first full year, with the majority of SME installers and homeowners failing to engage, and the financial package underpinning the scheme proving unattractive to most consumers."

He repeated the oft-made call that: "the single most effective measure to kick-start demand would be to reduce the rate of VAT from 20% to 5% on all domestic energy-efficiency work".

Paul King, chief executive of the UK's Green Building Council, was more forthright this week when speaking at a conference on the Green Deal. He called on the Government to "recognise energy efficiency as a national infrastructure priority and be prepared to delve into its purse to make its flagship policy more appealing through stronger incentives and more attractive finance options".

Local Authorities Flout the Law

Government and local government don't even practice what they preach themselves.

Separate research conducted by the Property and Energy Professionals Association (PEPA) has found that over half of local authorities throughout the UK are failing in their obligation to display up-to-date 'Display Energy Certificates' (DEC), as required by the European Union's Energy Performance of Buildings Directive (EPBD).

PEPA, the trade body that represents business engaged in the provision of Energy Performance Certificates (EPCs) and Display Energy Certificates (DECs), says that as a result they are missing out on the opportunity to use them as effective tools to reduce energy costs.

PEPA conducted a freedom of information exercise with all local authorities in England and Wales and found that only 47% of authorities claimed to be compliant with the DEC requirements, meaning 53% are potentially ‘breaking the law’.

A 2011 study by the Chartered Institute of Building Service Engineers (CIBSE) showed that where DECs had been used in government buildings as a proactive means of managing energy usage, savings of nearly 14% were achieved.

If these figures were applied to the estimated £750 million per annum of energy costs incurred by local authorities then energy savings of £65 million could be possible. This is a significant sum at a time when local authorities are cutting public services.

£1.9 million of public money is given to local authorities' Training Standards officers each year to ensure compliance with the EPBD regulations. But PEPA believes it is never used for that purpose since it isn't ring-fenced.

"There seems to be no political will within DCLG (the government department responsible for local authorities) to address non-compliance with the EPBD regulations and anecdotally is believed to regard the Directive as unnecessary European bureaucracy, something which is likely to end up with a fine from Brussels," said Stephen O’Hara, Chairman of PEPA.

“The whole situation regarding DECs defies logic and common sense. The proactive use of valuable energy information has been proved to reduce costs to the taxpayer, but government, both central and local, are either ignorant of this fact or do not seem to care. It is irresponsible of DCLG to show disdain for the regulations which they themselves have laid down as the law of the land, and potentially to incur swingeing financial penalties from Europe as a result.”

“Regardless of your views on climate change and reducing carbon emissions, saving money and reducing pressure on hard pressed energy supplies must surely make sense even to those who want to cock a snook at Europe.”

Employment Down

The drop in energy efficiency measures has had a knock-on effect on employment in the industry.

There are now at least 7,000 fewer people were employed in delivering insulation in homes than in 2012, according to Andrew Warren, CEO of the Association for the Conservation of Energy. “A lot of people went out and set up new small companies," because they thought the Green Deal would mean an increase in the amount of work. "They have been completely sold down the river,” he said, by the failure of government to deliver.

Andrew has for three decades been championing the cause of energy efficiency.

It's just a shame that no one at Whitehall, or in the town halls up and down the country, is really listening.

Notes

The European Union is conducting a household energy affordability study in conjunction with the University of York. You may take the survey here: http://energyaffordability.eu/?lang=en

The Energy Saving Trust says that the average (gas-heated, semi-detached) three bedroom home in the UK could save the following each year on their energy bills:

• Cavity wall insulation - £140;
• External Solid Wall insulation - around £490;
• Loft insulation - up to £180;
• New boiler (furnace) - up to £310.

Energy efficiency infographic courtesy of The Trillion Fund

Minister meets 'test family' in zero carbon home

Energy Minister Greg Barker MP (right) with Laura and Nik Glazebrook and Paul Hicks of VELUX, outside the four bedroom CarbonLight Homes project in Kettering, Northamptonshire.

Energy and climate change minister Greg Barker yesterday saw for himself the benefits of living in a low energy house when he met one of two test families who are living in a 'CarbonLight Home' as part of a 15 month study.

The VELUX CarbonLight Homes are located in Kettering, Northamptonshire. Mr Barker toured the houses accompanied by Kettering Borough Council’s leader Cllr Russell Roberts, and met the Glazebrook family, who are living in one of the homes as part of a study to measure the homes’ energy performance and monitor their effect upon the families’ overall health and well-being.

“This energy-efficient home is inspirational," said Mr Barker at the end of his visit. "It dispels the myth that green living involves sacrifices of style, luxury or comfort. It’s so bright, light and airy, with high ceilings and lots of family space.

"It’s clearly delighting the couple and their kids who live here. This vision gives something to learn from for the rest of the country."

He used the opportunity to promote the Green Deal, which he said "is giving people a chance to retrofit their homes with energy efficiency measures by removing expensive upfront costs.

“And it’s great to see new, efficient, homes, like these ones in Kettering, being built as well.

“Our housing stock is currently among the least energy efficient in Europe, so upgrading older homes and building new more efficient ones is absolutely vital if we’re going to cut our emissions and help people reduce their energy consumption.”

Paul Hicks, Sustainability & Design Manager at VELUX, added: "It is crucial that the green agenda is placed at the forefront of government policy-making. We hope the Minister’s visit to the CarbonLight Homes has demonstrated that innovative design can be employed to create inspirational carbon neutral houses, encouraging a wholly sustainable lifestyle and offer a viable solution to the challenge of reducing carbon emissions.”

The two homes meet the future demands for sustainable buildings and were developed with a focus on the health and well-being of their occupants. They are also designed to interact with local conditions and use natural resources to reduce carbon emissions.

While in the area, the Minister also met with the MP for Kettering, Philip Hollobone, and a range of public and private sector partners to understand more about the area’s innovative approach to energy efficiency and sustainability issues.

Councillor Russell Roberts, Leader of Kettering Borough Council, said that Mr Barker's visit "follows an on-going dialogue with him on the opportunities that exist in Kettering and we are keen to continue this dialogue in the future."

The VELUX CarbonLight Homes

These homes have been designed and built to the new government definition of ‘zero carbon’, and are intended for ordinary people. They make use of their surrounding environment in an intelligent way to maximise daylight and encourage a sustainable lifestyle.

Design-wise they are open plan and incorporate high levels of daylight and natural ventilation in order to minimise energy consumption among residents and generate a sense of community.

They intended to demonstrate that common-sense design can be used to create inspirational sustainable houses that can be easily replicated by the UK’s volume house builders.

The CarbonLight Homes were developed in a strategic partnership between the VELUX Group, HTA Architects, Kettering Borough Council, Willmott Dixon and the North Northants Development Company, WindowMaster, VELFAC, Drexel and Weiss and Sonnenkraft supplied the products for the house.

The CarbonLight Homes are one of six buildings in Europe to be constructed by the VELUX Group as part of the Model Home 2020 project.

Model Home 2020

Model Home 2020 is an experiment launched by the VELUX Group that represents its vision of how future buildings can be both climate-neutral and comfortable and attractive places to live, through use of daylight and fresh air.

The project is designed according to the next generation of design principles, called ‘Active House’, in order to achieve a balance between energy efficiency and optimal indoor living conditions.

The building dynamically adjusts to its surroundings and yet is climate-neutral. Each instance of the design must reflect and respond to the different climatic, cultural and architectural conditions of the countries in which it is constructed.

Model Home 2020 comprises six demonstration projects. Each was implemented in close cooperation with local and regional partners, suppliers, architects, engineers and researchers.

The demonstration houses will be open to the public for 6-12 months after completion and then sold. They will then be monitored during occupancy to learn how the experiments turn out in real-life conditions.

The experiments in Denmark, Home for Life in Aarhus and Green Lighthouse in Copenhagen, have been in use for a year, those in Germany and Austria opened in the autumn of 2010, and those in the UK and France opened in 2011.

There are far better deals than the Green Deal

 Minister Greg Barker signing off £224 million of public money this week to finance the Green Deal.

For those disillusioned with the Green Deal, there is no shortage of alternatives, many of which are more attractive and less hassle.

Energy Secretary Ed Davey was keen recently to assure the public that the Green Deal will have a significant uptake and make a difference to the lamentable energy efficiency of the UK's housing stock.

There were plenty of people willing to express scepticism, especially given the off-putting cost of obtaining an initial assessment (around £100) and the 7% interest rate on the loan which makes many measures unaffordable within the context of the Golden Rule, that the savings generated must lie within the cost of the measure.

But the Green Deal is not the only show in town. Far from it.

One of the alternatives is that there are plenty of quick win, low-cost measures you can take yourself to save energy and money on bills that are not even catered for with the Green Deal.

These include simple draught-proofing of doors and windows; installing flue gas heat reclamation on non-condensing boilers (cheaper than buying a condensing boiler); or installing secondary glazing (almost as good, but not as nearly as expensive, as installing double glazing).

But you may still need cash, even if these measures will pay for themselves quickly, at least for the last two measures, and for many larger jobs.

For this, there are many loan offers for energy efficiency on the market, beginning at 0%, and all lower than the Green Deal. We will look first at offers for householders, then businesses and the public sector.

Top of the list is the offer from the Co-operative Bank. It is offering an Energy Efficient Advance with an interest rate of just 1.04% for the first two years over the Bank of England base rate, i.e. 1.54% or an AER of 2%. Up to £20,000 may be borrowed, and you can even take a payment holiday for up to 6 months. There is an approved list of measures, which includes the usual kinds of insulation and double glazing, as well as a few renewable electric and heat technologies.

Not to be outdone, the Nationwide Building Society is also offering an energy efficiency loans scheme with interest rates from 2.29%. Its Green Additional Borrowing service allows existing mortgage customers to take out loans of £5,000 to £20,000 to fund anything from heat pumps to double glazing, insulation and solar panels.

And for some time the Ecology Building Society has offered its "C-Change Retrofit mortgage" that has a discount on its standard variable rate of 4.9%, of 0.25% for every grade improvement in the building's Energy Performance Certificate (EPC) rating that is delivered through home improvements.

Then there is the Royal Bank of Scotland's new energy efficiency loan service, which will complement its already successful renewables loan scheme. Under this, its bank managers will offer energy efficiency audits to small business customers, which will recommend behavioural changes or building improvements. Financing will be offered to cover the cost. However, the cost of an initial audit may be offputting: around £1,000. But with saving possible of around £9,000 a year, based on about £20,000 of spending, RBS says, it's still worthwhile. The interest rate is unknown at present.

Some councils offer their own interest-free energy efficiency loans to householders. For example, Wirral Borough Council, which offers a loan for loft and cavity wall insulation, central heating boilers, draught-proofing and solar water heating. Wigan Council is another example.

Even better is a set of schemes in Scotland, which include not only interest-free loans of up to £2,500 but grants of £200 as well. It's worth checking your local authority website for similar deals.

There are several differences between these types of schemes and the Green Deal. 

Firstly, the loans are unsecured. Secondly, the Green Deal aims to have many checks and balances on the quality of the work, and of the contractors who carry it out. One may only employ approved assessors and installers; but with many of the other deals on offer, any contractor may carry out the work, and of course it's a case of ‘buyer beware’.

The above schemes are generally for homeowners or tenants.

But what about businesses and the public sector?

For SMEs, there is always the Carbon Trust energy-efficiency loans, which are available at 0% interest, for amounts between £5,000 and £200,000. They are often used to upgrade heating systems but can be used for insulation and other types of refurbishment and equipment. In Northern Ireland, amounts of up to £400,000 are available.

For bodies in the public sector, there is the Salix range of funds. They are different for the different provinces of the UK, but in each case are available for schools, NHS, educational institutions, public services and local authorities. They are interest-free loans, repayable over a four-year period. With many measures paying for themselves well within this period, this results in a net zero cost or even cost benefit soon to clients. So far, over 2,230 energy efficiency projects have been undertaken in England in the last two years. This has resulted in annual energy savings of £27 million from public bodies, not to mention 159,000 tonnes of annual CO2 savings.

Under Salix' Energy Efficiency Recycling Funds scheme, amounts as high of £500,000 can be loaned. This is matched by the client and fed into a ring-fenced fund, to be spent on improving energy-saving projects with a payback of less than five years. The energy savings are returned to the fund until the original project investment is repaid. After that, the client can keep the savings. The fund itself can stay in place.

There are also, for businesses, Enhanced Capital Allowances, allowing businesses to purchase energy-saving plant or machinery specified on the Energy Technology List, which is managed by the Carbon Trust. This provides businesses with a 100% first-year tax relief on their qualifying capital expenditure. So, if a business pays corporation tax of 28%, for every £1,000 spent on such equipments, the annual tax bill reduces by £56, providing a cash flow boost of £224 for every £1000 spent in the year of purchase. Of course, on top of that is the saving on energy bills.

So, for those disillusioned with the Green Deal, there is no shortage of alternatives, many of which are more attractive and less hassle.

It really is a no-brainer; everyone should be looking into these.

DECC’s own draft Impact Assessment projects says that between 2013 and 2020, six million lofts and 6.3 million cavity walls must be insulated, but the Government admits that only 700,000 lofts and 1.7 million cavity walls will be insulated under the ECO. We need as many ways to meet the target as possible, so all of these schemes are very welcome. I expect several more pay-as-you-save schemes to come on the market in the next year, now the model has been established.

Britain ahead of game as ministers approve Energy Efficiency Directive

After lengthy, extremely complicated negotiations, a target of 20% energy savings for the EU as a whole by 2020 has been set, as European ministers formally adopted the Energy Efficiency Directive yesterday.

Member states now have to propose, by April next year, their national indicative targets and how they will achieve them. The Commission then has to calculate whether, together, they will total 20% for the continent as a whole by 2020.

Britain does not currently have any target for reducing energy use, but DECC has said that one will be published by April.

Under the legislation, energy companies will have to reduce their sales to industrial and household customers by 1.5% every year, meaning that they will have to recalibrate their business plans so that selling energy efficiency advice becomes increasingly a part of the services they offer.

The Directive also stipulates that 3% of public buildings that are owned and occupied by central government must be renovated every year, and each member state must draw up a roadmap on how it will make the entire building sector more energy-efficient by 2050.

Britain is already way ahead on this compared to its European counterparts with the establishment of the Green Deal, Zero Carbon Homes and the Green Investment Bank.

There are also requirements for energy audits and energy management by large firms, which are already encouraged here under mandatory carbon reporting.

A formal assessment of the potential for district heating and combined heat and power generation (CHP) throughout the EU must be made by 2015.

The final vote in the Council saw Portugal and Spain opposing and Finland abstaining. The directive enters into force in November. The European Commission will undertake reviews of progress in 2014 and 2016.

Energy Commissioner Günther Oettinger welcomed the news, and said: “I call upon member states and stakeholders for extra efforts to bring its provisions into life. The Commission also remains dedicated and committed to continue its support to the process".

Carbon pricing

The Government's policy for zero carbon new homes by 2016 will help to contribute to energy efficiency targets.

Construction companies have been researching the most cost-efficient means of attaining the target, and this week published a set of ‘Allowable Solutions’ that may be taken by home builders.

E.ON's Marco Marijewycz, who is the utility's Strategic Lead in the discussions, commented that "the most striking insight which emerges from this process is the consensus amongst key stakeholders that Allowable Solutions has the potential to catalyse both cross sector innovation and the economic rejuvenation of our communities via a low carbon trajectory."

This boost for jobs and innovation will be found across the board of all sectors affected by the Directive.

But Marijewycz goes on to point out that the price of carbon would be a crucial factor in attaining any targets. "What is emphatically clear is the desire for clarity now on the mechanisms for pricing carbon within any such framework. This clarity is essential so as to enable key market actors to strategically plan now ahead of 2016.”

Certainty about the price of carbon, however, is not going to come soon. Yesterday, the EU Parliament announced in its legislative timetable on its website that it won't be until February that it will vote on whether the Commission has the legal power to intervene in Europe's $148-billion carbon market.

This delays even further a decision on whether it will press ahead with its controversial plan to prop up the moribund carbon trading prices.

The six Allowable Solutions are certainly in line with the Directive, including investing in social housing retrofitting initiatives and district heating, as well as low carbon lighting, particularly LEDs.

Embodied carbon, which is the fossil-fuelled energy cost of manufacturing products, also figures, and this is covered by the Directive's pressure on energy utility companies.

Green Deal Providers' registry goes live Oct 1st

The Green Deal registry of providers, installers and assessors will not be available to the public until October 1. This means that the scheme will be off to a slow start as it will be several months before the first work under the scheme can begin.

The industry is also still awating details of the financial arrangement for the scheme.

The registration and authorisation processes for want-to-be Green Deal assessors, installers and certification bodies began on August 8.

Registration is achieved via the Green Deal ORB website. This website will be the source of official information for potential Providers, Certification Bodies, Installers and Assessors interested in participating in the Green Deal, as well as the public.

Attaining the Green Deal Participant Register gives the seal of approval to Providers, Certification Bodies, Installers and Assessors. In order to provide confidence to customers and investors, the Energy Act 2011 only permits a Green Deal Plan to be supplied by an authorised Green Deal Provider.

The registers will go public on the same day as the launch of the Green Deal, 1st October, from which point the details of those on the register will be publicly available online, and they may use the Green Deal logo in their publicity.

Members of the public will then be able to scrutinise the registry, in order to obtain competing quotes from potential suppliers. It is recommended that they obtain at least three.

Given the complexity of providing an audit, negotiating the work to be done, of obtaining financing and securing contractors, it will be some time before the first installations are begun, let alone completed.

Energy and Climate Change Minister Greg Barker said: “The opening of the Green Deal register will enable businesses to start becoming Green Deal authorised”.

The GD ORB is now accepting applications for Green Deal Provider authorisation. The pre-assessment application form and accompanying guidance notes are available to download from the ‘Become a Green Deal Provider’ page of the website.

Information on assessors and installers will be supplied by Certification Bodies and register data will be maintained and updated regularly by the GD ORB.

For any queries regarding the Green Deal Provider authorisation process please contact GD ORB Helpdesk by emailing gdproviderapplications@gemserv.com or call 020 7090 1031.

Further information regarding the Microgeneration Certification Scheme (MCS) can be found here: www.microgenerationcertification.org.

Green Deal loans to be underwritten by Government

Danny Alexander said said that there are over 30 expressions of interest so far in Green Deal infrastructure loans.

The Green Deal is to be an early candidate for UK Infrastructure Guarantees scheme, said Danny Alexander, Chief Secretary to the Treasury, last week.

In other Green Deal news:

• the register for Green Deal providers, assessors and installers has been opened
• a £7 million loan has been advanced to the Green Deal Finance Company (GDFC)
• and social landlords are being encouraged to take up the millions of pounds still on offer for Renewable Heat Premium Payment Scheme.

Infrastructure Guarantees

The Infrastructure Guarantees scheme is a new credit enhancement scheme set up to kick-start critical infrastructure projects by stimulating the injection of private finance with loans underwritten by the Government.

Mr. Alexander said that there are over 30 expressions of interest so far.

"The Green Deal is the largest ever programme for investing in the energy efficiency of our housing stock," Mr. Alexander told the Global Business Summit on infrastructure in London, “And we are looking at whether and how a guarantee could ensure that the finances are in place to get the programme off to a very strong start."

A spokesperson for the Department of Energy and Climate Change (DECC) said that it "is currently undertaking discussions with interested parties, such as the banks and investors on whether and how a guarantee could support the provision of low cost finance for Green Deal."

Attracting loan financing has been one of the stumbling blocks inhibiting the full launch of the scheme this October. The Institution of Civil Engineers (ICE)'s Director General, Nick Baveystock, expressed relief at the news: “When this scheme was announced, we and others across industry voiced concerns around whether the criteria for accessing guarantees were too high to attract applicants," he said.

"The news that there are over 30 expressions of interest so far is positive and we look forward to further updates from Government on which [other] projects it will be providing guarantees for.

“Reducing demand by making existing older homes more energy efficient is a vital if we are to have a resilient, affordable and low carbon energy system in future years," he added. But he cautioned that the government must make public "figures on exactly how many projects are actually moving forward as part of the scheme”.

DECC also announced yesterday that it has advanced a £7 million loan to the Green Deal Finance Company (GDFC), the not-for-profit company that will provide low-cost Green Deal finance to homeowners and businesses. Longer term, it expects to secure finance from the bond markets to ensure residents taking the Green Deal will be offered sufficiently low rates to attract their interest.

The GDFC is also in discussions to secure financing from the new Green Investment Bank (GIB). The GDFC's members include British Gas, Carillion, Clifford Chance, E.ON, EDF Energy, Goldman Sachs, HSBC, Insta Group, Kingfisher, Linklaters, Lloyds Bank Corporate Markets, Mark Group, npower, PwC, RBC Capital Markets and SSE.

It was forced to suspend operations earlier in the summer because it had not been able to secure the funding it needed through UK Green Investments, which had been set up to provide funding ahead of the GIB receiving State Aid approval.

State Aid approval has still not been given but is expected by the end of the year.

Green Deal register

DECC also announced that it has opened the register for Green Deal providers, assessors and installers. This register will give the 'seal of approval' to businesses that successfully go through the Green Deal authorisation process.

A Green Deal Quality Mark will show who is authorised and protect consumers.

"The opening of the Green Deal register will enable businesses to start becoming Green Deal authorised and the Green Deal Quality Mark will show they have met our standards. Crucially, this will protect consumers, who will know that anyone displaying the Quality Mark has been through the required process to become authorized," said Energy Minister Greg Barker.

Anyone with questions about the guidance should contact the Green Deal Oversight and Registration Body on 020 7090 1031 or visit their website at www.decc.gov.uk/orb.

Businesses wishing to become Green Deal Providers can apply directly online, while accredited certification bodies will be able to submit the details of Assessors and Installers to be authorised.

Many housing associations are hoping to become Green Deal providers and include: Gentoo, Affinity Sutton, Places for People, Alliance Homes and the Aster Group.

Social landlords

These and other social landlords have also been encouraged to take up the millions of pounds still on offer for renewable heat.

This is under the Renewable Heat Premium Payment (RHPP) scheme, which had failed earlier in the year to disburse all of the funds at his disposal.

The competition is being reopened, with a millions of pounds available for social landlords to get kit such as biomass boilers, solar hot water panels and heat pumps into social tenants’ homes.

Energy and Climate Change Minister Greg Barker said: “I would urge social landlords across the nation to apply and take advantage of all this scheme has to offer.”

Registered providers for social housing, such as local authorities and social housing associations, can bid for funds up to the Sterling equivalent of €200,000, which currently amounts to around £156,000 each. Up to £2.5 million of additional funding will be allocated under this element of the competition.

UK has the largest green skills gap in Europe - report

Green Deal jobs like insulating this ceiling are going to decline. So much for the Greenest Government Ever.

The UK has been singled out for having skill gaps in more occupations in the green economy than eight other EU countries.

A new study also says that demand for such skilled workers is highly dependent on environmental regulations and subsidies, and governments need to do more to integrate their energy, environment and skills policies.

The shift to a green economy will not only generate new jobs, but will also change the scope and character of existing jobs. Demand for energy auditors, electricians, solar PV installers, sheet-metal workers and insulation workers is forecast to rise in most of the eight countries in the study.

These occupations, which require medium-skill levels, have more growth potential than higher-skilled occupations, which employ fewer people, the report says.

The UK, Germany and Finland are three out of the eight countries that predict future increases in the number of jobs across the widest range of occupations.

But the UK lacks the appropriate skills more than any other country, and is blamed for introducing changes to legislation (along with the Netherlands) that are expected to reduce demand for energy auditors, solar PV installers and insulation workers.

Ministers have suggested that the introduction of the Green Deal will increase employment in two of these sectors. But the Energy Bill's own impact assessment reveals that the number of insulation installations could actually reduce under the Green Deal from previous levels, which will cut the number of jobs in these sectors.

The research comes from Green Skills and Environmental Awareness in Vocational Education and Training, a report from the Institute for Employment Studies (IES) prepared for the European Centre for the Development of Vocational Training (Cedefop), which looked at nine different job roles (see below) in eight EU member states: Germany, Greece, Italy, Hungary, the Netherlands, Slovakia, Finland and the UK.

The need for consistent regulation

It recommends several policies that will help businesses take advantage of opportunities in the transition to a greener economy, and ensure the availability of appropriately skilled workers.

The most important of these is consistent regulation and sustained investment over a prolonged period of time, to ensure that the markets for these products and services become self-sustaining. Secondly, financial incentives need to be phased out gradually to prevent dependency on state funding and to avoid ‘shocks’ that could cause businesses to fail and jobs to be lost.

But it's not just a matter of legislation, the report says. Businesses and private consumers need to be better and more actively informed of the benefits of investment in energy-efficient equipment, systems, products and services, through better marketing and information, advice and guidance from governments.

Generally, the occupations in which job numbers are predicted to increase are in renewable energies, the environment and new technologies, while they are predicted to decline in sectors worst affected by the recession, such as construction.

In the last three years there has been an increase in the number of jobs for insulation workers and electricians and, in relative terms, for nanotechnology engineers and environmental engineers.

The data also show stable or slightly increasing demand for sheet-metal workers and refuse collectors. Only in the cases of solar photovoltaic installers and transport vehicle/energy auditors does it appear that employment has contracted.

Gaps in learning provision

One of the main gaps in learning provision is for insulation workers and solar PV installers.

The UK was especially picked out for having employers who lack experience of transparency in the content and quality of training in solar PV.

In their survey responses, learning providers across the eight states said they were enthusiastic to change the content of curricula to meet new demands. However, action has been rather piecemeal and reactive so far, although less so among those providing tuition for new occupations such as energy auditors and solar PV installers.

All states were criticised for not doing enough to steer unemployed workers, young people or disadvantaged groups into the target occupations. It said there are very few examples of this kind of project, which could do a lot to help the long-term unemployed.

It recommends also revision of existing curricula, qualification standards and training programmes, and the promotion of green career opportunities hand-in-hand with the raising of their status in society. The occupations most crucial to the green economy, like energy auditors, environmental engineers and insulation workers, are not necessarily known to people as career options.

The sectors examined are:

• nanotechnologist, engineering technologist and environmental engineer as examples of high-skilled occupations
• 
  energy auditor, transport vehicle emissions inspector, insulation worker, electrician, solar photovoltaic installer and sheet-metal worker as examples of medium-skilled occupations
• 
  refuse/recycling collector as an example of a low-skilled occupation.

Green Deal will be a lame duck: Government sets out its unambitious terms

Ed Davey, Energy Secretary, learning how to insulate solid walls. Some think he should take this up permanently...

The Government has set out the parameters of the Green Deal energy efficiency scheme, which have been met with a muted response from the industry and consumer groups.

The proposals outline the secondary legislation to be enacted, the expected extent of the work that will be undertaken, and new measures to strengthen consumer protection, reduce industry burdens, and implement the Energy Company Obligation (ECO).

But DECC confirmed that it now expects the Green Deal to take up to 18 months to get going. Its introduction "will happen gradually, building towards a 'natural peak' in the spring and summer of next year", DECC says. “Functionality will be phased in, with collection of the Green Deal charge beginning early in 2013."

The Green Deal for business will launch alongside the domestic Green Deal as had been originally planned.

DECC says the scheme will cost around £17.3 billion over ten years and bring £25.6 billion of benefits. The ECO (mandatory fuel poverty action) alone is expected to prevent the emission of 27.8 mega tonnes of carbon dioxide over two years.

The list of eligible measures has been extended from 30 to 45 measures, with fewer solid wall and more cavity and loft insulations expected than were in the original consultation. However, the annual rate of loft insulation will be substantially less than it has been in the past few years.

As a result, the Impact Assessment accompanying the proposals says, "job losses from parts of the cavity and loft insulation market are likely".

Despite this, the Secretary of State for Energy, Ed Davey, said he believes the Green Deal "has the potential to support up to 60,000 jobs in the insulation sector alone, more than doubling the number of jobs in the sector, and making a real contribution to green growth".

For comparison, 4,700 installers were employed in the insulation market in 2007/8, which covers loft and wall insulation, and another 22,000 in the wider supply chain.

"We have listened very carefully to what industry, consumer groups and other organisations have told us," Davey said in a statement. "Broad support for a managed, tested and careful introduction of the Green Deal fits exactly with our objective to provide an excellent customer experience from day one and a market where a range of new players can readily participate."

However, speaking for consumers, Audrey Gallacher, Director of Energy at Consumer Focus, said: "We are concerned that the Government has still not outlined further steps to stimulate consumer demand for the Green Deal. Without clear incentives to attract consumers, such as council tax or stamp duty discounts, we are worried that people won’t see the benefit or relevance of the scheme to them."

He added that “much more needs to be done" to help the vulnerable in society, “given the millions of pensioners, families and disabled people struggling to afford to heat their homes" and proposed that the Government should use some of the revenue that it will receive from carbon taxes "to get help to those who need it."

The Impact Assessment says that it expects that the average saving per household on bills will be £50-60 per year by 2023. But with work costing up to £10,000 per household this would take 200 years to pay off at this rate, allowing for absolutely no saving on the bill for householders. It is only designed to operate until 2030.

Ministers have always said that the customer will experience reduced bills and at the same time be able to pay off the loan taken out to finance the energy efficiency measures from further savings on the bill.

But customers with bills lower than the national average may find that their repayments will be higher after a Green Deal than previously, the impact assessment says. This is because at the heart of the Deal is the Golden Rule, which limits the amount of finance that can be attached to an electricity bill, and which is based on average energy users' bills. Green Deal Providers had been told that they must now obtain a written acknowledgement of customers' awareness of this before work can take place.

The impression of financial chaos is underlined by the decision a few days ago by some business leaders from the Green Deal Finance Company to suspend work. Kingfisher, British Gas, Willmott Dixon, Carillion, Marks & Spencer and Travis Perkins are amongst those who have written to senior officials complaining that a lack of funding is hindering their work. They are calling for £40m in start-up funding to cover initial construction and early operating expenditure and a further £260m from the Green Investment Bank to secure access to capital market funding. At the current rate they say they won't be in a position to lend money until well into next year.

Rhian Kelly, CBI Director for Business Environment policy, commented that: "the Government needs to move quickly to put everything in place. It must ensure that businesses who want to get involved are in the best position to do so and put the right policies in place to stimulate consumer demand."

The main thing is the money. As Nathan Goode, Grant Thornton's Head of Energy, Environment and Sustainability, observes: "Virtually nothing is said about the Green Deal Finance Company, other than a general statement alongside other possible options in the framework document, while an answer on the disbursement of the early adopter money is postponed until later in the year. The role of the Green Investment Bank appears still to be unresolved."

The Government has still not decided how to spend the £200 million allocated in the Autumn Statement to encourage early uptake of the Green Deal. With only four months left to go till the scheme is scheduled to start, this has raised some criticism, not least from the group of Pioneer Green Deal providers who signed a Memorandum of Understanding with DECC to start work early.

Nevertheless, DECC is estimating that between £1.1 and £1.3 billion will be lent to householders by 2015.

Greg Barker tweeted optimistically: "Full steam ahead #GreenDeal but the roll out from the autumn will be very carefully managed so we grow from strong foundations".

His enthusuiasm is not shared by fellow MPs, less than half of whom have indicated that they will promote the uptake of the Green Deal, in a survey conducted by Velux, Land Securities and the Glass and Glazing Federation. The survey of 100 MPs found that more than a fifth (21%) were unlikely to promote the scheme, 20% said they were neither likely nor unlikely to champion it, while 11% were still unsure.

What will it finance?

The Impact Assessment estimates that up to one million solid wall insulations will be completed by 2022. It also estimates that 1.2 million easy to treat cavities will be filled out of the current potential of 2.6 million. Including loft top-ups of around a quarter of the six million potential and the non-domestic sector’s abatement, this contributes 9 MtCO2 of savings within the second Carbon Budget period and a further 16 MtCO2 to the third.

Just 364,000 loft insulations are envisaged up to 2015. This contrasts to 800,000 that were installed in 2009, 540,000 the following year and 870,000 last year. The full total envisaged by 2022 is just 1.7 million.

Either added to this or included within this is, “an extra 540,000 lofts and cavities" to be filled in “hard to treat cavities (and lofts if bundled with them)” under the ECO.

DECC's argument for this reduction in the number of loft insulations is that the cost of these measures has now come down, as a result of previous subsidies, in the same way that the cost of solar photovoltaic installations came down, and so requires less subsidy. This is in comparison to other energy-saving methods in the home such as external wall insulation.

However, very few external wall insulations are likely to be conducted under the scheme, as the payback period is typically far too long. What would make sense is that the measures which secure the most money and carbon saving for the least amount of expenditure should be implemented first. These are the quick wins, like topping up loft insulation and the still unfilled cavity walls around the country.

Protection for customers

Some consumer protections have been tightened as a result of the consultation, but other burdens on Green Deal Providers have been removed to save them money.

Among the protections are that Green Deal Assessors will have to tell customers before they visit whether they are independent or tied to a particular provider, and how and how much they are paid.

However, cold calls will still be allowed, but customers will be permitted a cooling off period of at least one day after a cold call has been made and before the assessment is carried out.

It is confirmed that the interest rate charged on the loans would be at a fixed rate for simplicity's sake and to allow consumers to hedge against future energy prices. However providers can increase the whole charge by 2% a year, in line with the inflation target of the Bank of England, which will “allow them and customers to capitalise on some of the expected increase in savings due to expected fuel price inflation”. This will be set at the outset of the deal.

The whole process will be overseen by a separate Green Deal Ombudsman and Investigation Service, the details of which will be announced shortly.

The ECO

Energy suppliers with more than 250,000 customers will be required to take part in the ECO scheme. This will involve spending £1.3 billion a year on three obligations, rather than the two originally proposed: Affordable Warmth, Carbon Saving Communities and Carbon Savings. They will be administered by Ofgem.

The new element, the Carbon Saving Communities Obligation, is designed to target insulation measures in the bottom 15% of low-income communities, 15% of which will be targeted at rural, low income households.

This was hailed by the National Housing Federation. But its policy leader Pippa Read added that the Government should "think again about the continuing exclusion of social landlords from one pot of funding for fuel poverty, and to simplify the process of securing consent for work in blocks of flats".

Under the Affordable Warmth Obligation, any measure will be eligible for support if it reduces the notional cost of heating the property.

District heating will be eligible under the ECO Carbon Saving obligation when connections are delivered as part of a package that also includes SWI or non-standard cavity insulation.

For providers

Already, a full set of National Occupational Standards has been finalised, enabling qualifications to be developed, and the Green Deal Installer standard (PAS2030) has been published, which controls the processes and the quality of service the customer can expect before, during and after the installation.

The Green Deal Register will open in early August 2012, and accredited certification bodies can then begin applying for the power to be able to certifying assessors and installers. It will be administered by the Registration and Oversight Body, which will overlook the process.

All assessors and installers who want to be Green Deal authorised should contact the appropriate certification body to find out how they can become certified, a list of which can be found on the DECC website.

One provider, Garry Worthington, Head of Green Deal at Climate Energy, said: "we are disappointed that the Government remains undecided about its £200m fund to kick-start the scheme". He called the current plans to use this purely as a cash-back incentive over the next two years "misguided" and said they should "be used much more creatively to support regional schemes, local innovations, jobs, communities and delivery to give take-up an initial boost.

"We would also urge DECC to reconsider its support around promoting Green Deal and creating awareness of the scheme."

All in all, it looks as if the Green Deal will be a light, rather than dark shade of green.

New body formed to drive energy efficiency in buildings

 Dr David Strong, chairman of the new Energy Efficiency Partnership for Buildings

The Energy Efficiency Partnership for Buildings has been set up to become the largest network of potential Green Deal providers, financiers, product and service suppliers in the UK.

It intends to become a hub of expertise to represent industry’s views on the practical implementation of Green Deal, ECO and wider energy efficiency opportunities in the UK, and has received the backing of a significant group of founding members, including npower, Strutt & Parker, Centrica, Kingfisher, Enact and Knauf Insulation.

It brings together more than 1,300 individuals from 760 organisations in voluntary cooperation across all parts of the energy efficiency supply chain.

It is a wholly owned subsidiary of the National Energy Foundation (NEF), which provides education and training, technical services, behavioural programs and community work to promote the uptake of energy efficiency measures and sustainable energy technologies.

The NEF is an independent educational charity based in Milton Keynes, and one of the longest established bodies of energy efficiency expertise in the UK.

The EEPB has already been asked by the Department of Energy and Climate Change (DECC) to continue facilitating and coordinating the four Green Deal advisory forums.

These have the job of increasing the capacity of the Green Deal supply chain, setting up the installation, accreditation and qualification framework, promoting energy efficiency improvements across different building tenures, and developing a Green Deal advice framework for consumers.

The EEPB will also be helping to advise DECC on the implementation of the Government’s Microgeneration Strategy.

Dr David Strong, chairman of the EEPB, said: “The creation of the EEPB comes at a very significant time. Organisations across all parts of industry, all parts of the product and delivery sectors, and all parts of the private and public sector are seeking to collaborate and find answers to how we make the most of the new energy efficiency policies coming through from Government.”

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He said his priority was to look at "how we overcome market barriers and unlock opportunities from Green Deal and ECO, especially for SMEs".

He said they will be talking to all stakeholders to develop answers to these questions.

Michael Verity, Equity Partner at Strutt & Parker, said: "Most of the jigsaw pieces are available but putting them together is the major challenge."

Steven Heath, External Affairs Director for Knauf Insulation, said that the timing of its creation “has special relevance to the Green Deal," but said that their pursuit of answers will “no doubt throw up as many complexities in its delivery as in its conception. This is especially true of the nascent non-domestic sector".

However, he was optimistic. "The Energy Efficiency Partnership for Buildings will be well placed to identify these complexities, offer solutions and act as a conduit for concerns between the energy efficiency supply chain and Government.”

For RWE npower David Titterton, Domestic & Obligations Director, said his company was "backing the Energy Efficiency Partnership for Buildings because it provides access to a network of real value".

The Energy Efficiency Partnership for Buildings will engage with all key Government departments involved in policy formulation and implementation, including:

• DECC which is responsible for energy and carbon policy, Green Deal, the Energy Company Obligation, microgeneration and fuel poverty (England)
• DCLG for building regulations, EPCs, planning and local authorities
• BIS for construction industry, skills and consumer protection
• Defra for product policy and standards
• in addition it will offer support to Treasury and the devolved Governments.

Civil war breaks out in Government over green policies

Latent divisions in the coalition government have broken out into a war of words, as Tories challenge the Green Deal and wind farm plans, in a bid to influence next session's legislative programme before May 9th's Queen's Speech.

Energy minister Greg Barker appeared to signal a shift in policy over the weekend by saying that Britain already has “the wind we need” either being built, developed or in planning. “It’s about being balanced and sensible,” he said.

“We inherited a policy from the last government which was unbalanced in favour of onshore wind. There have been some installations in insensitive or unsuitable locations - too close to houses, or in an area of outstanding natural beauty,” he added.

Senior Conservatives in the Coalition are plotting how to reduce support for onshore wind power, with one eye on their electoral chances in rural areas.

They have seen Chris Huhne's resignation as an opportunity to take curb green policies. "Chris Huhne’s zealous ambition is being reined back,” one top Whitehall source is reported as saying. “There’s already enough [wind farms] being built and developed."

But a Department for Energy and Climate Change spokesperson said there was ‘no U-turn on wind farms’, adding: ‘This is not a change in policy.”

Telegraph campaign

Leading Conservatives have also launched a campaign to kill the Green Deal in the Telegraph, which seems to be running a persistent campaign against the coalition government's energy policies.

The paper reports the communities secretary, Eric Pickles, the housing minister Grant Shapps, and the employment minister Chris Grayling, calling the Green Deal a stealth “conservatory tax” on householders. They claim it will add around 10% to a typical bill for home improvements, But they fail to consider the longer term benefits of reduced energy bills.

"We don't think this should extend to a 'conservatory tax' situation. The compulsion elements are over-the-top," a Government source said.

The ministers called for the entire Green Deal to be scrapped. The Sunday Telegraph quoted them as saying: "The Green Deal was Chris Huhne's baby. He has gone now and it is the right time to kill it off. Forcing people to pay thousands of pounds for unwanted extra home insulation is the last thing hard-pressed families need at the moment. It's madness."

A new Energy Bill containing the latest policies will form part of the Queen’s Speech, and is due in a few weeks' time.

DECC fights back

Deputy prime minister Nick Clegg hit back, calling reports that householders would have to pay thousands of pounds extra to do “simple things like insulating their homes”...“ludicrous scare stories”.

Chris Huhne has also responded, saying, "Top Tories should stop posturing on green plans that help hard-hit households".

And Greg Barker has called the attacks on the Green Deal "bonkers", and pointed out that the policy was in the Coalition agreement and had been developed by the Conservatives in opposition.

Nick Clegg only last week mounted a strong public defence of the Green Deal, promising customers will never be "charged more for the home improvements than we expect them to make back in cheaper bills. Plus the charge is attached to the property, rather than the person, so if you move, you stop paying. That is maximum affordability, with savings that should more than cover costs."

The facts about the coalition's green policies

It's worth restating a few salient facts around the issues of the coalition’s climate change and energy policies:

1. 463 MPs voted for the Climate Act, and only three against it.


2. Other countries are following suit, with Mexico passing a Climate Act next month, and Germany and Australia also having targets to cut emissions by 80% by 2050.


3. The clean technology sector is one of the few areas of the economy experiencing growth, and the CBI has consistently called for no further changes to energy policies to give investors confidence.


4. The impact of green policies on energy bills is minimal: according to Ofgem, the cost of nuclear decommissioning is about £266 per year for a UK household, whereas support for solar power adds £2 per year, or about 0.15% of the UK average dual fuel bill.

On the Green Deal:

1. The standard assessment procedure (SAP), used to calculate how much households will save from the Green deal measures, is as accurate as possible, as it is based on a survey of thousands of homes and is being constantly updated to take account of the latest research and experience of energy saving measures.


2. The cost of the measures will be calculated to be less than the savings achieved by the measures applied, known as the 'golden rule', and will be financed by applying a pre-agreed charge to the building's electricity bill.


3. The government says that there will still be enough cash left over for occupiers to experience reduced bills as well.


4. The length of the repayment period can be adjusted to make the golden rule work; up to 25 years in some cases.


5. Assessment can only be done by UKAS-accredited certification companies in much the same way as EPCs are presently done, i.e. by a competent person who has been trained and is certificated.


6. Assessments will not be free, but usually carried out as a loss-leader by companies who are also providing the installations. It’s therefore only fair that they will be given some of the resulting work.


7. There will be a requirement for schemes to comply with British Standard EN 45011, and for installation to be under a Publically Available Standard now under consultation (PAS 2030) which will define the skills required through National Occupational Standards (NOS).

The Green Deal will be attractive to large organisations, but the processes for subcontracting specialist installation services, in compliance with the code of conduct, still needs to be developed.

A number of local authorities are gearing up to deliver Green Deal schemes themselves, including Birmingham City Council and a cluster in the North East led by Newcastle City Council.

Councils are trusted and in a prime position to accept this responsibility. They would also be in a good position to recover the loan repayments, as they already have a property-based system in place for council tax collection.

The government is currently putting together a system of checks, guarantees and insurance schemes to try and ensure the quality of the work.

UK Solar industry predicts 1GW of installations in the next year

We're going to see a lot more of these in the UK.

The UK solar industry now sees a bright future for itself following last Friday's decision by the Supreme Court to refuse the Government permission to appeal on the ruling that solar PV installations registered after December 12 last year and before March 3 this year could qualify for the 43.3p kWh subsidy rather than the 21p rate the Government tried to enforce.

Many companies have plans for large-scale solar in particular because they see new possibilities from the Renewables Obligation Certification scheme (ROCs), which gives two ROCs for each MWh for schemes over 5MW, and under which there is no size limit.

There is even talk of solar farms as large as those found in Europe, up to even 40MW in size, in the south of England. One player predicts 1GW of plant installed in the UK over the next year.

Emma Hughes of Solar power Portal says that "now that the feed-in tariff fiasco has reached a conclusion many are looking forward to working in the UK solar industry in 2012, especially now there is opportunity under the Renewables Obligation."

REC Solar, Canadian Solar, Q-Cells and many others are all of the opinion that if the component prices decline as expected, and energy bills continue to rise, opportunities for ground-mounted solar to become cost-effective will increase.

REC Solar is hoping to double its capacity this year by installing approximately 60MW, a large proportion of which will be ground mounted.

Superhomes

At the domestic and business consumer level, more than anything else the government has done, the installation of panels on so many roofs across the country has got people talking about energy and its importance.

All over the country this weekend, owners of homes who had installed green equipment or upgrades threw open their doors for visitors interested in doing eco-refits themselves.

Besides solar PV systems, visitors to the 'green showhomes' on these tours saw every type of upgrade from simple insulation and draught proofing measures to complete overhauls and rebuilds, involving many types of green heating from woodchip fired boilers to solar water heating systems, and even in one case, a tank which combined four different kinds of heating.

Many of those on the tours had had their interest in the subject first aroused by seeing solar panels on neighbours roofs.

This indicates that a chief aim of government policy has succeeded: increasing public awareness in energy matters, even though investment in photovoltaic technology in this country is not cost-effective at the level of subsidy initially set by the feed in tariffs.

But although many of the thousands of people on these tours knew about the Feed-in Tariffs, a high level of ignorance was revealed about the follow-up schemes, the Renewable Heat Incentive and the Green Deal, indicating the huge amount of work that the Government yet has to do to publicise these initiatives.

The 'Superhomes' tours were organised by volunteers in many towns and cities in England and Wales, either by the network members themselves, or local Transition Towns groups.

Several were oversubscribed, indicating the increased popularity of the subject, further evidence of which was the changed nature of last week's Ecobuild exhibition in London, which was far more upbeat, corporate and mainstream than it had been in previous years, with much floor space taken up by solar and heat pump installers.

Speaking at the Ecobuild exhibition, Energy and Climate Change Minister, Greg Barker said: “This is an aspirational agenda. We know people are always looking to improve their home even in times of austerity. It’s part of the British DNA.”

John Gaffney, who organised a tour in and around Llandeilo in Carmarthenshire, said “many of the homes we have seen this weekend who have solar photovoltaic panels installed still think it is worth the investment even with the reduced tariff."

“It seems so complicated from the outside, knowing what to do," said one of the super homes tourists, Peter Jones of Llangadog, "But seeing what other people have already done is a terrific help in getting ideas about what is possible in your own circumstances."

A highlight of this tour was a home which had both water and space heating supplied by both a ground source heat pump and solar water heating panels, with the electricity for the pumps supplied by photovoltaic solar panels supported by FITs. “We generate more energy than we need, so we are still actually paid by the energy supplier after we have used all the energy ourselves," said owner Caroline Langdon.

Green Deal red tape removed

Last week, Greg Barker sought to remove doubts that the Green Deal implementation would be delayed, but did say there will be a “managed” roll-out of the scheme, meaning that some aspects will launch before others, chief of which may be the Energy Company Obligation, which is simpler to arrange.

He said that the Government would be responding to the Green Deal consultation in April and secondary legislation would appear “by summer recess”.

"This doesn't affect the planned October launch,” he said.

He told attendees to the exhibition that red tape was being removed from those who wanted to become accredited installers, including the requirements to have a surety bond in place prior to being authorised; to hold warranties for the 25 year length of the plan when they were longer than standard industry warranties, e.g. for boilers,; and the requirement that installers pay for an Independent Conciliation Service.

Instead, a new Green Deal Ombudsman capable of handling complaints will be appointed.

"Remove stamp duty"

UK Green Building Council chief Paul King has called the Government’s handling of the solar FITs “catastrophic” and said it is now crucial that the Government instills confidence in businesses preparing for the Green Deal.

This weekend, many visitors on the superhomes tours expressed fears that if they invested in renewable heat systems that the tariff rate for these would be reduced in the future. Many appeared unaware that tariff rate reductions did not affect those whose installations had met the deadlines.

In this respect the public perception arising from the solar FITs fiasco has been extremely damaging.

To rebuild confidence, and create more publicity, Paul King has called on the Government to link the Green Deal with stamp duty and council tax, making less energy efficient homes pay more through the tax system.

He said it didn't matter if the implementation of the Green Deal was delayed if it meant that its integrity would be preserved and the fine detail was in place and did not have to be amended subsequently.

He said: “I would much rather delay it rather than go and blunder it as it will take 10 years to get it out of the public consciousness.

Collective energy purchasing

In a further bid to engage consumers with energy purchasing, today, Ed Davey has written to all of the energy suppliers asking them to support collective purchasing schemes as another way of helping householders engage easily with the electricity market and bring prices down.

He wrote: "I want to make it easier for consumers to club together and use their collective purchasing power to engage with the market and to get good deals on their gas and electricity."

This was a key part of the Consumer Empowerment Strategy that Ed Davey launched as a Minister in the Department for Business Innovation and Skills last year.

He said particular you want to see schemes that reached out to “include more vulnerable customers and people who don't shop around for their gas and electricity".

The purpose of the letter is to encourage all energy suppliers to engage with these organisations on their ideas.