Proposed changes for consultation - Regensw
ECO/ Green Deal consultation event 19 March 2014
Agenda 1000
Registration and coffee
1030
Welcome, Merlin Hyman, chief executive, Regen SW
1040
Marcus Brooks, senior policy adviser, DECC
1100
Technologies supported by ECO
1130
Driving quality and compliance
1200
Break
1230
Increasing the appetite for Green Deal
•Work with the sustainable •Not for profit 1300 Final remarks energy industry and decision •Independent 1315 Lunch & Networking makers •Mission led 121s with Ready for Retrofit business support managers •Established1415 10 years 1500
Close
Who we are....
Independent Not for profit Centre of expertise Since 2003
www.regensw.co.uk
• • • •
•
•Not for profit •Independent •Mission led •Established 10 years
3 year, EU funded Completing late 2014 410 business assists 12 hours of support or equivalent £8m project (£4m ERDF)
•Work with the sustainable energy industry and decision makers
Ready for Retrofit offer: • Free conference tickets • Funded exhibition stands
•Not for profit •Independent •Mission led •Established 10 years
•Work with the sustainable energy industry and decision makers
The Future of the Energy Company Obligation
Consultation on The Future of the Energy Company Obligation Marcus Brooks DECC ECO Team
The consultation: what’s next • Published the consultation on 5 March - 6 week consultation. • Ofgem have published early response outlining how they intend to implement proposed changes from March 2014 Q1 2014
Q2/3 2014
Q3/4 2014
Consultation
Legislation laid
Legislation in force
• Number of stakeholder events across the country and further engagement opportunities during the consultation period. Please ensure you respond to the consultation. Location Date Glasgow
25 February
Birmingham
12 March
London
17 March
Newcastle
25 March
Bristol
31 March
Overview
• 2 December 2013 Government announced that it would consult on making ECO easier and cheaper to deliver • Right that Government reviews the impact of policies on household costs • Estimate (based on supplier information) proposed changes to ECO will result in a £30-35 reduction in energy bills, on average, in 2014 • Proposals: • ECO scheme extended to 2017 • Current levels of ambition for CSCO and HHCRO maintained and extended at the same scale to 2017 • Reduce CERO for current period and extend CERO to 2017, at a reduced level, allow loft and standard CWI as primary measures
Proposed changes for consultation (1) The Targets • The March 2015 Carbon Emissions Reduction Obligation (CERO) target will be reduced by 33% • The March 2015 Carbon Saving Communities (CSCO) and Affordable Warmth (AW) targets will remain the same • ECO will be extended to March 2017 and new targets imposed for CERO, CSCO and AW at a pro rata of the March 2015 levels
New targets are proposed for 2017
• Proposal to set NEW targets for 2017 for all three ECO sub obligations. • Proposed levels for the 2017 targets in the consultation. • Continuing level of ambition for ECO elements targeted at low income and vulnerable consumers.
11
Sub obligation
2015 Targets
Enforceability at 2015
2017 Target
CSCO
No change proposed
Remains an enforceable compliance deadline at 2015
6MtCO2
Affordable Warmth (HHCRO)
No change proposed
Remains an enforceable compliance deadline at 2015
£3.8 billion
CERO
Propose to reduce by 33% to 14 MtCO2
Proposal to allow supplier to under deliver at 2015, but their 2017 CERO target will be increased by 1.1 times the carbon shortfall at 2015
12.4MtCO2
Presentation to Steering Group 21 February 2014
Proposed changes for consultation (2) CARRY FORWARD • Allow suppliers to more fully realise the benefits of carry forward of over achievement from CERT/CESP to ECO • Energy suppliers to be able to potentially carry forward over achievement against their March 2015 targets to count towards their March 2017 targets • Suppliers may choose to deliver less than their share of the new 2015 CERO target – in which case, the supplier would see its CERO obligation for March 2017 increased by 1.1 times its shortfall in March 2015
SCORING UPLIFT • Suppliers who have delivered >25-35% of their current Phases 1 and 2 CERO target by 31 March 2014 will receive 1.75-2 times the carbon score for the measures delivered to that date – the scoring uplift would only apply to measures above the threshold (CERT / CESP excess actions excluded ) • The above flexibility and uplift proposals would not apply to HHCRO or CSCO targets
Proposed changes for consultation (3) Carbon Emissions Reduction Obligation (CERO) • March 2015 CERO target reduced by 33%, and extended at that level (pro-rata) from 2015 to March 2017 • Connections to district heating schemes included as primary measure • Standard cavity walls included as an allowable primary measure (as a result, we would envisage that current administrative rules on the identification of hard to treat cavities would fall) • Loft insulation included as an allowable primary measure, but propose putting a clear compliance mechanism in place • Would include retrospective delivery of loft and CWI from 1 April 2014 onwards
Carbon Saving Communities Obligation (CSCO) • Extended from the bottom 15% to the bottom 25% most deprived areas, based on the Index of Multiple Deprivation (IMD) • Qualifying criteria for the CSCO rural sub-obligation will be simplified • Measures will qualify for the rural element if they are installed in households in the poorest 25% of rural settlements Pre March 31 2014
Post March 31 2014
CSCO
CSCO Rural
CSCO
CSCO Rural
% of obligation
85%
15%
85%
15%
Definition of rurality
NA
Settlement of 10,000 people or less
NA
Settlement of 10,000 people or less
Eligible areas
Lowest 15% on IMD
Any rural area
Lowest 25% on IMD
Eligible recipients
Any household
AWG
Any household
Either Any rural area
Lowest 25% on IMD of listed rural eligible areas
AWG
Any households
14
Proposed changes for consultation (5) Delivery costs • Government intends to increase transparency of the costs of ECO, either through voluntary agreement with suppliers or by taking powers through legislation • Suppliers intend to provide active support to the Green Deal and work towards reducing their ECO costs by increasing blending of ECO and Green Deal finance packages
Scheme Simplification • Inviting views on what elements of the ECO scheme rules would benefit from simplification, and if so, how this can most effectively be done while still ensuring that the scheme objectives are met and the schemes integrity maintained?
Affordable Warmth (HHCRO) • We are not going to propose any changes to the targets originally set for 2015 for Affordable Warmth, however we propose to set new targets on top of this for 2017 • During 2015 – 2017, propose 1) to incentivise delivery to non-gas fuelled households by uplifting their scores and 2) require a warranty to be included with all boiler replacements
Solid wall insulation (SWI) • There will be a requirement to deliver a minimum level of SWI – set at 100,000, or a specific volume of CO2 equivalent to that number of SWI installations • The target would be delivered by 2017, across all companies and all elements of ECO • There would be no other measure-specific sub-targets
Questions for stakeholders
1. How can we best make ECO and the Green Deal work together and deliver the level of blending that we want to see – does legislation have a role to play? 2. How can we make ECO easier and simpler to deliver? 3. How can drive greater delivery to non-gas fuelled households? 4. Delivering on a street by street basis has a range of advantages – particularly for SWI - how can we drive this type of area based delivery? 5. What can we do to improve the customer experience of ECO and ensure customers get the measures they want and the quality of installation they have the right to expect?
Contact - ECO Policy • [email protected]
The Consultation: https://www.gov.uk/government/consultations/the-futureof-the-energy-company-obligation
Green Deal activity so far 1
1,721 households had Green Deal Plans in progress at the end of January 2014, 746 were ‘live’ (all measures installed)
2
In January 2014, there were 3,087 Advisors, 2,432 installers and 130 Providers
3
There are more than 40 Providers are able to offer Plans and 20 Providers are now writing plans. The Provider Support Team is providing more support to more Providers.
Four key priorities 1
Streamlining the green deal proposition (to e.g. improve assessments, make the most of the quality mark, make the finance product more accessible)
2
Energy company obligation – delivering proposed changes to the scheme
3
New incentives (e.g. Home buyers incentive, Private Landlords incentive,) and enhance delivery of existing incentives (Green Deal Communities, Current Cash Back scheme)
4
Private rented sector regulations
Improving & Streamlining the Green Deal We will work with stakeholders to consider amongst others: What DECC can do to improve the attractiveness of the finance product – subsidising the interest rate has vfm and state aid implications, but we are interested in ideas What adjustments can be made to the “golden rule”? Assess options to plug the gap between golden rule and measure cost How we can improve the quality and user-friendliness of green deal assessments so it is clear to consumers what they can do next, how much it will cost and where to go for advice How we can minimise the number of visits to a home for assessments, work and inspections? How to ensure customers can have full confidence in the quality of install?
The new incentive schemes Note that these are not yet agreed and work is still on-going but reflect outlined ideas in the Secretary of State announcement. Home buyers Scheme to support incentive worth up to private landlords £1000
Private landlord scheme
Loan scheme for public sector energy efficiency improvements
Public sector loans scheme
£540m over 3 years
Home buyers incentive
Keeping the cash back open
Confirmed: Keeping the Green Deal Cashback scheme open – application extended to June 2014 –uplift for some measures eg SWI to £4000
Key Cashback messages • On 18th February Government confirmed the extension for cashback applications to 30 June 2014, with installations to be made and vouchers redeemed by 30 September 2014. • We also announced revised cashback rates to reflect the costs customers incur when installing measures. These include: Up to £4,000 is now available for solid wall insulation, up from £650. Up to £1,000 for anyone needing ‘room in roof’ insulation, increased from £220. Up to £650 for households installing double glazing, from £320.
• These new rates will apply to any Cashback application made or redeemed on or after 13 December 2013. • We are also increased the cashback contribution cap so customers can now get cashback to cover up to two thirds of their contribution to the installation cost. • Cashback applications cannot be combined with GD Communities or, from 1st April, ECO.
Green Deal communities £20m
Increased to
£80m
Bids from 64 consortia of local authorities covering around 70% of local authorities
First 6 approved last week - represents a total £19.5m and aim to deliver over 5,500 Green Deal Finance Plans, with more than 7,000 households benefitting.
Focus on area based delivery, street by street hard to treat measures e.g. solid wall
24
Private rented sector regulation The legislative framework to allow green deal finance to be delivered in the tenanted sector is now in place (in force 28 February).
We are soon to consult on regulations to require private landlords to achieve minimum energy efficiency standards from 2018.
We are working with local authorities to pilot new approaches to driving energy efficiency in the tenanted sector
25
We want to hear from you: There are specific forums, chaired independently, that take forward the views and ideas from Installers, Assessors and Providers. Today – David Adams – Chair of the Provider Forum is here in response to request from Providers to be able to input into future work and to listen to the views and ideas being put forward.
The Forums can be contacted at : [email protected] The questions today are not part of a formal consultation so we are using these sessions and your feedback sheets at the end as a route to take all comments.
26
Questions for stakeholders - your views 1. What makes the Green Deal attractive to the customer? In audience sector groups, delegates will be asked to discuss what needs to happen to make the Green Deal more attractive, and what is the role of both industry and government in making this happen.
2.
What makes the Green Deal attractive to business?
Building on our discussions about increasing customer demand, this last session will discuss what needs to happen to make the Green Deal more attractive to business. What role do industry and government need to play?
Who else needs to engage in Green Deal to make it a success? How do we make it more attractive to those already involved and draw in new players to the supply chain? Does wider government need to be involved, and if so who and why?
27
Agenda 1000
Registration and coffee
1030
Welcome, Merlin Hyman, chief executive, Regen SW
1040
Marcus Brooks, senior policy adviser, DECC
1100
Technologies supported by ECO
1130
Driving quality and compliance
1200
Break
1230
Increasing the appetite for Green Deal
•Work with the sustainable •Not for profit 1300 Final remarks energy industry and decision •Independent 1315 Lunch & Networking makers •Mission led 121s with Ready for Retrofit business support managers •Established1415 10 years 1500
Close
Who we are....
Independent Not for profit Centre of expertise Since 2003
www.regensw.co.uk
• • • •
•
•Not for profit •Independent •Mission led •Established 10 years
3 year, EU funded Completing late 2014 410 business assists 12 hours of support or equivalent £8m project (£4m ERDF)
•Work with the sustainable energy industry and decision makers
Ready for Retrofit offer: • Free conference tickets • Funded exhibition stands
•Not for profit •Independent •Mission led •Established 10 years
•Work with the sustainable energy industry and decision makers
The Future of the Energy Company Obligation
Consultation on The Future of the Energy Company Obligation Marcus Brooks DECC ECO Team
The consultation: what’s next • Published the consultation on 5 March - 6 week consultation. • Ofgem have published early response outlining how they intend to implement proposed changes from March 2014 Q1 2014
Q2/3 2014
Q3/4 2014
Consultation
Legislation laid
Legislation in force
• Number of stakeholder events across the country and further engagement opportunities during the consultation period. Please ensure you respond to the consultation. Location Date Glasgow
25 February
Birmingham
12 March
London
17 March
Newcastle
25 March
Bristol
31 March
Overview
• 2 December 2013 Government announced that it would consult on making ECO easier and cheaper to deliver • Right that Government reviews the impact of policies on household costs • Estimate (based on supplier information) proposed changes to ECO will result in a £30-35 reduction in energy bills, on average, in 2014 • Proposals: • ECO scheme extended to 2017 • Current levels of ambition for CSCO and HHCRO maintained and extended at the same scale to 2017 • Reduce CERO for current period and extend CERO to 2017, at a reduced level, allow loft and standard CWI as primary measures
Proposed changes for consultation (1) The Targets • The March 2015 Carbon Emissions Reduction Obligation (CERO) target will be reduced by 33% • The March 2015 Carbon Saving Communities (CSCO) and Affordable Warmth (AW) targets will remain the same • ECO will be extended to March 2017 and new targets imposed for CERO, CSCO and AW at a pro rata of the March 2015 levels
New targets are proposed for 2017
• Proposal to set NEW targets for 2017 for all three ECO sub obligations. • Proposed levels for the 2017 targets in the consultation. • Continuing level of ambition for ECO elements targeted at low income and vulnerable consumers.
11
Sub obligation
2015 Targets
Enforceability at 2015
2017 Target
CSCO
No change proposed
Remains an enforceable compliance deadline at 2015
6MtCO2
Affordable Warmth (HHCRO)
No change proposed
Remains an enforceable compliance deadline at 2015
£3.8 billion
CERO
Propose to reduce by 33% to 14 MtCO2
Proposal to allow supplier to under deliver at 2015, but their 2017 CERO target will be increased by 1.1 times the carbon shortfall at 2015
12.4MtCO2
Presentation to Steering Group 21 February 2014
Proposed changes for consultation (2) CARRY FORWARD • Allow suppliers to more fully realise the benefits of carry forward of over achievement from CERT/CESP to ECO • Energy suppliers to be able to potentially carry forward over achievement against their March 2015 targets to count towards their March 2017 targets • Suppliers may choose to deliver less than their share of the new 2015 CERO target – in which case, the supplier would see its CERO obligation for March 2017 increased by 1.1 times its shortfall in March 2015
SCORING UPLIFT • Suppliers who have delivered >25-35% of their current Phases 1 and 2 CERO target by 31 March 2014 will receive 1.75-2 times the carbon score for the measures delivered to that date – the scoring uplift would only apply to measures above the threshold (CERT / CESP excess actions excluded ) • The above flexibility and uplift proposals would not apply to HHCRO or CSCO targets
Proposed changes for consultation (3) Carbon Emissions Reduction Obligation (CERO) • March 2015 CERO target reduced by 33%, and extended at that level (pro-rata) from 2015 to March 2017 • Connections to district heating schemes included as primary measure • Standard cavity walls included as an allowable primary measure (as a result, we would envisage that current administrative rules on the identification of hard to treat cavities would fall) • Loft insulation included as an allowable primary measure, but propose putting a clear compliance mechanism in place • Would include retrospective delivery of loft and CWI from 1 April 2014 onwards
Carbon Saving Communities Obligation (CSCO) • Extended from the bottom 15% to the bottom 25% most deprived areas, based on the Index of Multiple Deprivation (IMD) • Qualifying criteria for the CSCO rural sub-obligation will be simplified • Measures will qualify for the rural element if they are installed in households in the poorest 25% of rural settlements Pre March 31 2014
Post March 31 2014
CSCO
CSCO Rural
CSCO
CSCO Rural
% of obligation
85%
15%
85%
15%
Definition of rurality
NA
Settlement of 10,000 people or less
NA
Settlement of 10,000 people or less
Eligible areas
Lowest 15% on IMD
Any rural area
Lowest 25% on IMD
Eligible recipients
Any household
AWG
Any household
Either Any rural area
Lowest 25% on IMD of listed rural eligible areas
AWG
Any households
14
Proposed changes for consultation (5) Delivery costs • Government intends to increase transparency of the costs of ECO, either through voluntary agreement with suppliers or by taking powers through legislation • Suppliers intend to provide active support to the Green Deal and work towards reducing their ECO costs by increasing blending of ECO and Green Deal finance packages
Scheme Simplification • Inviting views on what elements of the ECO scheme rules would benefit from simplification, and if so, how this can most effectively be done while still ensuring that the scheme objectives are met and the schemes integrity maintained?
Affordable Warmth (HHCRO) • We are not going to propose any changes to the targets originally set for 2015 for Affordable Warmth, however we propose to set new targets on top of this for 2017 • During 2015 – 2017, propose 1) to incentivise delivery to non-gas fuelled households by uplifting their scores and 2) require a warranty to be included with all boiler replacements
Solid wall insulation (SWI) • There will be a requirement to deliver a minimum level of SWI – set at 100,000, or a specific volume of CO2 equivalent to that number of SWI installations • The target would be delivered by 2017, across all companies and all elements of ECO • There would be no other measure-specific sub-targets
Questions for stakeholders
1. How can we best make ECO and the Green Deal work together and deliver the level of blending that we want to see – does legislation have a role to play? 2. How can we make ECO easier and simpler to deliver? 3. How can drive greater delivery to non-gas fuelled households? 4. Delivering on a street by street basis has a range of advantages – particularly for SWI - how can we drive this type of area based delivery? 5. What can we do to improve the customer experience of ECO and ensure customers get the measures they want and the quality of installation they have the right to expect?
Contact - ECO Policy • [email protected]
The Consultation: https://www.gov.uk/government/consultations/the-futureof-the-energy-company-obligation
Green Deal activity so far 1
1,721 households had Green Deal Plans in progress at the end of January 2014, 746 were ‘live’ (all measures installed)
2
In January 2014, there were 3,087 Advisors, 2,432 installers and 130 Providers
3
There are more than 40 Providers are able to offer Plans and 20 Providers are now writing plans. The Provider Support Team is providing more support to more Providers.
Four key priorities 1
Streamlining the green deal proposition (to e.g. improve assessments, make the most of the quality mark, make the finance product more accessible)
2
Energy company obligation – delivering proposed changes to the scheme
3
New incentives (e.g. Home buyers incentive, Private Landlords incentive,) and enhance delivery of existing incentives (Green Deal Communities, Current Cash Back scheme)
4
Private rented sector regulations
Improving & Streamlining the Green Deal We will work with stakeholders to consider amongst others: What DECC can do to improve the attractiveness of the finance product – subsidising the interest rate has vfm and state aid implications, but we are interested in ideas What adjustments can be made to the “golden rule”? Assess options to plug the gap between golden rule and measure cost How we can improve the quality and user-friendliness of green deal assessments so it is clear to consumers what they can do next, how much it will cost and where to go for advice How we can minimise the number of visits to a home for assessments, work and inspections? How to ensure customers can have full confidence in the quality of install?
The new incentive schemes Note that these are not yet agreed and work is still on-going but reflect outlined ideas in the Secretary of State announcement. Home buyers Scheme to support incentive worth up to private landlords £1000
Private landlord scheme
Loan scheme for public sector energy efficiency improvements
Public sector loans scheme
£540m over 3 years
Home buyers incentive
Keeping the cash back open
Confirmed: Keeping the Green Deal Cashback scheme open – application extended to June 2014 –uplift for some measures eg SWI to £4000
Key Cashback messages • On 18th February Government confirmed the extension for cashback applications to 30 June 2014, with installations to be made and vouchers redeemed by 30 September 2014. • We also announced revised cashback rates to reflect the costs customers incur when installing measures. These include: Up to £4,000 is now available for solid wall insulation, up from £650. Up to £1,000 for anyone needing ‘room in roof’ insulation, increased from £220. Up to £650 for households installing double glazing, from £320.
• These new rates will apply to any Cashback application made or redeemed on or after 13 December 2013. • We are also increased the cashback contribution cap so customers can now get cashback to cover up to two thirds of their contribution to the installation cost. • Cashback applications cannot be combined with GD Communities or, from 1st April, ECO.
Green Deal communities £20m
Increased to
£80m
Bids from 64 consortia of local authorities covering around 70% of local authorities
First 6 approved last week - represents a total £19.5m and aim to deliver over 5,500 Green Deal Finance Plans, with more than 7,000 households benefitting.
Focus on area based delivery, street by street hard to treat measures e.g. solid wall
24
Private rented sector regulation The legislative framework to allow green deal finance to be delivered in the tenanted sector is now in place (in force 28 February).
We are soon to consult on regulations to require private landlords to achieve minimum energy efficiency standards from 2018.
We are working with local authorities to pilot new approaches to driving energy efficiency in the tenanted sector
25
We want to hear from you: There are specific forums, chaired independently, that take forward the views and ideas from Installers, Assessors and Providers. Today – David Adams – Chair of the Provider Forum is here in response to request from Providers to be able to input into future work and to listen to the views and ideas being put forward.
The Forums can be contacted at : [email protected] The questions today are not part of a formal consultation so we are using these sessions and your feedback sheets at the end as a route to take all comments.
26
Questions for stakeholders - your views 1. What makes the Green Deal attractive to the customer? In audience sector groups, delegates will be asked to discuss what needs to happen to make the Green Deal more attractive, and what is the role of both industry and government in making this happen.
2.
What makes the Green Deal attractive to business?
Building on our discussions about increasing customer demand, this last session will discuss what needs to happen to make the Green Deal more attractive to business. What role do industry and government need to play?
Who else needs to engage in Green Deal to make it a success? How do we make it more attractive to those already involved and draw in new players to the supply chain? Does wider government need to be involved, and if so who and why?
27
