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Green Deal: government publishes details on what it will cover, consumer protection and the Energy Company Obligation
Practical Law UK Legal Update 0-506-3756 (Approx. 5 pages)
Green Deal: government publishes details on what it will cover, consumer protection and the Energy Company Obligation
by PLC Environment
| Published on 06 Jun 2011 • England |
On 2 June 2011, the Department of Energy and Climate Change (DECC) published a number of documents setting out more detail on the Green Deal on:
- What measures will the Green Deal cover?
- Consumer protection in the Green Deal.
- A new Energy Company Obligation (ECO).
Speedread
On 2 June 2011, the Department of Energy and Climate Change published the following documents setting out further details about the proposed Green Deal, the government's new initiative for financing energy efficiency measures:
- What measures does the Green Deal cover? This sets out the process for determining whether a measure is eligible for Green Deal financing. The government's indicative list of measures now includes microgeneration technologies (as well as the energy efficiency technologies envisaged from the outset), provided the particular measure is capable of paying for itself because occupiers use less energy as a result of its installation.
- Consumer Protection in the Green Deal. This sets out the government's intentions for consumer protection and redress.
- Extra help where it is needed: a new Energy Company Obligation. This outlines the new Energy Company Obligation (ECO) that will provide financial support in situations where the Green Deal will not work.
Background
The Energy Bill 2010-11 (Energy Bill) is currently making its way through the Parliamentary process, and reached Committee stage on 7 June 2011 (see Parliament: Energy Bill 2010-11 (Bill, progress and explanatory notes)).
Part 1 of the Energy Bill deals with energy efficiency measures, which include proposals for the Green Deal, the government's flagship energy efficiency initiative. The Green Deal will create a new financing mechanism for installing cost-effective energy efficiency measures in homes and businesses, at no upfront cost to the consumer, from autumn 2012. For more information on the Green Deal proposals, see Practice note, Energy efficiency in buildings: Overview: Green Deal.
New Green Deal documents
On 2 June 2011, the Department for Energy and Climate Change (DECC) published the following documents giving further details of the Green Deal:
- What measures does the Green Deal cover? This document sets out the three-step process that will be followed to determine whether a measure is eligible for financing under the Green Deal. It emphasises that what is appropriate will depend on the particular property. The government issued a call for evidence on possible measures in March 2011 (see Legal update, Government consults on energy efficiency measures for the Green Deal). It will consult on the detailed criteria for eligibility of measures in autumn 2011. However, its indicative list of measures now includes microgeneration technologies (as well as the energy efficiency technologies envisaged from the outset), provided the particular measure is capable of paying for itself because occupiers use less energy as a result of its installation.
- Consumer Protection in the Green Deal. This document sets out the government's intentions for consumer protection and redress. It includes:
- proposals for a new Green Deal Code, which is intended to protect consumers throughout the process of installing energy efficiency measures under the Green Deal;
- proposals for a new Green Deal telephone advice line; and
- the formal appointment of the United Kingdom Accreditation Service (UKAS), which will set standards for assessors and installers to participate in the Green Deal.
- Extra help where it is needed: a new Energy Company Obligation. This document outlines the new Energy Company Obligation (ECO) that will provide support in situations where the Green Deal will not work, in particular where the government's "golden rule" (that expected savings from measures repay the costs) will not work. The ECO:
- is intended for lower income and vulnerable households and properties needing the next most cost-effective measures that do not meet the golden rule (for example, solid wall insulation);
- will require energy companies to meet targets specifically within that householder group. The Energy Bill allows the government to set an "affordable warmth" target (to focus on reducing heating costs) and a carbon emissions reductions target;
- will be integrated into the Green Deal framework so that the consumer only deals with one Green Deal provider that arranges both the Green Deal finance and any ECO financial support;
- will require the same standards of quality and accreditation as under the Green Deal;
- will be paid for through increases in consumer bills across all households; and
- will be the subject of a consultation later in 2011.
Comment
The government has now clarified that some microgeneration technologies may be eligible for Green Deal financing, as well as the energy efficiency measures initially proposed. Although the inclusion of microgeneration has been generally welcomed by the renewables industry and by environmental pressure groups, some concerns remain, in particular:
- How Green Deal financing will interact with payments made under the proposed Renewable Heat Incentive (RHI) and feed-in tariffs (FITs) (see Practice note, RHI: Renewable Heat Incentive and Practice note, Feed-in tariffs: toolkit).
- How long it will be before microgeneration technologies are able to meet the golden rule, given the considerable installation expense compared to energy efficiency measures.
The government previously announced in May 2011 that the Green Investment Bank (GIB) may be used to help finance the first stages of the Green Deal, although the primary aim remains for the Green Deal to be a private-sector led scheme (see Legal update, Green Investment Bank to begin investing from April 2012).