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Taylor armitt gd opportunities ho
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11/07/2012
1
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
11/07/2012
2
0
20
40
60
80
100
120
140
160
180
200
Q4
20
03
Q2
20
04
Q4
20
04
Q2
20
05
Q4
20
05
Q2
20
06
Q4
20
06
Q2
20
07
Q4
20
07
Q2
20
08
Q4
20
08
Q2
20
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Q4
20
09
Q2
20
10
Q4
20
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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4
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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5
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
11/07/2012
6
•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
11/07/2012
7
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 [email protected]
Thank you- Any questions?
07876 241943
www.taconsulting.org
All Slides © Taylor Armitt Consulting 2012