notes from a seminar on the green deal and energy company
TRANSCRIPT
Notes from a Seminar on the Green Deal and Energy Company Obligation
Organised by Energy Action Scotland and Consumer Focus Scotland Held on 15 February 2011
Introduction From the start of 2013, the UK Government intends to introduce two new programmes to support improvements in household energy efficiency:
The Green Deal is targeted at able-to-pay consumers. It will follow a pay as you save model, with up front energy efficiency improvements funded by a third party, and costs recovered through charges on electricity bills over the long term. Measures funded have to meet the ‘golden rule’ – that bills would be no higher than would have been the case without improvements.
The Energy Company Obligation (ECO) is being introduced as the Government
recognises that the Green Deal will not be suitable for fuel poor consumers, as they may already ration the amount of energy used, and will actually need to use more energy, not less, to achieve a healthy home environment. The ECO is also likely to support more expensive measures in hard to treat homes.
These programmes will replace the existing Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP) when they end in 2012. They will also replace the Warm Front scheme in England which currently delivers heating and insulation measures to vulnerable households. The devolved Administrations each have their own version of Warm Front and in Scotland this is the Energy Assistance Package. The Energy Assistance Package relies heavily on the current CERT programme to fund its insulation offerings to vulnerable and fuel poor households. Aim of Seminar Given the increasing numbers of Scottish households in fuel poverty, it is clearly critical that these new programmes are designed, from the start, in ways which take account of Scottish circumstances. To help achieve this, Energy Action Scotland and Consumer Focus Scotland organised a seminar with two aims:
to inform stakeholders of developments to date regarding the Green Deal and ECO to provide a platform for discussion and an opportunity to highlight Scottish concerns
to officials from the Department of Energy and Climate Change (DECC) who are working to develop both programmes.
Over fifty stakeholders, representing a full range of Scottish organisations with an interest in energy and fuel poverty issues, attended the seminar. Delegates were expected to come prepared to share ideas, questions and reactions during the event. They were also asked to submit questions or points for discussion in advance and these were summarised by the
seminar organisers (see Initial Summary of Issues in the notes for each Discussion Group). Based on the range of issues raised in advance, the organisers asked delegates to break into four groups covering Technical Issues, Consumer Experience, ECO Targeting and Rural Issues. Full details of the four groups’ discussions are provided in this report. However, each group was also asked to highlight three key issues to DECC, which are also given in detail (see Main Focus Issues in the notes for each Discussion Group). Summary of Key Issues Raised In summary, key issues around development and delivery of the new programmes included the need for:
‐ The programmes to provide advice at varying levels (i.e. telephone based through to advocacy) and at various stages (i.e. pre- and post-installation etc) and long term maintenance, rather than just installation of measures. In addition, to ensure consumer confidence, accreditation would be required and consumers should be given a single point of contact for any issues, whether around financing or the physical performance of measures. Consistent marketing of simple messages underpinning the Green Deal will also be needed to avoid confusion, given the range of actors involved.
‐ In addition, ECO should be open to delivery by trusted local agencies which,
especially in rural areas, can increase the take-up of available services.
‐ A clear and consistent process is needed to assess what measures are appropriate for individual households, including, as a minimum, the most cost effective insulation measures. This process has to be independently monitored to ensure the customer receives the most appropriate advice for their needs.
‐ Enabling funds to be available, whether to bridge the cost of delivering measures in
remote rural areas (where cost is a recognised barrier) or to ensure that conventional barriers, like difficult access or loft clearance, are addressed.
‐ A clear approach is needed to take account of the high proportion of flats in Scotland,
especially since individual flats within a block often have different tenures, and this is already a barrier to energy efficiency work.
‐ Targeting of the significant, but clearly limited resources which will be available
through ECO; the need for support for ‘working poor’ families was highlighted by a number of stakeholders, in addition to conventional passport benefit approaches. Rural issues are important here too, because of the extra costs involved in working in sparsely populated areas but where the degree of fuel poverty is usually much higher.
‐ Again in relation to rural areas, it is important that finance is available to connect
properties to the gas grid, where possible and economic, or to support the installation of appropriate microgeneration where mains gas is not a realistic option.
‐ Stakeholders in all groups highlighted the need for both programmes to take account of climate in assessing the likely impact of energy efficiency measures, and noted that this also means that carbon savings, for the same measures, will be greater in Scotland. RdSAP is not, as it stands, an appropriate means of assessing current costs or savings as it does not take account of climatic variations across Great Britain.
A number of wider issues were also raised, including the need to ensure that the Green Deal and ECO integrate with existing Scottish fuel poverty and energy efficiency programmes, and to check that Green Deal requirements are consistent with the Scottish legal system, in particular with property conveyancing. Next Steps This report represents information and discussions at a particular stage in the ongoing development of the Green Deal and ECO. Both Energy Action Scotland and Consumer Focus Scotland will continue to feed in to discussions as the new programmes develop, and the issues raised in the seminar will form part of that process. Contacts For further information about the information in this report or the views or wider work of Energy Action Scotland or Consumer Focus Scotland, please contact: Energy Action Scotland: Elizabeth Gore Public Relations and Information Manager Tel: 0141 226 3064 Email: [email protected] Website: www.eas.org.uk Consumer Focus Scotland: Andrew Faulk Senior Policy Advocate Tel: 0141 227 1842 Email: [email protected] Website: www.consumerfocus.org.uk/scotland It should be noted that the Green Deal and Energy Company Obligation are policies which are under development and any information from the seminar or these notes is subject to change.
The Green Deal and future Energy Company Obligation (ECO)
Beth Chaudhary and Paul McCloghrie
15th February 2011
Overview
• Scale of the challenge
• What is Green Deal
• What consumers see
• The ECO
• What happens next
2
What the CCC suggest needs done by 2022
• 90% of all lofts and cavity walls insulated
• 10.1m additional lofts
• 7.5m additional cavity walls
• Solid Wall insulation
• 2.3m additional solid walls
CCC Annual progress report 2009.
• Attached to meter, not person –so stays with property
• Flow of payments collected through energy bill
• Not conventional loan – full capital not called in
Green Deal Finance Mechanism
Golden Rule
• Capped to the average saving – to protect future householders
• Extra help for those who need it
• Only ever an estimate – no guarantee
Green Deal: The Customer Journey
6
Marketing and co-
ordinationSurvey Finance Installation
Repayments and follow
up
Green Deal: Assessment & Advice
7
Marketing and co-
ordinationSurvey Finance Installation
Repayments and follow
up
Green Deal Finance
8
Marketing and co-
ordinationSurvey Finance Installation
Repayments and follow
up
GREEN DEAL PROVIDER
Green Deal: Installation
9
Marketing and co-
ordinationSurvey Finance
Install-ation
Repayments and follow
up
Green Deal: Repayment
10
GREEN DEAL PROVIDER
Green Deal: Repayment
11
Repay via meter over, say, 25 years
What is an ECO?
12
• There will still be households where Green Deal alone doesn’t deliver the support needed.
• ECO is an obligation on the energy suppliers to support household energy efficiency
• Builds on existing obligation policies• Fresh look to fit with Green Deal landscape
The ECO
• Launch alongside Green Deal
Objectives• Support low income vulnerable
households• Support hard to treat homes• Provides more certainty of carbon savings
The main players
14
The administrator
The suppliers The installers
Administration and data
• Frequent data on measures delivered
• Data on costs to energy companies
• Scottish data shared with the Scottish Government
15
Who will ECO support?
• Home heating cost reduction and Carbon reduction
• Low income and vulnerable households
• Hard to treat households
• Proxies?
16
What will ECO support?
• Will it support:
• Lower cost measures
• Hard to treat homes
• Heating systems
• Energy efficiency advice
• Etc?
17
The ECO - challenges
• Links to Green Deal
• Support only those who need it
• Distribution of costs and benefits
• Simplicity
TimetableGreen Deal & ECO legislation
The committee stage in the House of Lords is now finished.
DATE MILESTONE
December 2010 Introduction of the Energy Bill to Parliament
Pre- Autumn 2011 Officials engage stakeholders as they develop the technical details for secondary legislation
Autumn 2011 Formal consultation on secondary legislation
Early 2012 Secondary legislation laid before Parliament
Spring 2012 Detailed industry guidance prepared
Autumn 2012 First Green Deals appear & ECO in force
Any questions?
Notes of DECC Presentations Green Deal (GD) - GD is to follow CERT and CESP post-2012 - Marketing and co-ordination can be provided by any body that meets the consumer
credit/protection requirements - Finance is via the GD provider - The survey will be an Energy Performance Certificate (EPC)-type assessment of the
building plus a new element that assesses the people in the house in terms of social circumstances, ability to pay and energy advice requirements
- The GD repayment will be made via the meter over, say, 25 years, and will be shown as an extra line on the customer’s energy bill. The energy companies will collect this repayment and transfer it to the finance provider.
- Ability to access GD should not be affected by personal credit rating as GD is attached to and stays with the building
- the time period of the loan cannot be changed eg. cannot be called in early - to be capped to the average saving and so a fuel bill should not go up as a result of GD - are looking into consumer protection, guarantees and standards for installations - GD will be market driven (i.e. no targets) and so cannot be sure of the resultant carbon
savings - programmes to date have made no progress in terms of delivering solid wall insulation
and so it is a key aim of GD to overturn this trend. Energy Company Obligation (ECO) - will work in the main through the energy companies - targets will be set (unlike for GD) - objective are to:
- support low income and vulnerable households - support hard to treat homes (solid wall insulation in particular) - provide more certainty of carbon savings (than GD, hence the targets)
- Will launch alongside GD - Will involve installers and local authorities, third sector, community partners - a key area to explore is proxies for fuel poverty - will be paid for by energy consumers and so need to ensure all customers will have an
equal ability to benefit Admin and data: - will be frequent data on measures delivered - data on the costs of ECO to energy companies is unlikely to be made public for
commercial reasons - Scottish data will be shared with the Scottish Government Legislation: - Legislation for both GD and ECO is in the Energy Bill currently making its way through the
UK Parliament - for ECO, the Bill has two objectives i.e. home heating cost (known as the thermal
objective) and carbon reduction - Bill has now been through the Lords and is expected in the Commons in the next few
weeks. Work on it will continue over the summer. Expect a full 12 week consultation in October on the secondary legislation. Plan is for it to be laid before Parliament in early 2012.
ECO support: - lower cost measures (envisage this via GD rather than ECO)
- hard to treat measures - heating systems (i.e. gas or ‘appropriate’ off gas) - energy efficiency advice - etc? (still under discussion) - expect a similar range of measures as for GD. Challenges for ECO: - links to GD - support only those who need it (need proxies; possibly some measure of energy
performance too) - distribution costs and benefits - simplicity (complexity is reflected in cost) Q & A: Q: Will the Golden Rule apply to individual measures or the whole package? Why doesn’t ECO include energy generators? Is referring to a home heat cost reduction redefining fuel poverty when energy consumption is not just heating?
DECC: The Golden Rule will be calculated on whatever is installed at the time – so could be a package of measures. If more measures are installed, say, six months later then that is a separate calculation.
CESP did include generators but that was a pilot to try a new approach. It hasn’t worked as well as was expected and there is a question around the link to the consumer.
ECO is to address a specific obligation around being able to adequately heat the home affordably, i.e. energy efficiency and efficient heating. However, it isn’t the only fuel poverty policy, but one of a range of policies addressing fuel poverty. It will not solve the whole of the fuel poverty problem.
Q: How does the finance work with the Consumer Credit Act (CCA) if it is set against the meter and not an agreement with a named individual?
DECC: the CCA will apply to Green Deal finance as it will have to meet those standards.
Discussion: The Energy Bill splits the way the CCA is applied – the initial contract is with the existing householder/bill payer and then responsibility passes to the energy supplier to disclose the charge to new bill payers.
Q: In the private and social rental sectors, how will the Green Deal be passed on as tenancies change?
DECC: Green Deal provides a way around the resistance of landlords to install energy saving measures because there is no upfront cost.
Q: There are likely to be complications where the title deeds are combined in multiple occupation buildings or in complex situations or where there is a legal question relating to the house sale and the exchange of the burden of the Green Deal charge. E.g. in house sales, a buyer cannot be forced to take on a GD burden as it could from part of the bargaining at point of sale in negotiations between seller and buyer.
DECC: will look further into this.
Q: Could a Green Deal charge become an obstacle to the house sale?
DECC: The energy bill in a property should be at least the same or less with the Green Deal charge than without it and so it shouldn’t put anyone off.
Q: Has there been any modelling done of the GD market e.g. GD driving ECO or vice versa?
DECC: It is difficult to model the market as it doesn’t exist. Some work has been done and is ongoing on e.g. the willingness to invest.
Q: How will savings be calculated in, say, off gas grid areas where oil is used for heating?
DECC: the calculated saving is of all fuel use; different types of fuel will not be separated out. E.g. may make a saving on oil but pay back through electricity bills.
Q: When payments towards CERT and CESP cease, will fuel bills go down?
DECC: ECO will replace CERT and CESP. However, resources are expected to remain at the same level. The same factors will apply i.e. energy companies will choose whether and how to pass on costs to customers. At present, DECC estimates how they do this but don’t know full details.
Q: How will this affect the Energy Assistance Package?
DECC: We do not intend to design schemes that are not compatible with the Scottish schemes. DECC officials have met with the Scottish Government and will continue to work with them to ensure compatibility.
Q: In comparison to the Priority Group and Super Priority Group under CERT, will there not be much more of a requirement on RSLs (Registered Social Landlords) to source information on potentially eligible people for the ECO, and e.g. to measure cost savings in terms of heating cost reductions?
DECC: There will be no requirement to work out the energy bill cash savings under ECO. We want ECO to be as flexible as possible and to still be able to work with RSLs. We don’t want to move away from the system of using benefits as a proxy as this works well. Proxies that work across all sectors will be required.
Q: Regarding competition in the energy services market, how can we ensure that a consumer will get the same ECO offer if they approach a GD finance provider or if they approach an energy company?
DECC: this is being looked into.
Q: There is a worry about ‘expected’ financial savings, e.g. who will calculate this and what happens if the calculations are wrong or the measures do not produce the expected savings but the shortfall is blamed on customer lifestyle?
DECC: Are aware of the issue; it is harder to assess people rather than just the property. This is being looked into.
Discussion Group 1: Technical Issues The group was asked to focus on an appropriate range of measures to improve energy efficiency which would save both carbon and lower household fuel bills. In addition the installation and operation issues were to be considered. Initial Summary of Issues:
What measures will be included under the Green Deal (GD)/Energy Company Obligation (ECO)?
How will the relevant measures be identified in a transparent and consistent way? Will there be a hierarchy of measures, and who decides which take precedence?
Will there be support for enabling measures? Some of ECO funding will be used to subsidise GD finance for hard to treat homes
and so the Golden Rule can apply for more expensive measures. Is there some indication of how much funding will be used for this purpose, treating how many hard to treat homes annually?
How can we be sure local contractors are encouraged to participate in the Green Deal, while at the same time providing reassurance for consumers though recognised accreditation systems?
What arrangements will be in place for insurance, warranties and maintenance? Who will be liable for product failure/ breakdown?
How will GD/ECO interact and work for Buildings in Multiple Occupation/Blocks of flats with mixed tenure i.e. potentially a mix of owner occupier, social rented and private rented?
There was general agreement that these topic areas covered the main issues regarding the physical measures to be made available under GD/ECO. Main Focus Issues: 1. Measures should not be limited to insulation; advice and maintenance required
More than 50% of the group agreed that the type of measures to be made available under the Green Deal (GD) should not be limited to insulation measures alone. Whilst there was an understanding that this brought to bear a number of operational issues, it was felt that the limit on the GD should be dictated by the “Golden Rule” approach. If therefore a measure can be demonstrated to save energy, then its inclusion or not under GD finance will be determined by the savings it makes over the period of the finance agreement. However the inclusion of energy efficient equipment brings to bear a number of associated issues. 1.1. the responsibility of on-going maintenance until the finance package has ended. 1.2. the provision of effective advice to ensure that the householder is able to use the
equipment most effectively. In addition, there should be a duty to ensure that any new owner also has access to this effective advice when taking on the GD finance.
1.3. the provision for renewal should the effective lifecycle of the equipment extend beyond the period of the GD finance.
2. Minimum fabric energy efficiency standards must be embedded in the deal
The group strongly supported the view that minimum standards for fabric energy efficiency should be embedded within any GD finance arrangement. This would be similar to the minimum energy efficiency standards placed on households that received the Low Carbon Buildings Programme i.e. loft insulation where possible to 270mm and the cavity filled where appropriate.
3. Appropriate accreditation required The issue of proper accreditation was discussed widely during the session. The group strongly agreed that accreditation needed to be branded for GD/ECO in order to instil public confidence. This was not to be contrary to existing product or installer accreditation schemes currently in operation. There would, however, need to be minimum guidelines established under GD/ECO to ensure that all aspects of the finance package were assured from survey and finance to installation and advice provided. This would mean that consumers would have a universally branded point of contact to pursue any issues that they had with any aspect of the process. This independent approach would ensure minimum standards were met across providers and that also any issues were resolved with the appropriate agency responsible for that element of the package. There would also be in-built consumer protection for products and services delivered should any agency or delivery partner cease trading over the period of the arrangement. This would also ensure a degree of brand protection for the delivery partners.
Additional Issues: 4. Need greater clarity on funding arrangements particularly for low income It was agreed that stronger guidance on the issue of mixed GD/ECO finance would be needed. Whilst it was broadly understood that any shortfall in a GD arrangement would be met from the householder’s own funds, it was not clear how this would be shared under a mix of ECO and GD or if that kind of arrangement would be possible. ECO would be targeted at low income vulnerable households; these households are likely to have limited funds and possibly low credit scoring issues and so the options for shortfall funding may be difficult. It had been understood from the presentations given by DECC that the ECO funding would be targeted at priority and super priority groups. The level of this funding would be controlled essentially from the targets set by Government on the energy companies in the same way that CERT is currently. Certain measures therefore would automatically be limited in scope; in particular the “hard to treat” measures where the Government would like to see more activity over the coming years. Conversely the group could not see how ECO could be used to benefit all consumers. If all energy users are potentially liable for contributing to the ECO through their fuel bills and the ECO was targeted at priority/super priority group consumers, then this did raise some equity issues. 5. Quality assurance and accreditation – Scottish variations If the “Golden Rule” is to be underpinned by an Energy Performance Certificate (EPC), then the group felt that there needed to be in place a much more robust process of quality assurance for this activity. In Scotland it is not necessary to have the Domestic Energy Assessor (DEA) qualification in order to provide an EPC. Providers must be a member of a recognised protocol organisation and it is the duty of that organisation to ensure that its members are appropriately trained. This training may include the DEA qualification, but it is not limited to this as it is in England, Wales and Northern Ireland. It was the view of some of the group members that quality assurance under the schemes in Scotland was not sufficiently robust enough to give confidence that EPCs could be used to determine the parameters of a GD finance arrangement. 6. Need for enabling funds Some group members raised concerns with regard to enabling funds. Recent experience in Scotland has suggested that without an enabling fund many improvement works would not have been installed. The sorts of areas requiring assistance could be loft clearances and wall repairs to allow cavity wall insulation work to go ahead.
7. Ownership of carbon savings There was some discussion of how the carbon savings for work could be attributed. There are rules covering the proportion of the work budget that energy companies need to fund under CERT/CESP in order to qualify for the full lifetime carbon savings of a measure. It would be reasonable to assume that these would continue through to ECO. However it was not clear how this would work under GD. The group surmised that the value of this would be implicit within the finance package provided to the householder, i.e. that the GD provider would “own” the carbon. However it was felt that this accounting needed to be transparent within the finance package offered. There will be no set targets for GD providers in the same way that there will be targets for ECO and we have under past supplier obligations seen a healthy trading market in carbon savings. Therefore it was considered an important issue that the “ownership” of carbon saving be established clearly so that there would be no confusion over energy companies meeting future carbon targets. Where an energy company is also a GD supplier, then this relationship is clearer. The issue is where there are GD providers who do not have statutory carbon saving targets.
Discussion Group 2: Consumer Experience The group was asked to focus on issues specifically relating to the consumer including marketing and promotion, the customer journey, advice, changing circumstances and legal factors. Initial Summary of issues:
What will happen if a payback period exceeds someone’s working life (or similar circumstances resulting in reduced income, change of lifestyle, unemployment etc)?
What will be the arrangements for a basket of measures with differing repayment periods? Can someone move between the Green Deal (GD) and Energy Company Obligation (ECO)
(in either direction) as their circumstances change over time? Will the continuation of a loan etc be dependent on the continued supply of electricity to the
property? Is the GD/ECO provider a utility company because the finance is recovered through the
energy bill - or can anybody be a GD provider and, if so, what then will be the mechanism to recover the money through the energy bill?
Why does the Government believe that take-up will increase once people have to take out a finance arrangement?
Are there caps on the interest rates that will be charged? How will GD/ECO interact and work for Buildings in Multiple Occupation (BMOs)/blocks of
flats with mixed tenure i.e. potentially a mix of owner occupier, social rented and private rented?
Main Focus Issues:
1. Interaction with the property market (NB Scottish variations) How will Green Deal be dealt with in terms of the property market? (NB. differences in Scottish market) 2. Regulation/warranty/guarantee Regulation/warranty/guarantee – needs to inspire confidence, trust and buy-in. Needs to be across all elements – marketing through to post-installation. 3. Co-ordination of marketing Need co-ordination of marketing to get the message across. Consistency is crucial. Keep it simple.
Additional Issues: 4. Trigger/Marketing Who will be responsible for marketing?
Branding and continuity? How to dispel confusion and improve awareness?
Energy Saving Trust role? Co-ordination of messages → utilities, high street names, regional, local ……… Income as proxy for Green Deal targeting? Cherry picking? Location, house type etc. Independence/impartiality? Engaging – how? Right message is important. 5. Survey and Advice Different types of advice – starting point. How to ensure all aspects/programmes are covered? Independent?
Green Deal providers.
6. Finance and ECO Getting the right message across. What will incentivise those who didn’t take up free measures? What is new and different about ECO? 7. Follow up and Redress & Billing Value of Green Deal measures within property market? Tie-in of new technologies with Feed-in Tariffs (FiTs) and the Renewable Heat Incentive (RHI)? Validity of ‘savings’ estimated? (especially for fuel poor households) 8. Installation issues etc Buildings in Multiple Occupation (BMOs) and multi tenure/measures? Can Green Deal be imposed on BMOs? Who will decide the specification? Who will monitor? Post-installation advice? Who will deliver and who/how will it be paid for? 9. Expected sequence of events Trigger Point
↓ Advice
↓ Finance and ECO
↓ Installation
↓ Complaints and Redress & Billing
Discussion Group 3: Energy Company Obligation Targeting The group was asked to consider any issues relating to the proposed Energy Company Obligation (ECO) and to highlight any potential barriers or points for consideration in its development. Initial Summary of Issues:
Who will be eligible for ECO support? Will there be a link to social tariffs/Warm Home Discounts?
Will there be a mechanism to actively target (not just respond to enquiries from) those in fuel poverty?
What will be the fuel poverty impact of measures? How will those in fuel poverty be aided?
How much funding will be available to the ECO (even if indicative at this stage)? Is the Green Deal/ECO provider a utility company because the finance is recovered
through the energy bill - or can anybody be a Green Deal (GD) provider and, if so, what then will be the mechanism to recover the money through the energy bill?
How will GD/ECO interact and work for Buildings in Multiple Occupation/Blocks of flats with mixed tenure i.e. potentially a mix of owner occupier, social rented and private rented?
Main Focus Issues: 1. Need to develop solutions for flats/Buildings in Multiple Occupation/mixed tenure i.e. where a number of owners and occupants are involved Many Scottish cities and towns have flats and buildings in multiple occupation (BMOs). Often these properties are also of mixed tenure; for some, the owner may not live in the property and may be difficult to locate. Any energy efficiency works to the fabric of the buildings will therefore involve the permission and co-operation of several people. Currently, this is viewed as a major barrier. There needs therefore to be co-ordination to engage with all these people and to manage the process and for this to be resourced. It will by its nature be a more complex solution. However, use should also be made of existing legislation such as the Tenements (Scotland) Act, where appropriate. 2. Need to build in incentives to deliver to rural/remote areas, hard to treat homes and areas of high fuel poverty It was thought that recognition should be made of the longer heating season, and therefore of potentially higher carbon savings, in some regions due to their climate and geographic location. There was a suggestion for having a regional multiplier based on carbon, and perhaps using weather stations and degree days, to ensure a more equitable share of the programme’s resources. NHER and not SAP should be used as a rating scheme as NHER takes geographic location into account (and is used by the Scottish House Condition Survey). At present, some areas struggle to persuade companies to deliver government schemes to their areas. This is due to a combination of the cost of getting manpower and materials to the area (distances can be longer and might require overnight accommodation). None of this is allowed for in existing programmes. Bringing in contractors from a long distance also adds to the carbon produced thus negating some of the purpose of the programme. It was emphasised that while many rural and remote areas have relatively low population numbers overall, they do have many hard to treat properties and very high levels of fuel
poverty and severe fuel poverty. Tackling these high levels ought to be a significant factor therefore in giving incentives to companies to operate in these areas. Importantly, eradicating fuel poverty in these areas would make great inroads into meeting the target to end fuel poverty. 3. To identify the fuel poor, make use of existing knowledge of fuel poverty 3.1 Many agencies present believed that they already knew by and large where the main areas of fuel poverty were in their locality including off gas areas, hard to treat homes, or use of existing fuel poverty indicator toolkits and housing stock audits. 3.2 Use benefits as a proxy but also allow access to the scheme to the working fuel poor. It was thought that those people on passport benefits should automatically access the scheme. However, it was also believed that the working fuel poor should not be ignored, bearing in mind the growing levels of in-work poverty. Others should therefore be offered a more detailed check of their circumstances to establish eligibility. In this way, resources would not need to be found to give a detailed check to everyone thought to be eligible. It should be noted that this approach was supported by front-line advisers present who did not think this would be a barrier but instead would be taken by customers to be normal, similar to wanting access to, for example, a credit arrangement. They believed that this could easily be handled using the right advisers and the right questions. Additional Issues: 4. Need to enable people to move between GD and ECO as circumstances change It was envisaged that householders’ circumstances might change over time e.g. loss of employment or indeed gaining employment. This might necessitate a straightforward and unbureaucratic move in either direction between the programmes. It was also asked whether there might be cases where the programmes could be used in combination? 5. Programmes must be both reactive and proactive There are benefits such as economies of scale in operating with an area-based approach, but when dealing with vulnerable people and those whose circumstances are urgent – as would be the case in the ECO – then help will be needed as soon as possible and not in, say, three years’ time when the programme reaches that street. 6. Need to have enabling funds It has been the practice in programmes to date, supported by experience, that enabling funds are essential for low income or vulnerable groups. This could be, for example, for scaffolding, loft clearance and for covering distances (ref. point 2 above rural/remote areas). Without such funds, the works may often not go ahead. It was also suggested that distance to the job might also qualify for enabling funds, where this was otherwise a barrier. 7. Need access to all available help e.g. RHI NB. There remains questions around the operation and therefore use of the proposed Renewable Heat Incentive (RHI). 8. Continued need for Scottish Government programmes There will still be a need for the Scottish Government programmes to be well-resourced. They should also work with and not in competition with UK Government programmes. 9. Legislation as a driver The group had differing views on how far to legislate in each housing sector in order to improve the energy efficiency of dwellings.
Discussion Group 4: Rural Issues The group was asked to focus on how rural issues will need to be addressed in the development and operation of the Green Deal (GD) and the Energy Company Obligation (ECO). Initial Summary of Issues:
How will differences in climatic conditions/higher heating needs be taken into account in the carbon scoring system?
In some rural and remote areas there are significantly higher transportation costs for materials and labour, which in turn lead to longer payback times. Will these be allowed for in GD and/or ECO?
Given that the Scottish Islands have the worst fuel poverty ratings in the UK, is there to be any prioritising within the schemes to ensure the related investment reaches those in most need rather than being directed geographically to where it is 'easy' to install with lower costs related overheads?
Some of the ECO funding will be used to subsidise GD finance for hard to treat homes so that the Golden Rule can apply for more expensive measures. Is there some indication of how much funding will be used for this purpose, treating how many hard to treat homes annually?
Given the potentially large market in rural Scotland for microgeneration, will finance be available to overcome initial cost barriers? How will these schemes interact with the Renewable Heat Incentive (RHI)?
Will GD/ECO finance be available to pay for connections to the gas grid? Main Focus Issues: 1. Mechanisms required to ensure delivery in rural areas Mechanisms will be required to ensure that the schemes get out into the rural areas in the first place. Although costs may be higher and the number of homes relatively lower than in urban areas, the carbon savings can be greater. 2. Use local providers Regarding delivery, there is an issue around workers being parachuted into rural areas from outside when there are trusted local providers already. 3. Heating and micro-renewable measures required Microgeneration and other forms of heating need to be eligible and strongly considered in these areas. Additional Issues: 4. Carbon savings Are these calculated differently bearing in mind climactic conditions? 5. Heat pumps Are heat pumps considered a permanent rather than a removable item? If it covers boilers, then it probably covers heat pumps too. 6. Expense of installation
The Golden Rule may restrict charges and so less profit is possible, which means less incentive to install in remote areas where there are extra costs. How can economies of scale be achieved in rural areas, where it is much harder than in urban areas? 7. Local delivery of the scheme If it is paid for by a high street retailer in the central belt but delivered by a local company, then who gets the carbon savings? DECC response: GD Providers get no credit for the carbon savings / ECO only get credit for things that wouldn’t happen otherwise. Trusted local providers/installers are not always present in rural areas. 8. ECO driver in rural areas For ECO, is the driver to meet targets a fine on non-delivery? What is the driver to push into rural areas? In rural areas there is less competition on price so installers can push the price up. 9. Combining heating and insulation With any heating measure there needs to be effective insulation to see any difference. So could we force Green Deal finance for these measures before installing a heat pump or new boiler and will this be possible? If insulation has to be brought up to standard to install a new heating technology, will it all be part of the same package? 10. Oil-based customers For oil-based customers, electric bills will go up. This is an unregulated market and so there is no guarantee that even if consumption goes down we can guarantee that a bill will go down – is this a correct assumption? 11. Nature of houses in rural areas Houses in rural areas are hard to treat and combine different forms of heating including traditional stoves, electric, LPG, oil etc. 12. Heating versus lighting and appliances For electricity, there is a greater choice about what to turn off – appliances, light bulbs, the TV etc but it is far harder to choose to heat or not. The only guarantee is the additional charge on the electricity bill – the savings on heating (especially with oil/LPG etc) are theoretical. 13. Rate of return for finance providers. What will the rate of return be for the finance providers? What is the incentive – what’s in it for them? Will the level of interest be regulated? Other risks include whether the house will still be there X years down the line; this issue is important in rural areas. 14. For addressing fuel poverty – will this do the job? Will there be a sliding scale of eligibility for ECO or part-ECO/part-Green Deal? How will social tenants access the scheme(s) and be incentivised to do so? DECC note: ECO will be open to those who are vulnerable or fuel poor and to everyone in a hard to treat home regardless of income.
Panel Discussion: following Discussion Group Feedback of Main Focus Issues - Paul McCloghrie and Beth Chaudhary, DECC; Norman Kerr, Energy Action Scotland; and Liz Lainé, Consumer Focus Discussion point: Good quality advice is crucial and it must be independent and impartial. It also needs to be specific and appropriate to each customer. Qualifications and regulation will be required, plus transparency. There are also questions around who pays for the advice e.g. the independence of advisers and assessors. NB. It has been suggested that the adviser would be a domestic energy assessor, but these don’t exist in Scotland. There is also a desire to avoid multiple visits to a customer. In existing schemes, admin costs are involved but ‘advice is vital for success not a burden’. DECC is looking into the issue of advice. Discussion point: Who will be the Green Deal providers? There was a view expressed that instead of creating Green Deal it would have been better to encourage the energy companies to develop Energy Services Companies (ESCOs), as the 28 Day Rule was taken away some years ago to allow this. There was also a view that it was difficult to see how a SME or community organisation would enter into this new market. DECC wants to have as many different Green Deal providers as possible. E.g. energy companies, local authorities, high street retailers and others. It is unlikely anyone will commit until more details are known. DECC: There is a need to support the Green Deal customer journey but not to put someone through the whole process where it is clear Green Deal is not a viable option for them.