The Green Deal

Steve Adelizzi

Agenda

• Background and where are we now?

• Summary of Green Deal

• Customer Journey

• The rented sector

• Key players in delivery

• The operational model

• Is it all good news?

• What can we do?

Background and context� The Energy Bill included a provision to create a

framework for a national energy efficiency retrofit scheme – Green Deal.

� Warm Front, CERT and CESP ending and fuel poverty is increasing.

� The Bill also included a provision for a new Energy Company Obligation (ECO).

� Pressure on central funding – could be no funding!

� Too many schemes and a legacy of barriers

What is Green Deal?• A scheme to improve the energy efficiency of homes

and businesses in the UK!• A ‘loan’ scheme with no up-front costs and re-paid

through energy savings.• Repayment through a charge on the energy bill –

finance ‘tied’ to the energy meter and stays with the ‘property’ - even with a new occupant

• A market mechanism, funded through private capital.• A ‘one stop shop’ route to other schemes. • Measures chosen through a ‘Golden Rule’

Progress so far

• Dec 2010 – Introduced to Parliament

• Now – informal consultation

• Sept 2011 – Secondary legislation

• Sept 2011 – Spring 2012 formal consultation

• Sept 2012 Launch

• It’s very early days but things are gathering pace

The ‘Golden Rule’

• The cost of the loan repayments will always be lower than the expected fuel bill savings

• The repayment period will always be less than the expected life of the measures.

Example

Measure = £1000

Lifetime savings = £1200 - Yes – Green Deal finance Lifetime savings = £800 - No – referral to ECO or other

Householder in fuel poverty - No – referral to ECO or other

Customer Journey

Marketing and sign up

Home Assessment

InstallationMeasures

and finance plan agreed

Change of tenancy

Repayment

Marketing & Sign-up

• National marketing and publicity

• Retailers, DIY, supermarkets, home improvements

• Estate agents, EPC assessors?

• Independent advice and sign-up?

• Local Authorities?

Home assessment

• Individual assessments (home visits) are necessary• Measures, advice, finance plan• Codes of practice• Local knowledge needed• Local authority involvement?• An iterative process?

What measures?

Possible

measures

Golden

Rule

YES

NO

Green

Deal

ECO

FIT/RHI

Finance plan

• Only the Green Deal plan will finance thru the energy bill

• The Provider/Assessor to make the offer• Consent is needed by the ‘owner’• It is effectively a loan – a charge – with interest• There are implications for non-payment• A ‘bundled’ package is being considered

Installation

• High level of certification and warranty

• Green Deal brand and Quality Mark

• Very short timeline for installation

• Co-ordination of the ‘wider’ Green Deal package

• Referral to EPC

Repayments & Moving on

• A charge on the energy bill

• No restriction to switching supplier

• Charge passes to new occupant

• The new occupant must agree/accept

• The EPC is the main vehicle for disclosure

• The option to ‘re-negotiate’ is being considered

The rented sector

• Not straightforward

• Half properties are not a decent home standard

• Private rent likely to be 4 times colder than social rent

• So landlords given to 2013 to see how they respond but regulation will be a last resort

• Complications due to multi-tenure

Key players in delivery

Scheme

Provider &

Partners

Marketing &

sign-up

Assessors

Installers Funders

Funding

Vehicle

Energy

Company

EPC Process

Independent

Advice

Is it all good news?

• Some concerns about the role of dominant retail players• Interest rates (2% - 6%)• Council tax rebates and cuts in stamp duty• 100,000 new jobs (Chris Huhne)• Paybacks are determined by the cost of the measure• ‘Re-bound’ effect estimated at 15% - evidence is 40%• Rises in energy bills• Fuel poverty• New occupants with different consumption patterns

What’s needed?

• All the components in the delivery model• Secondary legislation (Autumn 2011)

– Bill payment process– EPC process– Consumer Credit Act process

• Green Deal brand, kite marks, warranties etc • A great deal more clarity from DECC• Energy Company Obligation (2013?)

What can be done now?

• Understand, discuss and explore partnerships

• Joint communication and dialogue

• Design and run a ‘pilot’ scheme

• A full Green Deal in parallel with the legislative process

What can be done now?

• Understand, discuss and explore partnerships

• Joint communication and dialogue

• Design and run a ‘pilot’ scheme

• A full Green Deal in parallel with the legislative process