Jon Kimber, MD AgilityEco
BEIS’s recent consultation on the Energy Company Obligation (a programme to deliver energy efficiency measures in homes across Great Britain) from April 2017 to the end of March 2018 has prompted strong responses from all corners of the industry.
ECO is currently in its second obligation period (ECO2), which is due to end on 31 March 2017. The Government’s Spending Review 2015 announced plans for a supplier obligation to run for 5 years from April 2017 at an estimated level of £640 million per year. The consultation included an impact assessment which set out the assumed costs of delivering the programme and the target for the programme including the number of energy efficiency measures to be provided to householders based on these assumed costs. Overall we are very supportive of the approach BEIS has adopted, targeting most of the support on fuel poor families who need it most, and reducing the administrative complexity of the scheme.
We’ve been following the different reactions to the consultation over the past couple of weeks and it’s been interesting to see how various organisations have responded. As expected, different commentators have all highlighted challenges and issues linked to their own perspective and agendas. That makes the task of trying to take all the different views into account when finalising the policy an unenviable one for BEIS.
In the run up to the submission deadline, AgilityEco spent time with a number of BEIS officials and analysts, examining the methodologies and assumptions underlying the impact assessment. We took these unique insights and used them to shape our own response. In addition we were also privileged to support INCA with its response.
From our perspective, there are two issues that stand head and shoulders above the rest. They need BEIS’s urgent attention in the final policy:
- Firstly, the key assumptions used by BEIS in relation to the cost of delivering the energy efficiency measures proposed are highly questionable and have led BEIS to set an unnecessarily low scale of ambition for the overall ECO programme.
- Secondly, this has been compounded by the fact that BEIS has assumed that the cost of supporting solid wall insulation (SWI) is much higher than the reality and has set a shamefully low target for SWI measures.
As explained below, we believe that SWI is THE key measure that needs to be supported by the ECO programme. We have therefore urged government to set the SWI minimum target at the current industry run rate of 33,000 measures, ring-fenced for delivery within the transition period itself.
SWI - the key to combating fuel poverty
There are more than 8 million solid walled homes in Britain, a third of all of our housing. Nearly half of those in fuel poverty live in solid walled houses. Uninsulated solid wall properties are highly inefficient, typically leaking twice as much heat as cavity walls, resulting in extremely high fuel bills for their occupants. SWI therefore delivers huge benefits for those living in solid wall homes (average annual savings of £490 per annum compared to £140 for cavity wall insulation), benefits that have not been delivered at any scale under successive supplier obligations, despite these households contributing hugely to the cost of those schemes. Moreover, owners (particularly social landlords and private householders) have been willing to make significant contributions to the cost of SWI works, keeping the cost to all energy bill payers down.
SWI results in significant job creation, delivers huge benefits to the exchequer (multiplier effect), whilst providing significant social and housing regeneration benefits.
We welcome the proposal that ECO support is focused on those most in need, but unless there is a greater level of support for SWI through ECO, a huge section of those most in need of support will continue to be overlooked.