1 MAKING TOMORROW A BETTER PLACE · 3 MAKING TOMORROW A BETTER PLACE ... Ernst & Young UK solar PV industry outlook – June 2011; (3) ... Market Size 2011 2012 2013 2020

MAKING TOMORROW A BETTER PLACEMAKING TOMORROW A BETTER PLACEMAKING TOMORROW A BETTER PLACE1

MAKING TOMORROW A BETTER PLACE2


Group highlightsStrong first-half performance

• Underlying(1) earnings growing strongly

• Group operating margin increasing – expect improved margins in support services and construction services (excluding the Middle East)

• Good cash flow and strong balance sheet – expect net debt to be below £125m, following £298.4m acquisition of Carillion Energy Services (formerly Eaga plc)

• Order book expected to remain strong, plus record pipeline of contract opportunities

• Integration of Carillion Energy Services progressing well – expect synergy cost savings to increase from £9m p.a. to £15m p.a. by 2013, at one-off cost of £20m

• On track to make further progress in the full year, despite challenging market conditions

(1) Before intangible amortisation, non-recurring operating items and non-operating items


Financial reporting segments

Support services• Expect to increase first-half margin and

operating profit

• Integration of Carillion Energy Services ahead of expectations

• Expect full-year revenue growth with margin remaining strong

Public Private Partnership (PPP) projects• Directors’ valuation of financially closed

projects expected to increase

• Sold two further investments at 7% discount rate

• Good pipeline of opportunities to add new investments

Middle East construction services• Expect strong first-half revenue growth and

increased operating profit, with margins easing back in line with expectations

• Continue to target growth in full-year revenue and operating profit

Construction services (excluding the Middle East)

• Good progress with re-scaling UK construction

• Canada markets remain strong, notably PPP

• Expect to increase both first-half and full-year margin and operating profit, despite planned reduction in revenue due to re-scaling UK construction


Trading update Outlook

• Expect to build on strong first-half performance and deliver full-year earnings growth

• Ability to perform well despite challenging market conditions continues to reflect – strength and resilience of our well-balanced UK support services and

international business mix – good revenue visibility– record pipeline of contract opportunities

• Medium term growth objectives announced August 2010 unchanged – substantial organic growth in UK support services from 2012 onwards– double revenue in Middle East and in Canada over 3 to 5 years, in each case

to around £1bn

• Acquisition of Carillion Energy Services will immediately enhance short and medium-term prospects for growth


MAKING TOMORROW A BETTER PLACEMAKING TOMORROW A BETTER PLACE7

MAKING TOMORROW A BETTER PLACE

Acquisition of CES John McDonough, Group Chief Executive

The ‘Big Energy Picture’ Jonathon Porritt, Founder Director Forum for the Future

History of CES Paul Varley, Managing Director, CES

Key markets & drivers Paul Varley

UK Legislation Mitesh Dhanak, Strategy Director, CES

CES - three key energy efficiency marketsPrivate housing Paul VarleyCommercial and non-domestic property Dominic Shorrocks, Integration DirectorLocal Authority & Social Landlord housing Paul Varley

- Clean Energy Programme Chris Rigg, Renewables Director

Summary & conclusions John McDonough

Q&A

AgendaCarillion Energy Services (CES)

8


Acquisition of Carillion Energy Services (formerly EAGA)

Strong financial and strategic rationale• Acquisition completed 21 April 2011, valuing Eaga at £298.4m

(£180.7m cash, 30.6m new Carillion shares)

• Eaga now rebranded as Carillion Energy Services (CES)– CES financial results will be reported within the support services segment – proforma 2010 full-year combined support services revenue circa £2.7bn

• Enhanced Carillion’s position as a leading UK support services company– increased Carillion’s capabilities to provide integrated solutions

• Attractive cross-selling opportunities

• Scalable platform to grow the UK’s largest independent energy services company

• Over £600m of contract wins since acquisition announced

• Expect acquisition to deliver both immediate and medium-term earnings enhancement in addition to previously announced objectives for growth


Carillion Energy Services (CES)Strong capabilities focused on three growth markets

• CES thoroughly reviewed post acquisition, business plan established

• Outcome in line with expectations

• CES focused on three energy efficiency markets – private housing – commercial and non-domestic property – Local Authority & Social Landlord housing

• Total value of these markets – currently circa £15bn p.a.– forecast to increase by around 50% to £22bn by 2015

• CES is largest independent energy services provider with total market share of < 5%

• Significant opportunities to– grow with the market– grow market share

10




Carillion Energy ServicesA brief history

• A leading UK energy services company established in 1990

• Excellent operational management team and reputation for customer service

• Strong growth track record– leading provider of residential energy efficiency solutions, at forefront of

low carbon economy in the UK– one of the UK’s largest national suppliers of heating and renewable energy– managing end-to-end solutions for customers

• Core focus has been on the domestic housing market, working with central and local Government, their agencies, housing associations and with utility companies to

– lower carbon emissions– combat fuel poverty and improve living conditions– reduce energy consumption

• Specialist knowledge, skills and delivery capabilities

13


Carillion Energy Services Strong independent offering focused on three growth markets

• Going forward, CES is focused on three main energy services markets – private housing – commercial and non-domestic property – Local Authority & Social Landlord housing

• CES’s scale and independence from energy companies is important to customers

• Key market drivers – energy security/rising energy prices– UK Legislation to reduce carbon emissions– social trend towards energy conservation– the technology/products to reduce energy consumption

14


Energy services companiesCES is by far the largest UK independent energy services company

Utility Companies Independent Companies

15


0

2004 2006 2008 2010 2012 2014 2016 2018 2020

Energy security

(1) DECC Annual Energy Statement 2010

• The UK has become increasingly dependent on imports to meet its energy needs

• UK Government predicts import dependency will continue to rise from 27% in 2009 to 46 - 58% in 2020(1)

16

60

40

20

UK import dependency (%)

2002-20

European Commission

All fuels


Rising energy prices

(1) DECC, Annual Domestic Energy Bill Data

• Average electricity prices have increased by 65% over the last 10 years(1)

• Ofgem’s Project Discovery modelled four future energy use scenarios, which predict wholesale electricity price will more than double between 2009 - 2016

17

120

100

80

60

40

20

0

Wholesale electricity prices (£/MWh)

Dash for EnergySlow Growth

Green StimulusGreen Transition

2009 2011 2013 2015 2017 2019 2021 2023 2025

Ofgem: Project Discovery – four energy use scenarios


UK Legislation Challenging emissions reduction targets

UK Legislation designed to cut 2008 emissions by 2020(1) by

18

• 29% for residential buildings

• 13% for commercial

(1)UK Low Carbon Transition Plan 2009 (2)2050 Pathways Analysis Report

100Tonnes MtCO2 (m)(2)

80

60

40

20

0Residential Commercial

2008

2020 at current emission level2020 target level

16Tonnes CO2 (per property)(2)

12

8

4

0Residential Commercial

2008

2020 target level 13%cut

29%cut

23%cut

38%cut


(!)DECC: UK Emissions Statistics

32

Business9

29

Residential

30Transport

Other

UK Carbon emissions Carbon Dioxide emissions by end user(1) (%)

• CES targeting around 50% of the total end-user market– whole of Residential– over half of Business


• Increasing importance of sustainability agenda– to consumers: a recent CBI survey found 7 out of 10 people feel a sense of

responsibility to do something about climate change– to companies: in a 2010 CBI/ KPMG survey 65% of respondents recognised

the importance of a low carbon approach to their business– to wider community regeneration

• Ageing population – by 2034 the number of people aged 85 and over is projected to be

3.5million - 2.5 times larger than in 2009(1)

• Increasing demand for social housing

• Rising energy costs leading increasingly to fuel poverty– fuel poverty defined as spending >10% of household income on energy – the latest UK Government figures(2) showed 4.5m fuel poor households,

double the figure from 5 years ago

Social trends

20

(1) Office for National Statistics (2)DECC Annual Fuel Poverty Report 2010


Technology

• Global technological advances in energy efficiency -reliability, performance and cost

– price of solar panels has dropped 17%(1)

since Jan 2011– Ernst & Young report(2) forecast price of solar

panels will drop 50% over next 5 years

• Solar Photo Voltaic expected to achieve grid parity 2013-2016(3)

• Proven energy efficiency solutions – increasingly sophisticated technologies for

energy efficiency/micro-generation– established domestic energy efficiency

technologies

• Increasing visibility of energy use through Energy Monitors and Smart Meters

21

(1)Credit Suisse; (2) Ernst & Young UK solar PV industry outlook – June 2011; (3)Renewable Energy Association

Cost of solar power modules(US$ per watt of capacity)

6

4

2

01985 1990 1995 2000 2005 2010

Source: Financial Times


Changing shape of CES

Digital Metering

Domestic Renewables(Feed in Tariffs & Renewable Heat Initiative)

Green Deal

Energy Company Obligation

Digital Switchover

Private Heating & Insulation

Warm FrontCERT

Mar

ket S

ize

2011 202020132012

Commercial and Non-Domestic

22



UK Government Legislation• Legislative framework is very complicated

• Energy Security Bill – currently before Parliament– energy security - balancing supply and demand is a major issue – delivery of legally binding CO2 reduction commitments

• Government’s legally binding carbon reduction commitments are underpinned by legislation/programmes

– Green Deal – Energy Company Obligations (ECO) – Renewable Heat Initiative (RHI) – Feed in Tariffs (FITs)

• CES knowledge and capabilities are key strengths– to deliver services aligned with Government programmes – enable businesses to comply with legislation – deliver significant customer savings

24


UK Government Legislation Green Deal (GD) – private housing

• Expected £2bn p.a. requirement

• Loans to be attached to the property and pass from one occupier to the next

• The annual cost cannot exceed estimated savings in energy bills – ‘Golden Rule’

• Primary legislation currently before Parliament

• Secondary legislation will follow to enable Green Deal to apply from late 2012

• Green Deal is seen as an important driver of economic growth and jobs

Flagship Government Policy providing a new way for householders topay for energy efficiency measures via their utility bills

25


Energy Company Obligation (ECO) – up to £1.5bn p.a. from 2013• Main energy suppliers to fund energy efficiency measures for homes, especially fuel poverty • Replaces existing Carbon Emissions Reduction Target (CERT) and Community Energy

Saving Programme (CESP)

Feed in Tariffs (FITs) - £870m 2011- 2014• Energy company payments to households with renewable energy systems• Driver for Solar Photo Voltaic (PV)

Renewable Heat Initiative (RHI) - £860m 2011- 2014 • Government payments for heat generation through solar thermal or biomass Combined Heat

and Power systems (similar to FITs)• Applies to commercial-scale installations now, domestic programme from 2012

Carbon Reduction Commitment (CRC) - £1bn of tax revenue in 2011/2012 • Mandatory emissions trading scheme for large public and

private sector organisations

UK Government Legislation

26


Climate Change Levy (CCL) • Government sets carbon prices to drive investment in low carbon technology

EU Emission Trading Scheme (EUETS)• Organisations have allowable level of annual greenhouse gas emissions and permitted to

purchase/sell surplus allowances

Energy Performance Certificates (EPC)• Buildings with floor area over 50 m2 (other than dwellings) must have energy

assessment at point of construction, lease or sale and must meet standards

Display Energy Certificates (DEC)• All public buildings over 1,000m2 must have energy performance assessed, rated and if

necessary improved, with rating publicly displayed

Minimum legal energy standard for rented property• Rented homes and businesses must have at least “E”

energy efficiency rating – c700,000 properties to be upgraded by 2018


27



(1)www.amaresearch.co.uk

Private housing marketCurrent market £1.8bn p.a.(1) CES >10% market share

29

Insulation£500m (29%)

Solar PV £110m (6%)

Biomass/Combined Heat & Power £15m (1%)

Heat Pumps £59m (3%)

Heating £1bn (56%)

Solar Thermal (water heaters) £90m (5%)

22m private homes - generate 24% of UK Carbon emissions


Private HousingExpect market to more than double to over £4bn per annum by 2015(1)

(1)CES estimate based on current market size and DECC predictions

30

• UK Government– committed to carbon reduction– legislating to ensure delivery

• FITs, RHI, GD, ECO

Political

Technological• Proven energy efficiency solutions

• Delivery capability – people and skills - available

• Energy costs rising

• Investments in energy efficiency measures deliver attractive returns

Economic

• Fuel poverty increasing

• Consumers striving to become more sustainable

Social

£4bn+Market


Private HousingCES capabilities

Supply • Market-leading UK-wide supply chain for heating, renewable, and insulation

materials/products Revenue-based private sector funding • Created first privately financed Solar PV project • Will replicate for Green DealAudit & Install • Provide installation services to over 2,000 homes a day• National capabilities to install heating, insulation and renewable energy systems• Accredited in-house surveyors and engineers plus established network of sub-contractorsAftercare • Provide 24/7 servicing/emergency repairs to over 2,000 homes each day• National capability to manage/maintain

31


Private HousingIntegrated end-to-end market leading capability

• CES is the leading UK independent energy services company

• Integrated end-to-end offering geared to delivering Green Deal

• Proven UK-wide capability

• Strong customer base - marketing through ‘affinity’ partnerships

• 22m houses need to improve energy efficiency

• Energy improvements to a typical 1980s detached property, not including renewables, can deliver up to £663 p.a. saving(1) or 52% of typical bills

• Customers who install Solar PV can save on average up to 30% of annual bill(2)

32

(1) Energy Saving Trust; (2)CES Figures

Value Chain SupplySupply Marketing Marketing FundFund AftercareAftercareAudit &

Installation

Audit &

Installation


Private Housing Affinity partnerships - Homebase

• Homebase - part of Home Retail Group and the second largest DIY retailer in the UK

• Homebase and CES are forming a 3-year partnership

• Service to include– heating services– central heating systems– annual service visits

• Strategic aim of partnership– positioned to maximise sales opportunities from Green Deal

33


Private HousingAffinity partnerships

34


Private Housing Affinity partnerships - The AA

• The AA has recently entered the home emergency response market

• Advanced stage of agreeing a 3-year partnership

• Agreement covers– breakdown– annual service visits – boiler replacement

• Trial service provision already started

35


Private Housing Affinity partnerships - The AA

36


Private Housing Summary

• Current £1.8bn market is expected to grow to over £4bn by 2015

• CES has >10% share of current market

• Market-leading independent energy services company with – knowledge, experience and technical skills– proven UK-wide delivery capability, offering end-to-end solutions

• Geared to delivering Green Deal programmes and objectives

• Strong and growing customer base

• Affinity relationships established and significant potential to add more

• Potential to – grow with the market – increase market share

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Commercial & non-domestic energy services Current maintenance/retrofit market worth at least £3bn p.a.(1)

CES <1% market share

(1)Source: Internal CES estimates based on market data and 2050 Pathways Analysis report

39

Ventilation & Air-Conditioning£1bn

Lighting£500m

Building Fabric£500m

Controls£500m

Water Efficiency£100m

Space & Water Heating£400m

1.8m commercial buildings - generate 18% of UK Carbon emissions


Commercial & non-domestic energy services Expect market to at least double to £6bn by 2015(1)

(1)CES estimate based on market data

40

• Compliance with Regulations – Carbon Reduction – Carbon reporting– Buildings performance

• EUETS, CRC, CCL, EPCs, DECs

Political

• Rising energy costs

• Carbon taxation

• Returns on investment in energy efficiency

Economic

• Companies becoming more sustainable

• Important factor in recruitment

Social

£6bn+Market

Technological

• Increasingly sophisticated technologies for energy efficiency/micro-generation

• Availability of people/skills


Commercial & non-domestic energy services CES capabilities

Audit and solutions • On-site auditing (CES and Carillion Professional Services)• Growing capability in energy and water efficiency solutions• Building certifications (CES and Carillion Professional Services)Bureau, Monitoring & Targeting• Bill management – retrospective and ongoing validation• Sub-meter installations• Consumption monitoring and reportingImprovement projects • Growing capability in project deliveryAftercare/operation and maintenance• Customer support and warranty maintenance• Operate and maintain energy efficient equipmentEnergy performance contracts • Guaranteed savings over a contract term

41


Commercial & non-domestic energy servicesIntegrated end-to-end market capability

• Broad, integrated energy services offering

• Well positioned for growth with large established customer base for cross-selling

• Strong demand from existing customers

• Target customer savings of up to 30%

42

Value Chain Audit &

solution

Audit &

solution

Bureau,

monitoring &

targeting

Bureau,

monitoring &

targeting

Improvement

projects

Improvement

projects

Aftercare,

operation &

maintenance

Aftercare,

operation &

maintenanceEPCEPCPerformance

Energy

Contracts


Carillion’s support services offeringEnhanced capability to meet complex customer needs

Scope

Com

plex

ity

0%

22%

34%

26%

18%

Trans-formation

e.g. Cleaning, security, catering

Two or more single services

Bundled services plus strategic management of property and services

TFM plus management of corporate real estate

Operational outsourcing plus business transformation

Mechanical & electrical engineering maintenance (plus Energy Services from 2011)

SingleService

IntegratedServices

BundledServices

TotalFacilities

Management(TFM)

TechnicalServices

18%

% of 2010

Full-year revenue


Commercial & non-domestic energy servicesMajor cross-selling opportunities

• Existing customers investing in measures to reduce energy costs and carbon footprint

• Carillion provides support services for– over 100,000 buildings – over 17,000 km of roads– rail and other infrastructure

• Existing customers include – BT Monteray circa 8,000 properties– Nationwide Building Society, over 800 high street branches and corporate offices– Ministry of Defence

- over 40,000 military homes- 6,700 buildings for Regional Prime Central- 2,000 buildings for Allenby Connaught

– 15 Public Private Partnership acute UK hospitals and healthcare facilities– 6 Public Private Partnership hospitals in Canada

44


Commercial & non-domestic energy servicesNationwide Building Society

• Energy services capability was an important factor in recent Nationwide Building Society contract win

• 3-year Facilities Management services contract for over 800 buildings including corporate head offices, data centres and retail branches across the UK

• Contract focused on managing and reducing direct environmental impacts in particular reducing carbon footprint and delivering real long-term energy efficiency savings

• Energy and Water Performance Contract in place to deliver Guaranteed Energy Savings over the 3-year period

• Investment in Energy Saving Projects including heating, air conditioning, lighting and ventilation, Solar PV installation and Behavioural Change to achieve energy reduction

45


Commercial & non-domestic energy services Carillion customer opportunities

• National Health Service

• Ministry of Defence

• BT

46


Commercial & non-domestic energy servicesInternational opportunities

• Canada – Feed in Tariff programme in Ontario offers commercial-scale solar PV

opportunities– increasing demand for energy services from commercial FM clients– growing political and social pressure for reducing carbon emissions

• Middle East – demand for energy and water services as part of FM contracts– rising electricity and water prices in UAE– greater drive for sustainability

47


Commercial & non-domestic energy servicesSummary

• Current maintenance and retrofit market worth in excess of £3bn p.a.

• CES has <1% share of current market

• Expect market to at least double to £6bn by 2015

• Carillion has large established customer base of blue-chip commercial and public sector customers offers major cross-selling opportunities

• Strong UK-wide, integrated delivery capability – CES capabilities combined with those of other Carillion businesses– knowledge, experience and technical skills – offering end-to-end solutions

• Strong demand from existing customers

• Well-positioned for growth

48



Local Authority & Social Landlord housing£10bn p.a. total current capital & maintenance market(1)

£2bn p.a. relates to energy services(2) - CES >7% share

• Potential for market to grow to at least £12bn p.a. by 2015 and to £15bn p.a. by 2020, due to carbon reduction programme

• Public sector budget cuts create opportunities for private finance

• Affordable rent issue impacting

• Carillion’s integrated energy-led offering gives access to non-energy market sectors

• 5m social housing properties responsible for 6%(3) of UK carbon emissions

50

(1) Internal CES Estimates based on market data, (2 ) Internal CES Estimates based on market data(3) CES calculation based on DECC data (4) Internal CES breakdown based on market data

Planned Maintenance

Energy RelatedCompliance

Reactive Maintenance

Estates Management

£10bn(4) p.a.


Local Authority & Social Landlord housing Potential for market to grow to at least £15bn p.a. by 2020(1)

51

(1) CES estimates based on current market plus ECO spend and stock upgrades

• Housing standards/carbon reduction targets

• Deficit reduction impacts

• RHI, FIT, GD, ECO

Political

Technological

• Rising energy prices

• Pressure to cut spending

• Affordable rents

Economic

• Increasing demand for social housing

• Ageing population

• Community regeneration

Social

£15bn+Market

• Established domestic energy efficiency technologies

• Skilled installation staff


Local Authority & Social Landlord housingCES key capabilities

Statutory compliance

• Compliance testing for social landlords

Repairs and maintenance

• A responsive repair and maintenance service

Regional asset upgrade and management

• Capability to upgrade assets of Local Authorities/Social Landlords, bringing in 3rd party investment

Strategic asset management

• Create strategic energy/asset management plans for Local Authorities/Social Landlords

52


Local Authority & Social Landlord housingBroad, integrated energy-led offering

• UK-wide, integrated energy-led offering

• 5m houses that need to improve energy efficiency

• Established customer base with strong relationships

• Well positioned to use energy-led offering to increase share of total market

• Capability to deliver major savings e.g. up to £658 p.a. or 46% for a typical 1950’s semi(1)

• Savings can include on average £225 p.a. for upgrading a G rated boiler; £110 p.a. for installing cavity wall insulation; and £145 p.a. for installing loft insulation(1)

53

(1) Energy Saving Trust

Value ChainStrategic asset

management

Strategic asset

management

Regional asset

upgrade and

management

Regional asset

upgrade and

management

Responsive

repairs &

maintenance

Responsive

repairs &

maintenance

Statutory

compliance

Statutory

compliance



Privately financed solar PV project

• First ever privately financed Solar PV project• Carillion’s expertise was key to achieving financial close• Three revenue and profit streams• Expect to roll out further privately financed Solar PV projects

Social Landlords(CES has signed agreements

with social landlords to install PV)

Debt £225m• HSBC• Lloyds• NAB• RBS• Santander

Equity £75m• CES (20%) • HSBC Environmental

Infrastructure Fund (40%)• Barclays Infrastructure Funds

Management Ltd (40%)

InstallationCES revenue £200m+

Operation & Maintenance CES revenue £50m+

Revenue- based private finance

vehicle

Energy Companies(pay feed-in tariffs)

55


Local Authority & Social Landlord housingPrivately Financed Solar PV project

• Involves over 30,000 PV installations

• £300 million of private finance – up to £15m of Carillion equity– achieves Carillion investment hurdle rate

• Generates for CES– £200m+ of installation revenue– £50m+ of operation and maintenance

revenue

• FITs fixed for 25 years and index linked

• Free of charge to Local Authorities/Social Landlords

• Free electricity for tenants

56

• Collects the Feed-In Tariff

Social Landlord

PV beneficialowner

Tenant

Free electricity

CES install and manage PV systems

• Nil cost of installation

• Help towards carbon and fuel poverty targets

• Benefits those most in need


Local Authority & Social Landlord housing Clean Energy Programme

Further opportunities

• Solar PV – Government target is to install Solar PV on 750,000 houses– potential to create more privately financed Solar PV projects

• Project finance model can be replicated for other renewable energy systems e.g. – air source heat pumps– ground source heat pumps– solar thermal

• Green Deal – establishes the economics for investing in energy efficiency measures and

unlocks private investment

57


Local Authority & Social Landlord housing Welwyn Hatfield Community Housing Trust

• CES has heating servicing and maintenance contract for the Welwyn and Hatfield property portfolio of some 10,000 properties

• 10-year partnering contract expiring March 2014

• Complete circa 500 heating installations p.a.

• Relationship recently expanded to include installation of Solar PV systems under Clean Energy Programme

• Approximately 500 PV systems have been installed to date

58


Local Authority & Social Landlord housingClean Energy Programme

Privately Financed Solar PVfor Southern Housing Group

59



Local Authority & Social Landlord housingSummary

• Total market £10bn p.a. of which £2bn relates to energy services

• Expect market to grow to at least £15bn by 2020 due to carbon reduction programme/energy services

• UK-wide, integrated energy-led offering

• Established customer base with strong relationships

• First privately financed Solar PV project

• Potential for further privately financed Solar PV or other renewable energy projects e.g. ground/air source heat pumps

• Well-positioned to – grow energy services revenue – use energy-led offering to increase share of total market

61



Carillion Energy Services Summary

• Integration progressing well with cost synergies increased from £9m to £15m by 2013, at one off cost of £20m

• CES focused on three key energy efficiency markets – private housing– commercial and non-domestic property– Local Authority & Social Landlord housing

• Strong growth drivers in each key market

• Well-positioned in each key market – only independent company with integrated end-to-end capabilities– strong customer base

• CES will deliver immediate and medium-term earnings enhancement, in addition to Carillion’s previously announced objectives for growth

63




UK Government Legislation Energy Company Obligation (ECO)

• Requirement on main energy suppliers to fund heating systems and energy efficiency works in homes to reduce emissions and fuel poverty

• Replaces existing Carbon Emissions Reduction Target (CERT) and Community Energy Saving Programme (CESP)

• Expected to fund works worth up to £1.5bn per annum from 2013

Feed in Tariffs (FITs)

• Energy Company payments to households with renewable energy systems

• Expected payments of £867m, 46p per KwH (inc export tariff)

• Driver for solar PV with tariffs focused on smaller (sub 50kWp) systems

• Index linked for 25 years

Renewable Heat Initiative (RHI)

• Similar to FITs but paid for heat generation through solar thermal or biomass Combined Heat and Power systems

• Total RHI payments from Government in CSR period are £860m

• Applies to commercial-scale installations with domestic programme from 2012

66


UK Government LegislationCarbon Reduction Commitment (CRC) – Energy Efficiency Scheme

• A mandatory emissions trading scheme aimed at large public sector and commercial organisationsin medium to low energy intensive sectors.

• Applies to all organisations with an annual electricity consumption exceeding 6,000MWh (equivalent to £500,000)

• Started in April 2010 - following budget changes this will raise £1bn in 2011/12

Climate Change Levy (CCL)

• Used by Government to set carbon prices and drive investment in low carbon technology

• Two elements, each of which is calculated on basis of carbon intensity of fuel used– levy paid by non-domestic users on energy used (in addition to CRC) excluding electricity

generators– a new separate carbon price support rate to be levied on electricity generators

• Budget set out intention to raise the current carbon price floor from current £16/tCO2 to £30/tCO2in 2020

67



EU Emission Trading Scheme (EUTS)

• Large emitters are allocated a set amount of greenhouse gas emissions allowances on an annual basis

• Emitters are then permitted to purchase or sell surplus allowances

Energy Performance Certificates (EPC)

• An assessment of the energy performance of the building as an asset, based on a defined usage pattern

• Required under the Energy Performance of Buildings Directive (EPBD) for all buildings with a floor area of 50 m2, other than dwellings, at the point of construction, lease or sale.

• Accompanied by a Recommendation Report, including recommendations for energy efficiency improvements

• Evaluation must be undertaken by an accredited energy assessor

Display Energy Certificates (DEC)

• An operational energy performance rating, based on actual energy usage, required under the EPBD for all public buildings over 1,000 m2 - responsibility lies with owner of the building

• Accompanied by an Advisory Report, which includes recommendations for energy efficiency improvements

• Evaluation must be undertaken by an accredited energy assessor

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Documents

1 MAKING TOMORROW A BETTER PLACE · 3 MAKING TOMORROW A BETTER PLACE ... Ernst & Young UK solar PV industry outlook – June 2011; (3) ... Market Size 2011 2012 2013 2020