Andrew DavidDirector

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Who are we? Energy Company Obligation - ECO Green Deal Green Deal Cash-Back NEST Arbed Renewable Heat Premium Payment

Who Are We?Who Are We?An independent charity established in 1995Aims are to combat climate change and fuel povertyBased in Newport, but strong links with MonmouthshireLast year we spent £3.5M treating 1,543 homesReduced carbon emissions by 79,733 tonnesReduced energy bills by £287,000 a year, or £7M over

the lifetime of the measures.

Energy Company Obligation - ECO Energy Company Obligation - ECO £1.3bn a year to March 2015 across three Obligations

Carbon Emission Reduction Obligation – CERO – Not fully funded Anyone, anywhere, but restricted to solid wall and Hard to Treat cavity

wall insulation, plus some other secondary insulation. Likely to top-up Green Deal Finance to meet “Golden Rule” Better funding for Off-Gas properties.

Carbon Saving Community Obligation – CSCO – Not fully funded Anyone in the most deprived 15% of LSOAs, plus target for small rural

settlementsHome Heating Cost Reduction Obligation – HHCRO – Fully funded

Restricted to low income households on eligible income based benefits Includes all insulation plus new boilers or repairs and all renewables

(but unlikely due to cost effectiveness)

ECO – The DangersECO – The DangersTo manage it’s far more complex than previous CERT and CESP

schemesOfgem have introduced very tight claim requirements with

regard to:Promotion of the schemeRecommended measures – GDA or CSRInstaller competence – PAS2030Guarantees providedCarbon scores – EPR/RdSAPTiming of reporting

This rules out retrospective claims and exposes scheme managers to significant risk

Affordable Warmth EligibilityAffordable Warmth EligibilityPension CreditChild Tax Credit (and your income is £15,860 or less)Working Tax Credit (and your income is £15,860 or less) - plus one of the

extra conditions below Income Support - plus one of the extra conditions below income-based Jobseeker’s Allowance - plus one of the extra conditions below income-related Employment and Support Allowance – plus the support or

work related element, or one of the extra conditions below Extra conditions you’re responsible for a child under 16 (or under 20 if they’re in education or training) you get Disabled Child Premium you get Disability Premium you get Pensioner Premium you’re 60 or over (only if you get Working Tax Credit)

Green Deal and ECO Working TogetherGreen Deal and ECO Working TogetherInteraction between Green Deal Finance and ECO Subsidy“Golden Rule” Savings must be less that Repayments

Green Deal Finance

Measure fully meeting the “Golden Rule”

Full ECO Funding

Measures requiring subsidy to meet “Golden Rule”

ECO Subsidy

Measures providing Affordable Warmth for the vulnerable

Green Deal Green Deal Government’s flagship scheme to improve

26m homes by 2030.It’s not a grant, but a loan at commercial rates of interest Delivered by Green Deal Providers (the middle men who will

add their mark-up to the cost) Energy saving measures installed with no up front costs if

they meet the Golden Rule. Golden Rule states that the savings (theoretical, not actual)

are equal or greater than the repayments Costs paid back with interest @ 7% through electricity bill The loan stays with the propertyIf property is sold the new bill payer must take over the loanLoans can take up to 25 years to repay.

Green Deal MeasuresGreen Deal MeasuresThere are 45 measures or areas of home improvement

approved to receive funding under the Green Deal covering:insulationheating and hot waterglazing microgeneration (generating your own energy).For the non-domestic sector lighting, mechanical ventilation

and heat recovery measures can also be covered. More may be added as technology develops.

Green Deal MeasuresGreen Deal Measures Heating Controls Condensing Boilers Under-floor Heating Heat Recovery Systems Mechanical Ventilation (non-

domestic) Flue-gas Recovery Devices Loft Insulation Cavity Wall Insulation Flat Roof Insulation External Wall Insulation Internal Wall Insulation Draught Proofing

• Floor Insulation

• Heating System Insulation (cylinder, pipes)

• Energy Efficient Glazing and Doors

• Lighting Fittings

• Lighting Controls

• Innovative Hot Water Systems

• Water Efficient Taps and Showers

• Ground and Air Source Heat Pumps

• Solar Thermal

• Solar PV

• Biomass Boilers

• Micro CHP

Green Deal Cash BackGreen Deal Cash Back

Qualifying Energy Saving Measure (most common) Cash-back

Loft insulation £100

Cavity wall insulation £250

Solid wall insulation £650

Condensing oil boiler (from non-condensing) £310

Condensing gas boiler (from non condensing) £270

New or replacement storage heaters £150

Double glazing from single to A rated £20/m2 (up to £320)

• To secure the cash-back you must go through a Green Deal Provider and have a Green Deal Assessment.

• The assessment will typically cost between £99 and £150• The Green Deal Provider will add their mark-up to the install cost• May be cheaper to go straight to a good contractor and forgo the cash-back

• Government funded initiative to Kick-Start Green Deal

Green Deal Example 1Green Deal Example 1Installing External Wall Insulation in a 3 bed gas

heated semi-detached house

Green Deal

Installed cost (loan amount) £8,000

Interest rate 8%

Repayment time (years) – maximum allowed 25

Repayment added to electricity bill/ month £62

Total amount repaid £18,600

Amount of interest paid £10,600

Estimated saving on gas bill / month £25

Net saving / month -£37

Eligible for Green Deal? NO

Green Deal Example 2Green Deal Example 2 Installing a new Gas Boiler, Heating Controls and Cavity

Wall Insulation in a semi-detached bungalow

Green Deal

Installed cost – DECC’s figures £5,000 *

Interest rate 7.9%

Repayment time 12

Estimated Saving (Not guaranteed) £778

Repayment added to electricity bill per year £660

Customer can be better off each year by £118

Customer gets cash-back of £520, so Y1 saving = £638

Nice in Y1, but try and sell a property with £660 surcharge on the annual energy bill for 12 years.

* We can do it for just £2,500 outside Green Deal, so that does government out of £400 VAT and the £2,100 for the Green Deal Provider.

Green Deal PitfallsGreen Deal PitfallsQuestion - Can customers that take out a Green Deal Plan still switch energy supplier?Answer – Yes, providing that the new supplier is participating in the Green Deal payment collection mechanism. That could rule out switching to a smaller, but cheaper supplier.Question - Are there guarantees that savings will be achieved and the Golden Rule will be met?Answer - No, so Fuel Poor could even poorer; little saved and a large loan to repay. Question – Does Green Deal offer good value for money?Answer – Probably not, just do the sums.

Green Deal Disaster So FarGreen Deal Disaster So Far4 Green Deal Plans signed since JanuaryOnly 25,999,996 plans to go!Cavity wall insulation market has crashed

April 2012 – 40,000 installsApril 2013 – 1,000 installs

5,000 jobs gone, not 24,000 createdEd Davey predicted that by 2015, more than 1m separate

pieces of home improvement would be installed under the Green Deal. Somewhat ambitious!

Why the failure?Why the failure?The principle is good, but the execution is badIt’s too bureaucratic; there are 10 or more organisations

involved in each dealIt’s too expensive; as all of the organisations between installer

and householder must add their mark-upSavings are not guaranteed; so risk is with householderFinance @ 7% + £63 set-up fee + £20/year admin chargeIt’s too troublesome; as householder needs to get all

consents; planning, building control, party wall, etc.The only people making money are the unscrupulous traders

selling surveys to the vulnerable for the “Government Scheme”. They promise everything, but deliver nothing.

The Green Deal Process

NESTNEST

Nest is the Welsh Government’s fuel poverty schemeThe energy efficiency of the property is upgraded at no

cost to the occupierA whole house assessment is available to people who are

in receipt of a means tested benefit and living in the hardest-to-heat homes, being F or G rated

Measures are predominantly heating with some standard insulation and EWI

Available to owner-occupiers and tenants in privately rented homes.

NEST – Qualifying BenefitsNEST – Qualifying BenefitsBenefits are Income Based

Child Tax Credit: where the household money coming in is below £15,910 a year

Council Tax Reduction Scheme (reductions and discounts do not qualify on their own)

Housing benefit Income-based jobseeker’s allowance Income-related employment and support allowance Income support Pension Credit - savings and guarantee Universal Credit Working Tax Credit: where the household money coming in is below £15,910 a

year

Arbed 2 – “To Save”Arbed 2 – “To Save”• Welsh Government’s strategic energy performance

investment programme• £45m of funding from the European Regional

Development Fund (ERDF) and Welsh Government• It’s area based and only local authorities can apply• Will provide energy saving improvements to 4,790

homes (minimum 50% privately owned) at no cost• Concentrate on the most deprived areas of Wales• Reduce greenhouse gas emissions • Reduce the impact of fuel poverty • To create jobs for Welsh residents and economic

opportunities for Welsh businesses.

Renewable Heat Incentive & PremiumRenewable Heat Incentive & PremiumTo encourage the take-up of renewable heating systems in the

domestic sectorAvailable for all tenures, but not new-build (except self-build) Good for oil and LPG replacement in rural areasRHPP available now, RHI proposed for Spring 2014.

Air Source Heat Pump

Ground Source Heat Pump

Biomass Solar Thermal

Renewable Heat Premium Payment

£1,300 £2,300 £2,000 £600

Renewable Heat Incentive (P/kWh)

7.3p 18.8p 12.2p 19.2p

Confused ?Confused ?Just get in touch with us

Tel: 01633 223111Email: advice @sewenergy.org.uk

Visit: Clarence House, Clarence Place, Newport, NP19 7AA

Open weekdays 9am – 5pmAdvice is free and impartial