ECO and the Green Deal PROGRESS TO DATE; THE IMMEDIATE OUTLOOK; AND WHAT NEEDS TO HAPPEN .

ECO and the Green DealPROGRESS TO DATE; THE IMMEDIATE OUTLOOK; AND WHAT NEEDS TO HAPPEN

WWW.UKACE.ORGWWW.ENERGYBILLREVOLUTION.ORG

Progress to dateAnd immediate outlook following proposed cuts to the Energy Company Obligation


Major measures delivered by Green Deal Finance, Cashback and ECO

These slides focus predominantly on ‘major measures’; i.e. those that constitute most of the work carried out. These are:

◦ Efficient boilers◦ Cavity wall insulation (CWI)◦ Loft insulation (LI)◦ Solid wall insulation (SWI)

Most of the following slides show month by month delivery of the above measures, from January 2013 to March 2014.


Major measures delivered by Green Deal Finance, Cashback and ECO

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-140

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Boilers CWI LI SWI


Programme delivery in historical perspective – about which more later…


2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/150

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Boilers CWI LI SWI

Green Deal and ECO: much momentum lost, and set to worsen this financial year due to cuts

Green Deal Finance and CashbackProgress to date


Major measures delivered by Green Deal finance


100

200

300

400

500

600

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Boilers CWILI SWIHeating controls Solar PVNumber of Green Deal Webpage views on Gov.uk

Num

ber o

f Gre

en D

eal m

ajor

mea

sure

s

Num

ber o

f Gre

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eal w

ebpa

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Gov.

uk

Worth noting that other measures have featured strongly in Green Deal Finance:• Heating controls• Solar photovoltaics

However, from here, we stick to the original four major measures…


Major measures delivered by Green Deal finance


100

200

300

400

500

600

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

602,170

170,836

Boilers CWILI SWINumber of Green Deal Webpage views on Gov.uk

Num

ber o

f Gre

en D

eal m

ajor

mea

sure

s

Num

ber o

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ebpa

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It looks as if interest has been declining…End of January 2013: Government-backed marketing campaign launches

End of June: “Green Deal mired in IT and legal problems”


http://www.theguardian.com/environment/2013/jun/27/green-deal-energy-efficiency-wall-insulation




Major measures delivered by Green Deal Cashback


200

400

600

800

1,000

1,200

1,400

1,600

1,800

Boilers CWI LI SWI

Mid-February: SWI cashback increased from £650 to £4,000; back-dated to mid-December 2013


Energy Company Obligation (ECO)Progress to date and immediate outlook


Progress to date under ECO

Next slides examine ECO as a whole, and then its constituent parts:◦ Carbon Emissions Reduction Obligation (CERO)◦ Carbon Saving Communities Obligation (CSCO)◦ Home Heating Cost Reduction Obligation (HHCRO)

Latest official data from DECC and Ofgem are used (to March 2014). Post March 2014, we look at the impact of changes proposed in the current ECO consultation, and compare this with what would have happened were the ECO left unchanged


https://www.gov.uk/government/collections/green-deal-and-energy-company-obligation-eco-statistics

https://www.ofgem.gov.uk/environmental-programmes/energy-companies-obligation-eco/public-reports

Major measures delivered by ECO – without changes

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13Jul-1

3

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Feb-14

Mar-14

Required m

onthly rate to

March

20150

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Boilers CWI LI SWI


Major measures delivered by ECO – consultation changes

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13Jul-1

3

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Feb-14

Mar-14

Required m

onthly rate to

March

20150

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Boilers CWI LI SWI


Major measures delivered by CERO – without changes

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13Jul-1

3

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Feb-14

Mar-14

Required m

onthly rate to

March

20150

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0.07240180862764270.149350849321765

0.2667415373334960.328365142728794

Boilers CWI LI SWI % of 2015 target

CERO activity has ramped up to the level it would need, approximately, to sustain in order to meet its original March 2015 target


Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13Jul-1

3

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Feb-14

Mar-14

Required m

onthly rate to

March

20150

10,000

20,000

30,000

40,000

50,000

60,000

70,000

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0.172085217141647

0.354978333041431

0.633993490532863

0.78046098515084


Major measures delivered by CERO – consultation changes

The level of activity in the first quarter of 2014 increased dramatically to take advantage of the ‘levelisation uplifts’ proposed by the consultation.This compounds the reduction of CERO targets and means very little will occur until at least April 2015


Major measures delivered by CSCO – without changes

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13Jul-1

3

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Feb-14

Mar-14

Required m

onthly rate to

March

20150

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0.1293930710008550.185701454234388

0.2246011853843330.247099355983712



Major measures delivered by CSCO – consultation changes

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13Jul-1

3

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Feb-14

Mar-14

Required m

onthly rate to

March

20150

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0.1403977792892640.201495115492874

0.2437032169480560.26811482698089


CSCO is the only part of ECO that will see any significant level of activity between now and March 2015


Major measures delivered by HHCRO

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13Jul-1

3

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Feb-14

Mar-14

Required m

onthly rate to

March

20150

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0.164795612855921

0.442628437003544

0.767794574117072

0.814045320309498


HHCRO well ahead of schedule to meet targets. This is why it starts to wind down level of activity


Mostly boiler replacements, averaging 1.2 measures per household helped

Relative contributions to dateFrom Green Deal Finance, Cashback and Energy Company Obligation – placed into longer term context of previous programmes


Relative contributions: Green Deal Finance…


50

100

150

200

250

300

350

400

Green Deal Finance

Tota

l num

ber o

f maj

or m

easu

res


…plus Green Deal Cashback…


200

400

600

800

1,000

1,200

1,400

1,600

1,800

Green Deal Finance Cashback

Tota

l num

ber o

f maj

or m

easu

res


…plus ECO.


10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Green Deal Finance Cashback ECO

Tota

l num

ber o

f maj

or m

easu

res


Delivery since 2000: loft insulation


2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/150

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Warm Front EESOP-3 EEC-1 EEC-2 CERT CESP ECO & GD

An 87% drop in loft insulations, even though 7.5 million lofts remain under-insulated

Delivery since 2000: cavity wall insulation


2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/150

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000


A 46% drop in cavity wall insulations, even though over 5 million homes could still benefit

Delivery since 2000: boilers


2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/150

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000


EEC-2 was an important facilitator in the transition to condensing boilers

The incentive structure under HHCRO to date has meant that boilers have been the simplest way of achieving its target

Delivery since 2000: solid wall insulation


2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/150

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000


Long project set-up time under CESP led to spike to reach target in its last year

Momentum being lost; 8 million untreated solid wall homes remain

All major measures across the programmes


2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/150

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Boilers CWI LI SWI

Drifting further away from what is needed, and what is possible

What needs to happenMeeting Carbon Budgets and dealing with fuel poverty


On reducing CO2 emissions

To meet carbon budgets, the Committee on Climate Change requires all remaining cavities and lofts to be insulated by 2015, and 2.2 million solid walls to be insulated by 2022*

* 2013 Progress Report to Parliament, Chapter 3, Section 3


http://www.theccc.org.uk/publication/2013-progress-report/

Monthly install rates to meet carbon budgets

Average monthly rate in 2012

Average monthly rate to March 2014

Likely average monthly rate to March 2015 (ECO only)

Rate required without cuts Monthly rate required to meet CCC trajectories

-

50,000

100,000

150,000

200,000

250,000

300,000

133,886

13,839 21,296 30,759

226,696

53,070

23,457 13,571

49,348

243,599

6,804 4,387 1,249 8,023

20,478

LI CWI SWI

Monthly rates needed to meet carbon budgets (to end 2015 for LI and CWI, and to end 2022 for SWI)

Without ECO cuts and without GD Home Improvement Fund, these monthly rates would have been expected to March 2015

Installation rates seen under ECO and Green Deal so far

Installation rates likely as a result of the cuts proposed; new GD Home Improvement Fund could drive an additional 2,000 SWIs per month. But this would only make up 15% of the carbon savings lost to the ECO cuts

Installation rates seen under CERT, CESP and Warm Front


On tackling fuel poverty The Energy Bill Revolution is calling for all low-income homes to be upgraded to an Energy Performance Certificate rating of Band C by 2025 – that means 5.9 million homes from now


On tackling fuel poverty Achieving Band C by 2025 means:◦ Deep retrofits◦ Wide range of energy

efficiency improvements

◦ Doing so at an ambitious, but achievable rate


Depth of retrofit in low income households

Average number of measures per household0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

HHCRO and CSCO depth of retrofit Required depth of retrofit to meet Band C


Depth of retrofit in low income households

ECO is very much a single measure programme, with low income households supported receiving on average 1.2 measures each Deeper retrofits are needed, averaging 3.1 measures per low income household supported, if Band C is to be met Also, the range of measures ECO delivers is too narrow…


Composition of retrofit in low income households

Air Source Heat PumpsBiomass Boilers

Ground Source Heat PumpsMicro CHP

PhotovoltaicsSolar Water Heating

Door InsulationElectric Storage Heaters

Flat Roof InsulationWindow Glazing

Hot Water Cylinder InsulationDraught Proofing

Solid Wall InsulationStandard CWI

Heating ControlsHTTC CWI

Loft InsulationBoiler

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

Required each month to reach EPC Band C by 2025 for low income households in EnglandSeen to date per month under ECO (estimate for low income households in England only)


Composition of retrofit in low income households

As could be seen, low income households not only need deeper retrofits, but also require a much wider mix of measures to meet Band C

See our ‘Ending Cold Homes’ report* for Consumer Futures (now Citizens Advice)

*Click cover to open the report on the ACE website


http://www.ukace.org/wp-content/uploads/2014/03/ACE-Research-2014-03-Ending-cold-homes.pdf

Reaching low income households

Average monthly helped to March 2014

Likely average monthly rate to March 2015 (ECO only)

Rate it would have been to March 2015…

Monthly rate required to meet EPC Band C trajectory

-

10,000

20,000

30,000

40,000

50,000

60,000

Low income households… …of which fuel poor

We estimate 460,000 low income households helped in Britain in first 15 months of ECO, of which 98,000 in fuel poverty

ECO set to continue at a similar rate to March 2015. Lower number of low income households that will be helped by HHCRO and CERO likely to be offset by catch-up necessary for CSCO

Without cuts, CERO would have helped considerably more low income households in the next 12 months. Were the ECO to continue until 2022, 640,000 fuel poor households would receive help.

Helping all low income households to reach an EPC rating of C by 2025 doesn’t require that many more low income homes to be reached. But it would help many more fuel poor households (3.1m to 2025), and provide more lasting support through deeper retrofits


Reaching low income households

So, the ECO supply chain is almost going into enough low income homes, compared to the number that need to be reached to reach Band C by 2025; this is encouraging, however:

It is currently an opportunity missed, because low income households are not receiving the depth or the range of support necessary to fuel poverty proof their homes


Conclusions Green Deal Finance and Cashback have contributed little to retrofits, compared to ECO. ECO is delivering much less than previous programmes

To cut carbon emissions at scale and speed required and to end fuel poverty more capital investment is needed to achieve deep retrofits.

The Energy Bill Revolution is calling for:

◦ Home energy efficiency to be made a UK infrastructure priority

◦ 2 million low income homes given free measures to bring them up to EPC Band C by 2020 and all low income homes brought up to EPC C by 2025

◦ Low interest loans for the able to pay◦ Use carbon revenue to provide long term funding


About the Energy Bill Revolution

The Energy Bill Revolution is an alliance of 180 charities and businesses campaigning to end fuel poverty by making home energy efficiency the UK’s priority infrastructure investment. They are calling for all low income homes to be made highly energy efficient and for carbon tax revenue to be used to provide long term funding.

For queries, contact Ed Matthew, Director at [email protected]

WWW.UKACE.ORG WWW.ENERGYBILLREVOLUTION.ORG

http://www.energybillrevolution.org/

mailto:[email protected]

About the Association for the Conservation of Energy

The Association for the Conservation of Energy was formed in 1981 by a number of major companies active within the energy conservation industry. Our aim is to encourage a positive national awareness of the need for and benefits of energy conservation, to help establish a sensible and consistent national policy and programme, and to increase investment in all appropriate energy saving measures.

ACE Research is an independently funded and internationally respected research unit which has consistently delivered ground-breaking policy research. Its work ensures that ACE’s campaigns and advocacy are always founded on, and guided by, the best available evidence and insight.

For queries, contact Pedro Guertler, Head of Research at [email protected]


http://www.ukace.org/

http://www.ukace.org/category/ace-research/projects/

mailto:[email protected]

ECO and the Green Deal PROGRESS TO DATE; THE IMMEDIATE OUTLOOK; AND WHAT NEEDS TO HAPPEN .

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Transcript of ECO and the Green Deal PROGRESS TO DATE; THE IMMEDIATE OUTLOOK; AND WHAT NEEDS TO HAPPEN .