Utility Week

UTILITY WEEK | 13TH - 19TH APRIL 2018 | 11 Policy & Regulation Analysis A bout 450 years – that's how long it would take to make the UK's solid- walled homes fully energy efficient if we have to rely on the current rate of Eco scheme delivery to do the job. A consultation paper outlining the gov- ernment's latest proposals for the supplier- funded energy efficiency mechanism, which was published over the Easter weekend by BEIS (the Department for Business, Energy and Industrial Strategy), sets the target for insulating solid-walled homes at 17,000 homes a year. That is down on the 21,000 a year current target for the programme. With the paper itself estimating that less than 10 per cent of the nation's 8.5 million solid-walled homes have been insulated, it is clear that Eco alone can only be expected to make a dent in the problem. Richard Lowes, researcher in the Univer- sity of Exeter's Energy Policy Group, put the situation into perspective by speculating on Twitter that the 17,000 figure was missing a zero. "Doing 17,000 homes a year is minis- cule in terms of the scale of the challenge," he says. Dr Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit agrees: "It's a cut from a tiny number to an even tinier number." The overall programme has been scaled back from £1.3 billion a year when it was first set up under the coalition government to £640 million in a bid to cut the impact of green policies on household energy bills. The major change to the scheme outlined in the paper is to fulfil the government's commitment in 2015 to wholly focus it on tackling fuel poverty. The Carbon Emissions Reductions Obli- gation (Cero) element of the scheme, which could be accessed by households on all incomes, has been dropped. At the same time, eligibility on low income grounds for Eco measures has been widened from 4.7 million households to 6.5 million by incor- porating child benefit and disability benefits into the eligibility criteria. Suppliers will be able to meet up to 25 per cent of their Eco obligations via measures to households identified as fuel poor but not on benefits by councils using their on-the- ground knowledge of local communities. There is leeway for carrying out upgrades of several homes at once, which is oen viewed as a more cost-effective way to install energy efficiency measures, but only where a mini- mum proportion of households would qual- ify on low income grounds. The paper also proposes increasing the proportion of obligations that should be delivered in rural areas to 15 per cent. Marshall worries that the scrapping of the Cero element skews the scheme's focus away from a broader decarbonisation agenda. While cutting the heat that radiates out through walls is a highly effective way of sav- ing energy, few households can be expected to pay the estimated £8-10,000 cost of carry- ing out such work themselves. "It's low down on home owners' list of things to do: hard-to-treat homes will need looking at a lot more," says Marshall. He also expresses concern that moves in the scheme to allow the replacement of ageing or defective electric storage heater systems with central heating could be poten- tially short-sighted. "BEIS knows it can't depend on gas heating forever. It doesn't fit with the carbon budgets. To insist on new gas systems when it could be looking at other ways of doing it could be a sign of potential lack of ambition. "To move away from dependence on gas heating rather than further locking it in would have been a good thing." Kelly Greer, research director at the Asso- ciation for the Conservation of Energy, says the focus on fuel poverty is "brilliant" but shares Marshall's concern about how the rest of the building stock will be brought up to scratch. Nigel Dewbery, director of obligation delivery at Eon, suggests Eco could be better resourced if the government lied exemp- tions from the scheme on smaller suppliers. "Removing these exemptions would mean a bigger pot with which to fund Eco and allow suppliers to help yet more vul- nerable people," he says, pointing to Ofgem Is Eco changing for the better? Proposed changes to Eco fulfil the government's promise to focus on fuel poverty, but at the cost of virtually abandoning some carbon reduction initiatives. David Blackman reports. figures showing that more than two million customers are with exempt suppliers. "(They) are not currently contributing to Eco, while everyone else picks up the shared cost through their energy bills. Most of these smaller suppliers do not offer Warm Home Discount (WHD) either, which means those customers couldn't access the scheme even if they were eligible," he says With the introduction of new rules allow- ing companies to data match customers eligi- bility on WHD, the government has removed much of the major cost and administrative burdens that the exemptions were designed to address in the first place. "The industry is well placed to extend its scope and ambition. Any potential impact on the market will be vastly outweighed by the benefits to millions of customers who may otherwise miss out on the help available," concludes Dewbery. However extending the scope of Eco is unlikely to meet the scale of the challenge. According to research carried out by Frontier Economics last year, spending on energy effi- ciency measures should be doubled to meet fuel poverty reduction targets. While the devolved administrations of the UK operate public-funded energy efficiency schemes alongside Eco, the supplier-funded scheme is now the only source of support for domestic upgrades in England. Ed Matthew, associate director at consul- tancy E3G, says energy efficiency should be recognised as an infrastructure priority, as it is in Scotland. He says: "This can deliver a long-term, ambitious programme, backed by public infrastructure funds to supplement Eco investment. It could achieve economic returns comparable to any other infrastruc- ture investment while slashing home energy bills by a quarter." The absence of central government invest- ment contrasts steeply with what is happen- ing with other GB countries. One fuel poverty expert told Utility Week: "It's good they have done what they commit- ted in 2015 to better target fuel poverty, but in isolation it not going to be enough. There's lot to do and limited resource to do it."

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