Green Deal Update
Content last updated: 1 May 2012
There is no doubt that sustainability will be a major driver in the UK construction industry in the next 10 years, with all three political parties committed to the sustainable agenda. The drive for sustainability is partly about reducing carbon emissions, but also to make the UK more energy efficient in response to increasing prices of oil and shortfalls in UK energy output. The Green Deal, which is part of the Energy Act 2011, started as a concept of the previous Labour government (Warmer Homes, Greener Homes). Having completed consultation and will be launched in October 2012. It is intended to make existing homes and businesses more energy efficient financed through savings on energy bills. This will be supported by the Energy Company Obligation which will fund harder to treat homes and low income households.
This is probably the most important driver for construction in the next 10 years. The government predict that this initiative will create a workforce to fit energy efficiency measures of 100,000 people by 2017. For this reason Competitive Advantage will maintain a Green Deal Update advising of the latest developments.
Latest News
The Energy Saving Advice Service has been launched, this will provide advice to consumers on the Green Deal.
The government has announced the first 22 organisations to become Green Deal Providers and published a Green Deal Provider Guide.
DECC have announced £3.5 million funding for training of assessors and installers for the Green Deal. The press release says it will deliver on the commitment to create 1000 Green Deal apprenticeships.
Green Deal Consultation for TRADA
Competitive Advantage has written a summary of the Green Deal Consultation for TRADA.
To recieve a copy complete our enquiries form on the right stating "Green Deal Consultation".
Taking Sustainability to the Consumer - A CIMCIG Industry Report
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The Green Deal will be launched in less than a year, promising major business opportunities for the construction industry. The government has also promised to ensure that the small and medium contractor will be included. Companies now need to prepare themselves to sell their products and services to the homeowner. Continuing CIMCIG’s series of industry reports, the latest, “Taking Sustainability to the Consumer” pulls together industry research, suggesting an approach which will appeal to the consumer and can be downloaded from the CIMCIG website
You can also view a summary of the report that Chris presented at the recent ECA Electircal Industry Conference on our Youtube Channel.
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The Green Deal Specified Energy Efficiency Improvements and Qualifying Energy Improvements Order will list the measures that are recognised as meeting the requirement. As a starting point, the list of measures included in RdSAP has been used to create the list of qualifying Green Deal energy improvements. For a measure to be added to the qualifying list it will have to meet the process currently used to add measures to SAP, known as Appendix Q.
It is intended to have a self certification process in place from March 2012 for manufacturers and suppliers to confirm their products comply and are Green Deal ready. Submission will be via an online template where manufacturers and suppliers can confirm their products and systems are quality assured and meet the Green Deal Code of Practice. The Oversight Body will have a target to complete a review within 30 working days of receipt. The database will be operational from Summer 2012.
Measures currently recognised are:
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Air source heat pumps
Biomass boilers
Biomass room heater (with radiators)
Cavity wall insulation
Cylinder thermostats
Draught proofing
Energy efficient glazing
External wall insulation
Fan-assisted replacement storage heaters
Flue gas heat recovery devices
Ground source heat pumps
Heating controls (for wet central heating system and warm air system)
High efficiency gas-fired condensing boilers
High efficiency replacement warm-air units
High thermal performance external doors
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Hot water cylinder insulation
Internal wall insulation
Lighting systems, fittings and controls
Loft or rafter insulation and loft hatch insulation
Mechanical ventilation with heat recovery
Micro combined heat and power
Micro wind generation
Oil-fired condensing boilers
Photovoltaics
Roof insulation
Room in roof insulation
Solar water heating
Under-floor heating
Under-floor insulation
Waste water heat recovery devices attached to showers
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To reassure and inform homeowners there will be a network of Green Deal assessors who will evaluate a property and present the choices. As part of this each home will need to meet the ‘Golden Rule’ that the costs of repayment will not exceed the energy savings achieved over a repayment period.
Once the specification for upgrading is determined there will be a network of Green Deal Providers from whom the homeowner can obtain a quote. Once a Green Deal Plan has been signed the Provider will arrange for an Approved Installer to undertake the work.
Impartial Advice
The Energy Saving Advice Service has now been established. Initially focusing on providing advice to households and businesses on existing Energy Efficiency and Microgeneration schemes. The government says it will play a crucial role in providing independent and impartial advice to consumers, including onward referrals, on the Green Deal when the policy launches in October 2012.
The United Kingdom Accreditation Service (UKAS) has been appointed as the accrediting body for Green Deal assessors and are developing a robust standard to ensure the quality and impartiality of the assessment. All assessors will need to be a registered member of a certification body accredited by UKAS and comply with the Green Deal Code of Practice.
The assessment will be known as the Green Deal Advice Report (GDAR). It will take into account the physical characteristics of the property and the way occupants are using energy, providing an improved Energy Performance Certificate (EPC). For the domestic sector this will use an improved reduced data Standard Assessment Procedure methodology (RdSAP). In the non-domestic sector it will use Simplified Building Energy Model methodology (SBEM). The GDAR will include a bespoke occupancy assessment but will be based on a minimum standard occupancy.
The government announced training for Green Deal Advisors on 1st May. Training will start in July, for a new qualification, and take between 3 and 5 months to complete. Training is being delivered by Asset Skills in cooperation with Construction Skills and Summit Skills.
Provider
The authorised Green Deal Provider is the organisation which enables the Green Deal, providing the finance and arranging for the measures to be installed. They may not actually undertake installation but they will be responsible for any customer service issue. They will be authorised by the Green Deal Oversight Body, will be required to comply with the Green Deal Code of Practice, enter the Green Deal Arrangement Agreement (GDAA) between Providers and electricity suppliers, hold a valid Consumer Credit Act 1974 licence (if operating in the domestic sector), make provision to protect customers in the event of insolvency through a surety bond and establish and provide a free independent conciliation process for customer complaints. Should there be a problem with an installation the Provider is responsible for giving the customer compensation and will then seek redress from the Installer or Assessor. For further details see the Green Deal Provider Guide.
On 4 April 2012 the first 22 Green Deal Providers were announced. These are: Ampere GDP, Anglian Home Improvements, BritishEco, British Gas, CarbonLow Group, Carillion, Empower Community, Enact Energy, E.ON, Gentoo Group, Grafton Group, Insta Group, Keepmoat, Kingfisher, Mark Group, ReEnergise Finance, SIG plc, SSE, Stroma, Toriga Energy, Willmott Dixon Energy Services, Yorkshire Energy Services
Authorised Green Deal Installers will be trained, qualified and certified. They will carry the Green Deal Quality Mark, take full responsibility for the quality of their work and comply with the Green Deal Code of Practice. Certification will be to the Green Deal Installer Standard currently being developed by BSI and scheduled for publication in January 2012. Certification will be via existing certification bodies that will be responsible for ensuring Installers meet standards and comply with the Code of Practice. UKAS will be responsible for accreditation of the certification bodies. The government had originally indicated that the first tranche of certification bodies will be accredited by April 2012 with a second tranche in place by August 2012, however it now seems that this will be delayed until October 2012.
Initial view on financing was that there would be a single finance provider, with the energy companies responsible for collecting repayments. DECC have now indicated that large providers will be free to arrange their own finance and homeowner can also use other forms of finance such as a adding the cost to their mortgage.
On 2nd October 2011 the formation of the Green Deal Finance Company (TGDFC) was announced. TGDFC was established solely as a standalone finance vehicle to provide the source of financing for the Green Deal. Its purpose is to minimise the cost of underlying finance and loans administration of Green Deals with the aim of raising finance in the capital markets at high investment grades, from the cheapest sources of finance.
TGDFC intends to become the market-driven vehicle to underpin the Green Deal’s finances, offering finance at a universal price, available to anyone or any business eligible for Green Deals, accessible by all Green Deal Providers to underpin Green Deal Plans. It will act as a representative industry body and a focal point for DECC. Its role will include the following functions:
- Provision of finance for all Green Deal providers, providing consistent quotes for specific loan durations and amounts
- Establishes common IT systems across the industry for the calculation, monitoring and amortisation of individual loans, allowing supplier switching
- Loans administration, keeping records of individual property details to ensure households can get information centrally and allowing switching of energy providers
- Treasury function to allow funding through the most advantageous mix of finance instruments to obtain the lowest overall pricing
- Retention of profits to build surpluses and add to its corporate strength
- Conduit for start-up finance, minimising the amount of start-up finance required across the industry
- Green Deal financing will be on TGDFC’s balance sheet, not the energy suppliers or public sector balance sheet
- Sourcing the most competitive high investment grade finance available
- Financing local authorities embarked on the Green Deal
The following organisations are members of and advisors to TGDFC: British Gas, Clifford Chance, Carillion, E.ON, EDF Energy, Goldman Sachs, HSBC, Insta Group, Kingfisher, Linklaters, Lloyds Bank Corporate Markets, Mark Group, Npower, PwC, RBC Capital Markets, SSE.
Timescales for establishing TGDFC are as follows:
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Feasibility
Nov’11 – Jan’12
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Developing detailed structure, security arrangements, IT planning, outline credit rating, loan loss estimates, input into secondary legislation, Memorandum of Understanding (MOU) and stakeholder agreements |
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Set-up
Feb’12 – June’12
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Procuring IT and loans administration systems, full credit rating, recruitment of full-time employees, Articles Associations, detailed treasury management policy |
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Implementation
July’12 – Sept’12
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Arranging debt and working capital facilities, IT going live, finalised stakeholder agreements, funds advanced |
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Go Live
Oct’12
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Available to provide Green Deal finance |
Published in July 2011, the Cabinet Office Behavioural Insights Team’s report Behaviour Change and Energy Use sets out research to be conducted into how people can be encourage to green their homes and be more energy efficient. Based around behavioural economics and psychology a number of research projects are to be conducted in time for the launch of the Green Deal.
Effectiveness of offering upfront incentives to encourage the uptake of energy efficiency products including a month’s holiday from council tax payments and the offer of a voucher for goods and services. Commercial partners: Homebase. supported by Carillion.
Two trials will be run. To evaluate the impact of offering energy efficiency products and services at varying levels of discount depending on how many people opt in to the offer to encourage neighbours to act together. Secondly, as a major practical and psychological barrier to loft insulation is the requirement to clear out a cluttered loft, a subsidised loft-clearing service will be offered. Commercial partner :B&Q
A trial to test the impact of offering community rewards for the take-up of the Green Deal. Depending on results from initial focus groups, rewards could range from microgeneration technology for community buildings, to training for community volunteers and additional support for vulnerable groups.Commercial partner: E.ON.
A trial of how behavioural feedback, including comparative consumption information showing how individual energy use compares with similar neighbours to help consumers with smart meters to save energy. Commercial partners: First Utility and Opower. In addition British Gas and AlertMe will investigate the effectiveness of different channels in providing personalised information to smart meter consumers about their energy use as well as personalised hints and tips on how to save energy
Other initiatives include redesigning Energy Performance Certificates to include a clearer signpost to the Green Deal and precipitate greater action towards making energy efficiency improvements. This follows research which indicates that 18% of people claim that EPCs influence their house-buying decisions.
See also the 2011 CIMCIG Report, written by Chris Ashworth, Taking Sustainability to the Consumer for suggestions on promoting the Green Deal to the homeowner.
Possibly in response to criticism of lack of incentives for homeowners to take up the Green Deal, made during the consultation, the consultation for Document L of the Building Regulations (Conservation of Fuel and Power) included consequential improvements. This means that if an existing building has an extension, then improvements in energy efficiency will have to be made to the existing structure. This would have forced implementation of measures covered by the Green Deal and contribute to take up. Following criticism of the concept in the national press it is reported that David Cameron has now put a block on this measure. It remains to be seen if it will be included when the revised Document L is published.