Solar and the Green Deal

This article first appeared in Solar Business Focus UK. To read more articles on UK solar market developments subscribe today! October this year heralds the start of a possible game-changing Government initiative called the Green Deal. The Green Deal will open up the residential improvements market as never before by removing the need for householders to fund the cost of energy efficiency up front through the use of an innovative type of loan secured against the energy meter of a property, rather than the householders themselves, and is based on a principle known as the ‘Golden Rule’ that ensures the cost of financing the installed measures is less than the energy saved by their installation. This article will focus on why Government has developed this scheme and how will it will realistically affect the solar installation industry. Like much of the legislation coming out of the UK parliament, the origin of the Green Deal comes from Europe and you need to go back over a decade to the first Energy Performance of Buildings Directive (EPBD) in December 2002 to see where this initiative originally kicked off. The EPBD was the first attempt at an EU-wide level to attempt to raise the consciousness of the need for energy efficiency in buildings through the requirements for mandatory energy performance certificates (EPCs). Unfortunately, the introduction of EPCs did not achieve the leap in the installation of improvements that the European Parliament had hoped, mainly because the requirement for a standardised approach to their production and patchy implementation at a member state level watered down the requirements to such an extent that, certainly in the UK, EPCs became a discredited requirement. In response to this poor take up, the European Parliament had a second attempt, and the EPBD recast was the result in 2010. This won’t be fully implemented until early next year, but has strengthened the EPC requirements by making them more property specific, with better recommendations for improvements and requiring EPCs to be at the front of any purchasing or letting marketing. You should progressively see the results of this over the next year. A further twist to the directive was the requirement for member state governments to introduce financing mechanisms for consumers to access improvements and hence, the Green Deal was born. At the same time the EU has also come to recognise that we are vulnerable to the energy suppliers, whether they are in the Middle East or Russia. This less of a problem to the UK, as we still have North Sea oil and gas, however these are of course the source of CO2 and the problems of climate change are also firmly on the EU agenda. 2050 carbon targets The European Commission published a roadmap to a low carbon Europe in early 2011, which is where the requirement to reduce CO2 by 80 percent by 2050, now enshrined in the UK’s Climate Change Act, was first set out. As buildings account for a large percentage of CO2 emissions, up to 47 percent for some countries through space and water heating requirements, the Commission determined that the EU should aim for nearly zero carbon emissions for all its 160 million existing properties. Of course, with the current near record low levels of new building in the UK, it is the existing properties that are the key to meeting the targets. The UK has around 26 million properties and up to 80 percent of the current stock will still exist in 2050 considering the current levels of building. A quick calculation shows that an existing property would need to be upgraded every 50 seconds in order to reach the levels required, so the pressure can only increase as the years roll by. The UK Government, whilst committing to the headline 80 percent reduction also put in place challenging interim targets of 34 percent by 2020 and 50 percent by 2025, ahead of the EU’s own targets. This is even more challenging because the EU sees properties as an easier target than the next largest emitter, transport, so the target for property is nearer 90 percent reduction. So how is this going to be achieved? This is where solar technology comes into its own. The first thrust of the Green Deal will be concentrating on improving the insulation in properties, so don’t expect a big surge in orders as the Green Deal kicks off. The UK has around 6 million solid wall properties, which are considered ‘hard to treat’ so this is where the emphasis will lie at the start, but getting to the 80 or 90 percent reduction required by law will require a lot more than insulation, as this will only improve efficiency so far. In order to get to the nearly zero levels of efficiency, renewables will be required for most existing properties. As a surveyor working for the RICS, one of my roles has been to look at the scenarios to meet the Climate Change Act requirements for property and from my research at a European level, it is clear that solar – whether solar PV or solar thermal – is the best solution to improve the energy efficiency at an individual property level. Whilst there are a number of other renewables solutions, many of them are either unfeasible or uneconomic when considered for a property. The gatekeepers to the Green Deal are the advisors or assessors who make the home visits at the start of the Green Deal process to look at the property, the energy bills and also the behaviours of the occupiers. This isn’t as sinister as it might sound. One of the key concerns Government has is that the Golden Rule is not met leading to large numbers of disgruntled home occupiers paying more for their energy bills, so the behaviour checks are to not only advise people how to improve their energy efficiency through the way the run their home, but to also check that they are not low energy users, who will need to be warned that their energy savings might not meet the financing. The advisors will carry out an EPC to check the rating of the existing house and also look at the suitability of the property for the various measures available because not all will be either suitable or meet the Golden Rule. Government has built in a number of safety factors into the calculations of the recommended measures, which discount the possible savings made to ensure the measures installed do provide sufficient savings to cover the financing. Whether solar measures will meet the Golden Rule will of course depends to a certain extent on the feed-in tariffs available, the relative cost of the panels and how these factor into the overall calculation. I suspect that at the early stages of the Green Deal, solar will be recommended but not as part of the Green Deal, as the emphasis will be on insulation. However, clients who want to future-proof their property will want to be able to consider installing all the possible measures. As time marches on and the pressure increases to meet the legislative targets, solar will no doubt feature much more strongly and Government will probably have to be more flexible in their approach to financing improvements. Conclusion The solar industry now needs to look at ways of providing information to advisors so that they are fully up to date with the legislation, such as FiTs, innovation and improvements in panels and suitable financial packages in order that advisors can provide the best advice to clients. Source - Solar Power Portal

DECC approves £7m loan to The Green Deal Finance Company

A £7m loan from the Department of Energy and Climate Change (DECC) to The Green Deal Finance Company (TGDFC) has been agreed today, coinciding with the opening of the register for Green Deal Providers, Assessors and Installers.

Green Deal Providers successful in the Green Deal authorisation process will be able to access finance through TGDFC, expected to be available early 2013. This will enable them to offer low cost finance packages to consumers upgrading their homes under the Green Deal, effective this October.

All authorised Green Deal Providers, Assessors and Installers will have to display the new Green Deal Quality Mark to demonstrate they comply with the required Green Deal standards. This will be vital for protecting customers from any rogue traders. Only registered and authorised businesses will be able to use this mark.

Government is using this milestone to showcase its commitment to working with the private sector to provide finance at a low but sustainable cost to Green Deal customers. The Green Deal is also being considered as an early candidate for the use of infrastructure guarantees, Danny Alexander, the Chief Secretary to the Treasury, announced today. Infrastructure guarantees will provide guarantees for major UK infrastructure projects, with the potential to support up to £40 billion of investment.

Energy and Climate Change Minister Greg Barker said, “I’m delighted to announce a number of important developments for the Green Deal today. The opening of the Green Deal register will enable businesses to start becoming Green Deal authorised and the Green Deal Quality Mark will show they have met our standards. Crucially, this will protect consumers, who will know that anyone displaying the Quality Mark has been through the required process to become authorised.

“The loan we have agreed with The Green Deal Finance Company will help them to undertake essential development and be ready to offer finance to Green Deal Providers in early 2013.”

Businesses wishing to become Green Deal Providers can apply directly online to become authorised, while accredited certification bodies will be able to submit the details of Assessors and Installers to be authorised.

New guidance is available on the DECC website which clearly explains what is required to get the Green Deal Quality Mark and to become an authorised Provider. This complements existing guidance setting out how to become an authorised Assessor or Installer.

Government assures that the Green Deal will open up the energy efficiency market, empowering new players, including small and medium sized businesses, to enter and innovate. The Green Deal will initially cover 45 different improvements for domestic and non-domestic buildings and is expected to support up to 60,000 jobs in the insulation sector alone by 2015.

Source - Solar Power Portal

Local authorities required to publish energy efficiency plans

Local authorities will have to publish a report on their plans to achieve improved energy efficiency in their area by March 31, 2013, according to new guidelines issued under the Home Energy Conservation Act (HECA).

Government is turning to local authorities to drive energy efficiency awareness and help lower the nation’s energy consumption from a local level. The guidance will ask local authorities to identify the most practicable and cost-effective solutions to dramatically reduce energy wastage for all residential accommodation within the authority’s area.   

The Department of Energy and Climate Change hopes that the upcoming Green Deal will help local authorities reach their targets by allowing residents to access a raft of energy efficiency measures at no upfront cost.

Energy and Climate Change Minister Greg Barker said: “Local authorities have a vital role to play in improving the energy efficiency of residential homes in their areas, and helping us meet our ambitious energy targets.

“This new robust guidance will support and encourage all local authorities to realise the significant benefits of upgrading homes. The Green Deal will be a fantastic tool to help with this, and I look forward to hearing how local authorities are using it to enable people to save energy and money.”

The new HECA guidance will also encourage local authorities to approach key local partners, such as social housing providers and community organisations, to encourage them to support the energy efficiency plans. Under the new guidelines, local authorities will have to report back on their progress in implementing their measures every two years. 

Source - Solar Power Portal