Tuesday, 3 December 2013

ECO and Solid wall insulation - An overview

I recently asked the library to look into the ECO. With both Blackburn and Hyndburn engaging in large scale schemes it is important to understand how the scheme is or isn't working.

ECO performance

The House of Commons library briefing, The Green Deal and The Energy Company Obligation (ECO) has the latest statistics included on ECO progress including costs, supply chains and measures installed. The figures are from the 9th in the series (November 2013)of Green Deal and ECO monthly statistics which are published by DECC. The next set of Monthly and quarterly statistics will be published on 19 December 2013.

You specifically asked for a geographical heat map highlighting ECO progress around the country. The latest DECC quarterly statistics (published 19 September 2013) have what you are looking for on page 9,  they explained that:

"Around a fifth (19 per cent) of ECO measures were in the North West (28,395), the highest in any region. The regions with the next highest proportions were the West Midlands (14 per cent) and Yorkshire and the Humber (10 per cent) 10 per cent of ECO measures were installed in Scotland (14,616) and five per cent were in Wales (7,923)."

The next set of monthly and quarterly statistics will be published on 19 December 2013.

ECO funding methodology

The ECO will be funded by energy suppliers and incurs a levy on customer bills. ECO places legal obligations on the larger energy suppliers to deliver energy efficiency measures to domestic energy users. It operates alongside the Green Deal which is designed to help people make energy efficiency improvements to buildings by allowing them to pay the costs through their energy bills rather than upfront.

Under the rules of ECO, energy suppliers are obliged to help improve the energy efficiency of their domestic customers' buildings in three distinct areas:

1.  Carbon Emissions Reduction Obligation
Under the Carbon Emissions Reduction Obligation, energy companies must concentrate efforts on hard-to-treat homes and measures that cannot be fully funded through the Green Deal. Solid wall insulation and hard-to-treat cavity wall insulation are the primary areas for focus under this target. Other insulation measures and connections to district heating systems are also eligible if they are promoted as part of a package that includes solid wall insulation or hard-to-treat cavity wall insulation.
2.  Community Obligation
Under the Carbon Saving Community Obligation, energy companies must focus on the provision of insulation measures and connections to domestic district heating systems supplying areas of low income. This target has a sub-target, which states that at least 15 per cent of each supplier's Carbon Saving Community Obligation must be achieved by promoting measures to low income and vulnerable households living in rural areas.
3.  Home Heating Cost Reduction Obligation
Under the Home Heating Cost Reduction Obligation, energy suppliers are required to provide measures which improve the ability of low income and vulnerable households (the 'Affordable Warmth Group') to heat their homes. This includes actions that result in heating savings, such as the replacement or repair of a boiler for example.

Target to achieve specific emissions savings in these areas have been set up until 2015.

Energy suppliers will provide the ECO directly to customers, or it will be provided by organisations working together through pre-approved arrangements, such as Green Deal providers.  ECO Brokerage is mechanism tp supports open and competitive delivery of the ECO. Brokerage operates as fortnightly, anonymous auctions where ECO providers can sell 'lots' of ECO Carbon Saving Obligation, ECO Carbon Saving Communities and ECO Affordable Warmth.

Page 27 of the latest Green Deal and ECO monthly statistics November release explains ECO brokerage as follows:

"The ECO Brokerage system operates as a fortnightly anonymous auction where GD Providers can sell 'lots' of future measures of ECO Carbon Saving Obligation, ECO Carbon Saving Communities and ECO Affordable Warmth, to energy companies in return for ECO subsidy.

This market-based mechanism has been introduced to support an open and competitive market for the delivery of the ECO. Brokerage allows a range of Green Deal providers to fairly compete on price to attract ECO support and enables energy suppliers to deliver their obligations at the lowest possible cost, thereby reducing the impact on customer energy bills.

Sellers (GD Providers) can make a competitive offer on brokerage by leveraging additional sources of finance, such as part funding measures through Green Deal Finance, partnerships with local authorities, or driving down costs by economies of scale.

The Government announced plans yesterday to reduce the impact of the ECO scheme on peoples by reducing the targets under  the Carbon Emissions Reduction Obligation element of ECO by 33 per cent for the period to 2015, it also extended the target to 2017  to make up for this reduction.