Utility Week

UTILITY Week 19th June USE

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

Issue link: https://fhpublishing.uberflip.com/i/529950

Contents of this Issue


Page 27 of 31

28 | 19TH - 25TH JUNE 2015 | UTILITY WEEK Customers Analysis I n the wake of the general election, calls have been made for a review of the gov- ernment's flagship energy efficiency scheme, the Green Deal, saying it requires a "radical overhaul" to meet its objectives. In addition, the fuel poverty scheme, the Energy Company Obligation (Eco), faces an uncertain future and a worrying funding gap on the horizon. And with the new ministers yet to declare the future of either of these schemes, industry concerns that energy effi- ciency has lost its way are mounting. The time is ripe for a fresh approach. At the launch of the Green Deal in 2013, then climate change minister Greg Barker proclaimed that if the scheme did not have 10,000 plans by the end of the year, "he would have many sleepless nights". So 2014 was no doubt a year of little sleep for Barker. Two and a half years later, completed meas- ures at the end of April 2015 totalled only 7,817. At the same time, the future of Eco is assured only until 2017, but with energy sup- pliers on track for completion by the first quarter of 2016, the scheme has in effect less than 12 months le to run. There are many reasons touted for the failure of the Green Deal. The National Insulation Association's chief executive, Neil Marshall, believes it is "fundamentally flawed" and would be pleased to see a fresh approach. Mike Foster, chief executive of the Energy and Utilities Alliance, told Util- ity Week that the scheme is bureaucratic. In particular, he said "red tape" surrounding accreditation for installers – something he thinks is unnecessary – and highly uninvit- ing interest rates, should be addressed. Marshall believes there is "a role for an attractive pay-as-you-save scheme – which is essentially what the Green Deal is – to help create a market for energy efficiency meas- ures rather than just relying on subsidies", but currently the golden payback rule is "restrictive". Removing bureaucracy is necessary in a review of both schemes, with Marshall summing up Eco's flaws as: "complicated, bureaucratic, unnecessary, costly and a lack of continuity", not helped by government moving the goal posts, which brought about the predicted funding gap. A simpler, more consistent approach is required, he says. Such approaches would inevitably only tinker with a fairly unchanged format, but there are some who would like to see more revolutionary changes. Citizens Advice has called for fuel poverty schemes, such as Eco, to be taken away from energy suppliers and given to local authori- ties to deliver. Suppliers have been criticised for their role in the failure of the schemes, mainly by Barker, who told The Independent that the big six had not "seized the oppor- tunity" provided by the Green Deal by not "providing a comprehensive package" as he had expected them to. Citizens Advice's main reason for sup- porting council governance is that councils are better placed to identify local need – and Foster agrees. He says there is "some merit in having local councils deliver fuel poverty strategies; they are quite a trusted partner" and that "the identification of individuals is the key to the success". However, Foster points out that this identification would need to be funded above the levy applied to energy bills for the work itself. Foster's other concerns include wasted resources arising from the lack of a targeted approach, and that councils would aim to partner with big efficiency suppliers and ignore the smaller, oen local, providers. Marshall believes it should not be an "either or" situation, and that reliance on one mechanism is too restrictive. He fears this approach too would result in something "very bureaucratic and time consuming". Another idea focuses on the one real suc- cess of the Green Deal: the number of assess- ments. As of April 2015, more than half a million assessments had been carried out under the Green Deal scheme, but only some 12,000 actual projects are in progress or have been completed. Labour peer Lord Whitty says that once an assessment is completed, many people choose to use other methods to fund the identified measures needed rather than use the scheme's loan system, perhaps because they are deterred by the high inter- est rate. Whitty suggests that the high assessment rate should be capitalised on by combining an assessment with the smart meter rollout, which he believes would bring about a "step change" in energy efficiency in Britain. His reasoning makes sense. "The Green Deal hasn't worked, there has been a cutback on the energy effi- ciency improvements that come under Eco – although the government will deny that – and we don't know what's going to happen beyond 2017," says Whitty. "But we do know that we are going to have a smart meter pro- gramme rolling for at least another five years and that will mean access to every single house in the country." Whitty says the assessment figures sup- port his calls: "Once [the improvements] have been pointed out, [people] are prepared to find ways of meeting it. Whether people take it forward from there or not will to some extent be up to them, but at least [the assess- ments] will all have been done." If the assessments were made the respon- sibility of the distribution network operators, the approach could also achieve economies of scale. It would also provide an element of consistency because the rollout itself is due to last at least three and a half years. Marshall hopes that whichever approach the government takes, it is a collaborative one. "What should happen is government works with industry, consumer groups and local authorities to agree the most effective delivery models," he says, "rather than the government saying 'this is what we are going to do, now you go away and deliver it'." What is clear from all sides, however, is that the future of energy efficiency remains unclear, and calls for a different approach are becoming more difficult to ignore. Get efficiency back on track Disappointing take-up of the government's energy efficiency schemes and doubts about their future are leading to calls for a new approach to energy efficiency. Lucinda Dann reports. "What should happen is government works with industry, consumer groups and local authorities to agree the most effective delivery models"

Articles in this issue

Archives of this issue

view archives of Utility Week - UTILITY Week 19th June USE