The energy saving co-operative

Green Deal+ Briefing

20 November 2012

Co-operating to save energy

2012, UN International Year of Co-operatives, is also the year thatthe Government’s flagship energy efficiency policy, the Green Deal has been launched

Our homes and other buildings are responsible for nearly 50% of our final energy demand and carbon emissions. Unlike some other sources of carbon emissions, the energy demand from buildings can be reduced to net zero – through energy efficiency and replacement with local renewable supply – by deploying existing technologies…

… And while ‘Powering Up’ replacement with renewable supply is critical, ‘Powering Down’ reduction of demand has to play an equal part, for us to stand any chance of hitting the UK Government’s statutory commitment to reducing carbon emissions by at least 80% by 2050. ‘Powering down’ is also financially more attractive, as it is usually much cheaper to save energy than build new generation capacity

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Barriers – Single family homes

Retrofitting older, single-family houses is the biggest challenge in Europe

The lack of an adequate ‘offer’ is especially important for individual homeowners

There are two key barriers to transforming what is currently a refurbishment market into an energy-efficiency market:

People do not know where to find relevant information on options, prices and suppliers; there are no ‘one-stop shops’ for retrofitting

Homeowners base decisions largely on first cost rather than overall financial returns

3Source: Transforming the Market: Energy Efficiency in Buildings, WBCSD, April 2009..

The Green Deal

The UK Government’s flagship energy saving scheme

A significant step forward in green building standards, via accreditation for: Green Deal Assessors Green Deal Providers Green Deal Installers

Innovative financing via loans against electricity bills – in theory, the house not the occupant takes out the loan

Tied heavily to the £1.3bn p.a. Energy Company Obligation (ECO)

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Green Deal progress

Officially ‘soft launched’ on 1 October

Regulations for Green Deal finance plans will not come into force until 28 January

The electricity suppliers will not be in place to collect repayments until at least this date

The Green Deal Finance Company (GDFC) will not be able to offer loans until at least Q2 2013

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Green Deal challenges (1) – The ‘Golden Rule’

At is simplest, the Green Deal is a funding transfer for energy saving measures,

such as loft insulation and cavity wall insulation, from Carbon Emissions Reduction Target (CERT) subsidies onto long-term loans

The ‘Golden Rule’ (capping repayments to year 1 energy savings): Constrains Green Deal viability to a minority of homes Leads to too much of the benefit being lost in long-term interest

payments Can lead to the short-term measures being prioritised over ‘whole

house’ energy saving improvements that will create greater benefit in the longer term

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Only a minority of homes are Green Deal viable

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Cambridgeshire example

Green Deal challenges (2) – Marketing

Promoting energy saving requires a perception shift then a behaviour shift

DECC’s own market research found that homeowners mistrust both the word “Green” and the word “Deal”

The Green Deal provides a significant opportunity to kick-start UK energy saving retrofitting… … but also presents a significant risk of pressure selling horror stories, and a lack of perceived energy savings (electricity bills going up, even if gas and overall energy bills go down) – discrediting ‘energy saving’ in general.

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Market tiers

Green Deal

Real people, real homes

Passivhaus

Architect designedEnthusiastsAfford-to-payWill happen anyway

‘Whole house’ or led by planned disruptionArchitect of building expert involvementMix of local tradesFlexible finance optionsPart-funded by Carbon Saving ECO

Simple measuresFit within ‘Golden Rule’Minimal customisation necessary

Top end

The mass-majority

Straightforward

The Energy Company Obligation (ECO)

ECO will and take over from the Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP) to distribute £1.3bn per year, when these existing supplier obligations end on 31 December 2012. Following the January consultation, the 11 June consultation response revised ECO to target 75:25 carbon savings: heating cost reductions, in three buckets:

• Affordable Warmth (25%, £325m p.a.): Largely similar to the existing CESP; any energy saving measure eligible if it reduces the cost of heating the home. Means-tested individual qualification; private tenure only.

• Carbon Savings (60%, £780m p.a.): Targeted at solid wall insulation and ‘hard-to-treat’ cavities.

• Carbon Saving Communities (15%, £195m p.a): targeted at the bottom 15% of Lower Super Output Areas from the Index of Multiple Deprivation (e.g. Barton in Oxford).

• 15% (£30m p.a.) reserved for rural low income households in towns and villages with populations less than £10k, means tested as per Affordable Warmth.

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ECO Brokerage

The January consultation proposed an independent online ECO Brokerage to ensure fair and transparent access to ECO funds

Consultation responses ranged: From 10-20% (the ‘Big 6’ energy suppliers) … to 100% (The energy saving co-operative, in partnership with Co-operatives

UK, Social Enterprise UK, and our community partners, among many others). The 11 June DECC consultation response concededmost responses were “at the higher end of the scale”

DECC hence proposed a short further consultation on the ECO brokerage, primarily on what proportion of ECO should be channelled through it – which will be launched next week

The ECO brokerage provides a significant opportunity for community groups (including local Councils) to direct ECO where the need is greatest

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What local Councils are doing

Low Carbon Oxford Green Deal+: a unique partnership between City and County Councils, Universities and community groups

Birmingham Energy Savers: procured Carillion as Green Deal Provider, with City Council funding for first wave of loans (focusing on social housing and CESP areas)

Many local Councils (e.g. Cambridgeshire Districts, Bath & Northeast Somerset) opting for ‘Producer’ relationship with a delivery partner following consultation– but ‘soft market testing’ to discover what this means

Several interesting energy agency models, e.g. Severn Wye Energy Agency in partnership with Gloucestershire Districts USEA in partnership with Oxfordshire Districts National Energy Foundation in partnership with Milton Keynes City Council

Marches Energy Agency are currently reviewing all of the better community-based models for Marches Sustainable Housing Partnership

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Warming Barton

Why Fair Green Deal

Greater traction Engagement through local community groups, co-ordinated by Low Carbon Hub expert team

Greater energy savings

Not constrained by Green Deal ‘Golden Rule’

Combining Powering Up with Powering Down

Behaviour change through community engagement – not just structural energy savings

Community economic benefit

Energy saving improvements delivered through local tradespeople, creating local jobs

Renewable generation for community benefit

Fair finance A full range of funding options from ethical sources, drawing in ECO and other grants for fuel poverty and hard-to-treat, to deliver the best financial value in each case

Self-sustaining The energy saving co-operative margins fund Low Carbon Hub community engagement

Social capital Bringing communities together in a co-operative partnership between residents, community groups, and local tradespeople

Warming Barton Green Deal+ Pilot

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A £100,000 plus scheme to enable 130 homeowners and 372 council tenants to make their homes more energy efficient 

The Low Carbon Hub will work in partnership with local community group, Low Carbon Barton, to build relationships, make initial contact with residents and get them involved

The energy saving co-operative will follow up with residents who want to sign up to the pilot scheme, to install energy saving improvements through trusted local tradespeople, and provide fair and ethical finance to those who need it

Tenants, owner-occupiers, and private landlords will be offered insulation, improved boilers, smart meters, solar panels, and other energy saving improvements to help reduce bills, make their homes warmer and more comfortable, and tackle fuel poverty

The cost of the energy saving retrofit work will be financed with money from the energy savings on bills, grants from gas and electricity supply companies, and fair finance loans from ethical providers

Warming Barton Revised Deliverables

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1. Promotion to all households in Barton; engagement with all owner-occupied properties with the aim of recruiting 100

2. Energy assessments of up to 100 unimproved homes, including behavioural advice and access to improvements to household via Green Deal, ECO (tbc) and RHPP2 (tbc) in energy report to householders

3. Evaluation report covering:a) assessment process b) installation process c) whole project model

Warming Barton Progress

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101 energy assessments signed up in 3 days!!!

Warming Barton Challenges

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“The best time to plant a tree was 20 years ago;

The second best time ........is now !!!”

– Chinese proverb

Who we are

The energy saving co-operative is a pioneering partnership between:

1. People who want to save energy

2. Co-operatives and community groups

3. Tradespeople such as energy assessors and installers

Working together, we will maximise our impact – combining the best of ‘Big’ with the best of ‘Local’

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Governance and profit sharing

The energy saving co-operative is an innovative, pioneering hybrid co-operative (IPS 31331R) , with three classes of user-membership:

1. Individuals using the services of the co-operative – Homeowners can become members

2. Co-operatives and other corporate or community bodies offering the co-operative’s services – Consumer co-ops and community groups can become members

3. Persons and organisations delivering the services of the co-operative – Tradespeople can become members

Each user-membership class shares in governance and profits,and has dedicated seats on the Board

There is a fourth category of membership for providers of finance (non-user members, with maximum 25% voting strength and limited right to profits)

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Our purpose, vision and values

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Purpose To provide people with the power to save energy   Vision The greatest contribution to UK energy saving will be through co-operative and community solutions   Values We are open, honest and fair We serve our customer members We enhance sustainable communities We earn trust in everything we do We are democratic

Project financing options

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We can now offer five options to customers:

1. Extending a mortgage or self-funding from savings will always be the cheapest option for those customers who can afford it

2. Ecology Building Society’s C Change retrofit and The co-operative bank’s Energy Efficient Advance discounted mortgage products (first charge)

3. Our own second-charge revolving loan fund, seeded by The co-operative bank then grown through professional and retail bond issues – a high priority for development, and a large opportunity for ‘teaming up’ and ‘scaling up’

4. The Green Deal Finance Company (GDFC) and Energy Company Obligation (ECO) for Green Deal qualifying projects, when available

5. London Rebuilding Society’s Home Improvement Scheme equity share finance for qualifying customers (low income, 50+, own their homes)

In addition will we obtain grant funding (e.g CERT, CESP, RHPP2), where possible and while available, for qualifying customers

Saving energy Selling energyIncreasing property values

Creating jobs

Building owners

Community groups (including local councils!)

Powering up

WorkersCommunity engagement and delivery

Oxfordshire’s collective and co-operative interest

Home improvement

Powering down

Community engagement and delivery

Powering up

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What we ask of Oxfordshire Environment Partnership

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Support us to help communities across Oxfordshire Power Down   Join us in membership class 2 (Co-operatives and other corporate or community bodies) to provide: A say in governance A share in profits via dividends A demonstration of local commitment to help us

focus community engagement  

The energy saving

co-operative

Wallingford EynshamChippingNorton

WestOxford

NorthOxford

Local householders and tradespeople

• National marketing & website• Expertise & standards• Finance• Customer account management

Oxfordshire working relationships

Joint project management and administration

Retrofit expert group

EastOxford

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The energy-saving co-operative – Local project management

Community engagement

Energy performance

assessor

Energy saving advice and contracting

InstallationQuality control

and impact measurement

Community groups – Outreach and engagement

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How it works