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e: bill@taconsulting.org

t: 07876 241943

www.taconsulting.org

THE GREEN DEAL (including June DECC updates)

Accessing the opportunities

Bill Taylor

Taylor Armitt Consulting

Main features of Green Deal

Possible responses from the

‘market’

Collaborative Delivery Health warning– the GD is complex – any presentation will necessarily leave lots of the detail out. Only the main points are covered here, with the emphasis on residential issues rather than commercial.

Delivery Options and

structures.

Main features of the

Green Deal

Green Deal – the carbon challenge

Source: Committee on Climate Change, 2011

Residential and Services

100m t Co2 to c0

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0

20

40

60

80

100

120

140

160

180

200

Q4

20

03

Q2

20

04

Q4

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04

Q2

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05

Q4

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Q2

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06

Q4

20

06

Q2

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07

Q4

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07

Q2

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08

Q4

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Q2

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09

Q4

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09

Q2

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10

Q4

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10

Q2

20

11

Q4

20

11

Ind

ex

20

05

=1

00

Fuel price indices in the domestic sector in real terms Q4 2003 to Q4 2011

Petrol and oil

Coal and smokeless fuels

Heating oils

Gas

Electricity

So – TWO good reasons why we need to do something – emissions reduction targets and steady rise in fuel prices.

Green Deal – the fuel price challenge

•Means of encouraging retrofit without ‘’up-front’ public funding

•Theoretically cross-tenure appeal – but practically?

•Energy savings balance cost of investment over time –

‘Golden Rule’

•Savings SHOULD increase as energy prices rise over time

•Supported by ECO grant for hard to treat or fuel poor

•Plurality of delivery intended – inc ECO via brokerage/market

•‘Impartial’ Advice and Occupancy Assessment

•Accreditation and certification of Providers, Assessors and

Installers

•Collection of ‘repayments’ via energy bills – low default

•Capital to be provided by market and GDFC (from GIB)

•Repayments can be stepped for measures of differing ‘lives’

•Repayments HAVE to be fixed interest rate but could be ‘low

start’

Green Deal – Main features

Basic Green Deal model

GDFC/Bank Borrowing

Energy Co collects

charge and pays GDP

or GDFC/bank

GD Installer(s)

GD Advisor

GD Provider

Green Deal customer

Marketing

Green Deal – The Golden Rule

£

Energy Costs Before Works

After Works – energy cost plus Green Deal repayment

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Green Deal – Funding Structure

Green Deal Finance – measures meet Golden Rule

Mix of Green Deal and ECO if

property or household qualifies

Energy Company

Obligation Finance –

hard to treat or fuel

poverty

• Accreditation and quality control

•Consents & dealing with flatted blocks

•Development of true ‘market’

•Warranties

•Access to ECO

•Non domestic stock

•Cost of funding via GDFC

•Availability of funding from

other sources

•State Aid - GDFC/LA money

•Attitude of CML, conveyancers

•The Golden Rule and occupancy assessment

•Ventilation where air tightness improved

• TIMESCALES – ‘Soft Launch’ - Plans not before end

Jan, payments end March

Green Deal – Issues

Green Deal – Key Guidance

See website refs at end of presentation

Free

£95 Free – new version due

soon Free – see 2 July version – still draft

• PUBLICLY AVAILABLE SPECIFICATION

•BSI documents, sponsored by DECC

•PAS 2030: Specifies requirements for installations

•C160 pages inc 27 annexes

•General reqs – eg Method

Statements, conformity.

•1 annex per measure

•Plus 1 on info collation

•Needs good info systems

•PAS 2031 – applies to

Certification bodies providing

conformity evaluation re

PAS2030, inc audit requirements

PAS 2030:2012; PAS 2031:2012

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Possible responses

from the ‘market’

Who can predict the

future? Probably only Walt

Disney........

•Market research by DECC

•Some owners occupiers interested but reluctant to pay for

assessment up front and concerned re impartiality of advice

and ‘Golden Rule’ working

•Private landlords – ‘better’ ones may be interested but

problem of disrepair for many in lower market.

•RSL pilots indicate some interest but lot of support needed on

the ‘journey’ (ref Affinity Sutton, Gentoo websites). Also much

of ‘basic’ work done so Golden Rule issues if not HTT.

•DECC research into terminology – ‘new sort of loan – to

property, not person’ and ‘golden rule’.

•Revised EPCs and Occupancy Assessments for clarity.

•What is appetite from supply chain?

•Will CML and conveyancers be positive or not?

Green Deal – is there a market?

Green Deal –

Delivery Options and

Structures

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PROS

•Proposed that GD Finance is ‘off balance sheet’ – good

•GDFC will lend – but on what terms and to whom?

•Collection by electricity supplier via meter is very low risk –

much lower than service charges etc

•Apart from notification, no admin at occupancy change.

CONS

•Admin requirements to become GD Provider and so

qualify for finance collection method. CCA accreditation?

•GDFC interest rate – c7%? State Aid Issues?

•Is return too long term for some likely players?

•Requirement to offer long term guarantees

on work and warranties.

Green Deal – Finance ‘Able to Pay’ model

Bank Borrowing

Energy Co collects

charge and pays GDP

GD Installer(s)

GD Advisor

GD Provider

Green Deal customer

Marketing

Part ‘Able to Pay’ model

• GD is essentially a ‘single property’ delivery model

•BUT challenge means we need to deliver at scale

•Aiming for ‘plural’ market and range of GD Provider

types

•LAs can choose ‘one or more’ GDP partners

•System IMPLIES minimum 3 providers per area

•MUST get fair access to ECO via brokerage

•SOME technologies will need area/street/cluster

approach

Green Deal – Options – Local leadership?

Collaborative

Delivery

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•Doing it all requires broad range of skills

• Investment needed and risk element of obtaining all

accreditations

•Work in the 2 or 3 areas you are good at

•Join with others who have complementary skills

•Try to build a Consortium with all the skills needed

•Formal JV or informal alliance?

•Or talk to larger regionals about sub-contracting

•Try to make sure they ‘Walk the Walk’ re supply chain

•Travis Perkins or Parity Projects models?

•Ask current clients what they want

•Ask your LAs what they are doing

•Keep coming to the Best Practice Club so you are up to date!

Working Together – WHY and HOW

Summary

•‘Do nothing’ is not an option – it’s going to happen

•Consultation has answered some questions but left others

•Needs more focus on customer engagement and behaviour

•Some good attempts to discourage worst practices

•Approach of CML and solicitors/valuers will be critical

•Cost/complexity of accreditation likely to deter smaller firms

from being ‘early starters’ until market develops.

•£200m ‘go early’ incentive – use to be decided.

•Route chosen will depend on position in market and

appetite/capacity for risk – long and short term.

•Opportunity to generate / protect turnover

•Delivering local training and jobs – eg via frameworks.

Green Deal – the challenge

• Model is complex but has promise

• BUT given that we can’t afford to offer grants for this work, and it has to

be done, its possibly the best solution possible for the whole market

• Lots of detail still to be delivered and weaknesses to be resolved

• Faith of market given delays and lack of detail.

• Potential GD providers and installers need to understand

requirements, risks and potential rewards.

• SMEs need to find way of collaborating

• In absence of major Gvt marketing, action by LAs with

local partners critical for success

Green Deal

Summary

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Green Deal

Summary CONTACTS

•DECC

http://www.decc.gov.uk/en/content/cms/tackling/green_deal/green_deal.aspx

•AGMA

http://manchesterismyplanet.com/shaping-a-low-carbon-economy

British Standards Institute www.bsigroup.co.uk

•Construction Products Association

www.constructionproducts.org.uk •Taylor Armitt Consulting www.taconsulting.org bill@taconsulting.org

Thank you- Any questions?

e:bill@taconsulting.org

07876 241943

www.taconsulting.org

All Slides © Taylor Armitt Consulting 2012