Where next for Energy Efficiency?

Jonathan Atkinson | Carbon Coop

Jonathan Atkinson, Project Manager of The Carbon Coop based in Manchester, argues that community lead whole house retrofit can be achieved at quality and reasonable cost and so should inform government strategy and policy

Just about everybody agrees that the UK is not building enough new homes. There have been a number of legislative attempts to up the numbers, but with government finances likely to remain stretched, perhaps now is the time for some radical alternative options

As the dust settles on the (first?) election of 2017 now is a good time to survey the landscape for energy policy and in particular retrofit.
The sector has been utterly dominated by the Green Deal fiasco and related Big Six-led hobbling of ECO (Energy Company Obligation). 
Since 2015 there's been a big black hole in energy efficiency policy, unsurprising given the political capital, time, money and effort lost in the programme but two years down the track there are signs of new initiatives. 

  

The imperative for action

Whilst the second and third carbon budgets mandated under the Climate Change Act are on target much of this is down to past policy and the phasing out of coal. The fourth and fifth budgets running to 2032 are predicted to fall short well short [1] – in large part due to a lack of credible energy efficiency policy. It's therefore imperative we find a viable, scalable retrofit mechanism for reducing domestic emissions.
 
Simple retrofit measures such as new boilers and loft insulation have already mostly been installed, the challenge going forward is to deliver complex, whole house retrofit works involving multiple measures such as solid wall insulation, ventilation and integrated heating systems. The key barriers to this include: the complexity and individualised nature of retrofit works; the lack of affordable, appropriate finance; and the lack of a skilled, experienced supply chain. 

Policy scene

Despite fears to the contrary, the Conservatives continue to publicly support climate action committed to under the Paris Accord. However, this support has been tempered by some mixed policy messages. For both Conservatives and Labour, energy policy is increasingly framed around affordability for consumers. 
 
For many in the sector, the obsession with affordability and price caps is frustrating, failing to take account that bills are a product of both the price and the amount of energy used and that the UK already has relatively cheap energy. A price cap would be a temporary sticking plaster whereas decent energy efficiency policy would deliver cheaper bills – forever.
 
Further uncertainty comes in the form of Brexit which has sucked time, effort and talent from departments like BEIS and put in doubt energy-related regulations and commitments made under EU law.

From the ashes of Green Deal?

The failure of Green Deal did incredible damage not only to consumer confidence but also to the sector with many of the big construction companies such as Willmott Dixon and Carillion shutting Green Deal subsidiaries. 
 
Despite this there have been moves to reanimate the corpse of Green Deal in some form. The Bonfield Review constituted the sector's response to Green Deal and has evolved in to 'Each Home Counts'. With wide scale industry involvement, it proposes an evolution of Green Deal to plug some of its failings with a new quality kite mark, online knowledge base and a series of pilots in 2017/2018. However, some worry this broad brush approach fails to address some of the fundamental failings of Green Deal such as the loss of quality and personalisation when energy efficiency is delivered at scale or the shear complexity of deep retrofit. 
 
The ECO programme continues to limp along with successful lobbying from the Big Six meaning the money available under the programme is way below required levels and a diminishing pot means only the most vulnerable are eligible – stigmatising energy efficiency as something for only the most deprived communities. It seems energy companies are happy to pay fines rather deliver ECO in a meaningful way. 
 
Surprisingly there are signs that the Green Deal loan finance mechanism may make a comeback. Though the government stopped promoting Green Deal the legislation that made it possible remained and the loan company was sold on. A recent investment offer signalled plans to relaunch Green Deal loans, possibly as a way to facilitate new PV/storage installations, though the reported rates of interest remained high at 9%. 

Green shoots?

Recently at a municipal level there has been a re-birth of interest in delivering energy services. Whilst Nottingham and Bristol have launched energy companies a slew of other local authorities are actively investigating ones of their own. 
 
The creation of new city regions means new metro mayors such as Andy Burnham in Greater Manchester are focusing on local issues such as housing, employment, health and energy and wondering how municipal retrofit programmes might deliver. In particular, interest centres on how local authorities might facilitate area based approaches to retrofit and make low or even zero percent interest home improvement loans available – for many this is a return to municipal policies last seen in the 80s and 90s!

A community-led alternative to Green Deal?

The community energy sector consists of voluntary groups who have mobilised around the UK to help the transition to a low carbon energy system. Traditionally this sector has been dominated by energy generation schemes, mostly because the Feed In Tariff (FIT) presented a simple, replicable model. However, with the FIT regime phasing out many groups are turning their interest to energy efficiency. 
 
Our newly published report, Powering Down Together, documents the learning from 'Community Green Deal' a DECC-funded pilot project to test out a community-led, Green Deal-like approach. 
 

  

We carried out deep retrofit work for twelve of our members, procuring a single contract and working with URBED, one of the UK's leading authorities on domestic retrofit, as lead architects and contract administrators. The project had some significant outcomes:
  • Householders participating in the scheme benefited from whole house assessments using full SAP and zero percent interest loans. Taking in to account some ECO and householder contributions works costs averaged £40,000/house.
  • Post-works evaluation documented in the report is extremely encouraging with average gas usage cut by nearly 50% with net bills, taking in to account FIT payments, now £270/house - net savings averaging £1,000/house.
  • Carbon emission reductions averaged 60% but our ambitious benchmarked project target, informed by 2050 domestic targets, was to reach 17kg/CO2/year and we came very close, averaging 18kg/CO2/year.
 
We believe a community-based model should inform whatever Pay-as-You-Save model follows. Our project shows quality whole house can be delivered at scale and policy should aim much higher than the 'single measures' approach. Zero percent loans are a huge driver – but need to be combined with strong quality control in order to avoid the failures of large ECO schemes. Finally, with trust in privatised utilities at an all time low, properly resourced community energy organisations can offer an intermediary role, protecting the interests of consumers and aggregating local demand to create viable schemes. 
 
[1] CCC: A plan to fill the UK’s climate policy gap is ‘urgently’ needed, Carbon Brief, 29/06/2017 https://www.carbonbrief.org/ccc-plan-to-fill-uk-climate-policy-gap-urgen...
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