The Green Deal How the Green Deal is intended to work QUESTIONS The possible role for councils QUESTIONS Outstanding issues –Home Energy Conservation Act (HECA) –Energy Company Obligation (ECO)

The Green Deal Process Assessment Finance Installation Repayments and Follow Up

Step 1: Unlocking Consumer Demand Reliant on householders asking for the Green Deal Retailer-led Questions… Trusted organisations? Role of Energy Companies? Marketing?

Step 2: The Assessment All households have access to an energy efficiency assessment as part of the Green Deal - EPC Accredited independent assessor produces a fabric and behavioural assessment Standardised, accredited assessment – uses agreed methodology Consumers can shop around after receiving advice Cross-selling in the home? How independent? Financial advice?

Step 3: Finance New mechanism attaching payment to the energy meter Consumer protections Golden rule that likely bill savings must be larger than payments Accreditation – only approved measures by accredited installers following accredited assessment Green Deal must be disclosed to future owners / renters of the property Appropriate consent must be sought before Green Deal is taken out on a property Adaptation of Consumer Credit Act protections Existing regulatory regime for collection of energy debt extended for Green Deal Private sector finance ?

The Golden Rule Energy Bill Without Green Deal Cost £ Energy Bill with Green Deal Energy Consumption Green Deal Payment Saving Overall reduced Energy Bill

Step 4: Installation Green Deal will require standards and accreditation for products and installers Installer will need to: –meet certain standards to practice under the Green Deal –carry the Green Deal kite-mark/ logo –sign off work once complete and inform GD Provider that repayments can begin Planning Permission? Area-based approach? Renewables? Local Firms??

Step 5: Repayment and Follow-up Payments will be collected through energy bills with the Green Deal charge shown as a separate line on the bill Customer is free to switch energy supplier – no change to current procedures Provision will be made for long term vacancy, early repayment, demolition, etc. Redress and disputes processes Pre-payment meters? Lifespan of the measures? Mortgage companies?

Selling it to householders Zero upfront cost for householders/organisations Customer insight: people most likely to consider improvements when they move into a new property but many lack access to finance at this time. Timing of payments roughly matched to timing of energy savings Customer insight: people put off by upfront costs and don’t value future savings. Costs attached to meter – you stop paying when you stop benefiting Customer insight: anyone considering moving property during the next 25 years currently likely to be put off investing in the measures with the longest paybacks. Customer only has to deal with one organisation Customer insight: poor conversion from customer interest to action Not a loan Customer insight: indebted households put off by risks of further borrowing.

The Energy Company Obligation Hard to Treat homes that do not meet the Golden Rule –Carbon Emissions Reduction Target post 2012 Fuel Poor households –Home Heating Cost Reduction Target (Affordable Warmth) Cannot double-up on targets No indication of scale at present Access to this funding?

Where ECO meets the Green Deal Unsuitable for finance e.g. Fuel poor or low income; Low energy user; Hard to treat housing CONSUMERS Suitable for full finance e.g. On higher incomes; High energy user; Low cost measures Green Deal Finance Energy Company Obligation MEASURES Funded primarily by GD Finance e.g. basic insulation Funded primarily by ECO e.g. central heating

Timescales Energy Bill – complete before Summer Recess Consultation on secondary legislation October/November 2011 Early 2012 – secondary legislation laid before Parliament Summer 2012 – Industry guidance issued Winter 2012 – Green Deal goes LIVE

QUESTIONS?

Role for Councils in the Green Deal? Every householder and business in the country has a local council so everyone would have equal access to the Green Deal. trusted by local people Experience from previous private-sector energy efficiency and climate change interventions have led to the involvement of local councils to enhance the success of these programmes. Several reports support an ‘area-based approach’ to energy efficiency, particularly for areas that require solid wall insulation Councils are best placed to link up this environmental initiative with others local community leaders to generate interest and take-up

Potential Roles Green Deal Provider Green Deal Partner Green Deal Supporter Green Deal Recipient

Green Deal Provider Raising finance to deliver the Green Deal Mixture of Council funding, EIB, ECO and Private Finance Borrowing so need political commitment# Need large scale – unsuitable for small councils Using FITs – risk Control entire process: –Local jobs –Fuel Poverty –Linking up other priorities

Green Deal Partner Enter a partnership with a Green Deal or ECO provider to deliver a particular package Some funding likely to be required Ensure no cross selling Looking at getting volumes, e.g. Social Housing Stock Add-ons Local Evidence of demand Trusted brand Risks to reputation

Green Deal Supporter Encouraging residents and businesses to take up the Green Deal All Green Deal providers Low to no cost No control Reputational risk

Green Deal Recipient Install Green Deal on council properties Best value for money? – Energy Performance Contracting Coordinating portfolio of buildings? Showing willing and support to the Government initiative Guinea-pigs?

HECA Likely to involve the Green Deal Statutory requirement to have some involvement in the Green Deal No details yet Additional burden? Reputational risk?

ECO Secretary of State can direct Energy Suppliers to allocate it based on geography, property-type and individuals. Opportunity to lever funding into councils to deliver on fuel poverty? Continuing partnerships? Focused on Fuel-poverty

Questions Where do you think your council would fit in? Outstanding issues, questions and concerns Next steps –Influencing –Examples –Partnerships