The Green Deal

neueenergieanbieter

The Green Deal

British Framework for Driving Insulation

David Purdy

Head, Insulation and Delivery

UK Department of Energy and Climate Change

1 October 2010


Overview

• Drivers for action

• Barriers

• Delivery approaches

• CERT

• CESP

• Drivers for action

• Towards a new framework

Green Deal

• New Obligation

• Timeline

2


Drivers for Action –

UK Climate Change Act

All sectors will contribute emission savings

Carbon budgets are

equivalent to a 34% cut in

greenhouse gas

emissions in 2020.

The UK will also cut

emissions by 80% by

2050.

The Homes and

Communities sector will

need to reduce emissions

by 29% by 2020.*

* Based on analysis the most practical and

cost-effective route to achieving economy

wide reductions


Household emissions –

the challenge

CO 2 emissions (MtCO 2)

700

600

500

400

300

200

100

0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Total UK Residential end-use

2004

2005

2006

2007

• Now c. 26% of the total

• Household emissions

relatively static


Barriers to action

• Promoting efficiency in housing is very cost effective

• But barriers persist:

– Housing diversity – wide variety of housing issues

– Market – for some measures is underdeveloped

– Information – householders unaware of potential savings

– Capital – some householders don’t have access to capital

– Skills – access to expert advice and installation limited

– Uncertainty – some measures have long term payback

5


Delivery framework –

Overcoming the barriers

• Range of Government

interventions…

Housing types

• Owner-occupied

• Rented

• Social

• Retrofit

• New build

Measures and

technologies

• Lighting

• Insulation

• Heat generation

• Small scale renewable

electricity

• Domestic appliance usage

• Real time displays

• Behaviour change

Existing programmes

• Warm Front

• Decent Homes

• Product standards

• Building regulations

• Carbon Emission Reduction

Target & CERT extension

• Community Energy Saving

Programme (CESP)

• Low Carbon Community

Challenge (LCCC)

• Feed in Tariffs (FITS)

New programmes

• Smart meters

Green Deal

• Renewable Heat Incentive?

• Energy Company Obligation

6


Delivery framework –

Carbon Map

‘Business as

usual’ reductions

and price impact

Target 4

Eco Upgrades

10.9 Mt 0.8 Mt

3.2 Mt 1.5 Mt 7.2 Mt 0.5 Mt

All BAU changes,

including number

of households,

technological

change, product

and appliance

policy, building

regulations and

old policies etc.

8.5Mt

Price Impact 2.4Mt

Target 1

Zero Carbon

Homes

New building

regulations

(energy efficiency)

0.4Mt

(RHI 0.4Mt)?

2020 Household Carbon Goal

Reduction of 24Mt in non-traded annual

household CO₂ emissions from 2008 (29% cut)

Target 2

Lofts and

cavities

Warm Front

(small)

Decent Homes

(assumed nil)

CERT 1.3Mt

CERT Ext. 1.4Mt

CESP pilot 0Mt

Gap 0.5Mt

Target 3

Smart meters

target

Smart meters

programme 1.5Mt

New

policy

needed to

meet

shortfall

of 4.0Mt

Major

measures

(RHI 3.2Mt)?

CESP pilot 0.03Mt

PAYS pilot 0Mt

LCBP 0Mt

FIT 0Mt

CERT 0.07Mt

CERT Ext. 0.3Mt

Gap 3.5Mt

Other measures

CERT -0.4Mt

CERT Ext. 0.9Mt

Warm Front

(small, uncertain)

CESP pilot 0.01Mt


Carbon Emissions Reduction Target –

Key features

Overview

Targets

Schemes

Installations

Costs

Government

regulation

administered by

Ofgem

CERT

(293 MtCO 2)

Suppliers choose

approach to meet

their targets

Suppliers have

many delivery routes

Suppliers subsidise

installations

Obligation applies

to suppliers with

>50k domestic

customers

2008 - 2012

Extension

Schemes must be

pre-approved by

regulator

Partnerships with

installers, retailers,

Local Authorities

100% in Priority

Groups, 50% in

“able to pay”

Government sets

total target, Ofgem

assign suppliers

„share' proportionate

to customer base

40% Priority Group

68% Insulation Minimum

15% Super Priority Group

Carbon score for

measures awarded

for actual lifetime

savings

Suppliers recover

costs through

energy bills

8


Supplier obligations –

Delivery to date

• Energy Efficiency Commitment 2002 - 2008:

– 5 million households received insulation

• CERT April 2008 – June 2010:

– 160 MtCO 2 achieved

– 4 million households received insulation

(including carryover)

– 300 million CFLs distributed

– Estimated £2.75 billion invested

Mix of CERT measures

delivered to date


CERT Extension to 2012 –

Paving the way for Green Deal

• New target of 293 MtCO 2 by 2012

• Professional Insulation Minimum (68%) introduced

• CFLs ineligible from April 2011

• Solid wall insulation incentivised

Percentage of CERT extension targets to be met in

Non-priority, Priority and Super Priority Groups

Non-priority

group

Priority

Group 40%

60% SPG

15%

Non SPG

25%

17.3%

CERT measures to 2012

0.7%

0.3% 1.6%

0.1%

80.0%

Insulation

Heating

LED Lighting

Appliances

RTDs and HEAs

Microgeneration

10


CERT 2008 to 2012 –

Value for money?

Costs

• Energy suppliers will invest approximately £5.5 billion

• Annual cost now estimated £50 per consumer bill (to 2012)

Benefits

• Net Present Value of circa £22 billion

• 293 million lifetime tonnes CO 2 emissions reductions.

• 3 MtCO 2 non-traded savings in 2020 (10% of target)

• Approximately 7.5 million households will

benefit from major insulation measures.

11


CESP –

Progress to date

• 19 live schemes – e.g. Walsall,

Liverpool, Tyneside, Dumfries and

Galloway, Hammersmith

• Around 60 schemes in pipeline

• CESP evaluation integral to future

policy design:

– Involving owner occupiers &

rented sector

– Financing

– Regeneration opportunities


Towards a new framework

• Coalition Government formed in May 2010

• Concern with the „market‟

• Householder interest

• Wider concerns around energy security and

cost saving


The Green Deal

A new and ambitious approach to home energy

efficiency…

Green Deal Process

Assessment Finance

Installation

Repayment

and Follow

Up

14


The Green Deal

Assessment

• All households entitled to an energy efficiency

assessment as part of Green Deal

• Accredited assessor produces – fabric and behavioural

assessment

• Independent – uses agreed methodology

• Consumers can shop around after receiving advice

15


The Green Deal

Finance

• Householder receives measures at no up-front

cost from a ‘Green Deal provider’.

• Payment obligation attached to the energy meter

at a property.

• Obligation transfers automatically to whoever

pays the energy bill at the property.

• Not a loan, and not secured against the property.

16


The Green Deal

Installation

Green Deal will require standards and accreditation

for products and installers

• Installer will need to:

– meet certain standards to be accredited

– carry the Green Deal kite-mark/ logo

– sign off work once complete and inform GD

provider that repayments can begin

17


New Energy Company Obligation –

Underpinning the Green Deal

Twin objectives – CO 2 reductions and thermal efficiency

Funded primarily

by GD Finance e.g.

basic insulation

MEASURES

Funded primarily

by ECO e.g.

central heating

Unsuitable for

finance e.g.

•Fuel poor or low income;

•Low energy user;

•Hard to treat housing

Energy Company

Obligation

CONSUMERS

Green Deal

Finance

Suitable for full

finance e.g.

•On higher incomes;

•High energy user;

•Low cost measures


The Supply Chain

Green Deal will remove barriers promote take up and stimulate

the market for energy efficiency – leading to more activity and

more jobs

The supply chain could be very broad, including opportunities

for a wide range of companies (energy suppliers, retailers small

installers, etc)

• Currently 27,000 people are employed

in the energy efficiency sector

• This might grow to

250,000 by 2025.

19


The Green Deal

Indicative Timetable

• Autumn 2010 – Bill introduced into Parliament

• Autumn 2011- Bill receives Royal Assent (depending

on length of 1st Session)

• Ahead of Autumn 2011 - officials will be developing

thinking on secondary legislation with a view to

drafting secondary legislation and formally

consulting.

• Early 2012 – secondary legislation laid in Parliament

• Spring 2012 – detailed guidance prepared

• Autumn 2012 – First Green Deals appear

20


Questions

Contact

David.Purdy@decc.gsi.gov.uk

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