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The Future of the Energy Company Obligation – Response

 

The hotly awaited response to the ECO consultation was published yesterday by DECC.  No surprises really in the changes that will be made and sadly no good news for the insulation industry.  68% of respondents disagreed with the 33% cut so good to see the Government ignored this and went ahead anyway : )

DECC have also confirmed that the uplift of 75%, which was designed to reward suppliers who ‘went early’, will now be given to all energy suppliers who achieved more than 35% of their CERO targets.  Err, so that is all of the big 6 then?  Perhaps there was some nervousness from the Government that if they didn’t allow the uplift, the suppliers may raise energy prices again before the election?  But don’t worry, DECC have demanded that the suppliers possibly, maybe, if they would be so kind, publish a report on how they may give a little extra money off consumers bills as a result of the windfall (as it was referred to in today’s Telegraph).

So what are the key announcements?

  • Easy to treat cavities, lofts and district heating are eligible CERO measures backdated to 1st April 2014
  • ECO extended until 2017 based on pro rata levels
  • CSCO areas expanded to 25% most deprived LSOAs
  • CSCO Rural to now include most deprived 25% Rural areas (less than 10,000 people) without benefit requirement
  • Unlimited carry forwards from ECO1 to ECO 2 but for Affordable Warmth only measures installed after 1st April 2014 can be carried over (see details below on boiler warranties)
  • Missing the 2015 CERO target will result in a 10% uplift of the under delivery for suppliers which will need to be delivered in ECO2 up to 2017
  • ECO and GDHIF incentives will remain separate and cannot be combined
  • SWI minimum figure to be 4Mt of lifetime CO2 savings by the end of ECO 2 in 2017 (excluding secondary measures).  If all SWI homes were gas, this would equate to roughly 130,000 homes or if electric, 65,000.  To date, suppliers have already installed 55,000 SWI measures and with many of these being from off-grid homes, there is a chance that the 4Mt target could already be near to complete
  • No changes are planned to further drive blending of ECO and Green Deal
  • Mandatory use of GDARs will not be introduced allowing EPCs to continue as a means of scoring a job and EPRs for HHCRO will not at this stage be discontinued either
  • Use of the ECO Brokerage by energy suppliers will not be mandated

 

Changes to start on the 1st April 2015:

  • HHCRO insulation to receive a 35% uplift
  • HHCRO gas boiler savings to be deflated by 20%
  • HHCRO non gas boilers to receive an uplift of 45%
  • Storage heaters upgrades to be based on the same terminology as gas boilers, i.e. the home being assumed to use electric portable heaters
  • All new boilers and storage heaters to be supplied with a 1 year installation warranty (see below)
  • HHCRO renewable upgrade options could also benefit from the off grid 45% uplift but DECC will forbid suppliers taking the RHI payments
  • New DWP checking service for installers to be in place by April 2015 removing the need to copy benefit letters

 

Full details of the consultation response can be found here

The new CSCO areas can be found here (slightly revised)

 

New Boiler Warranty Requirements

 

Under new rules from 1st January 2015, all boiler and storage heater installations will require a minimum 12 month installation warranty that will cover the customer even if the manufacturer’s warranty has been invalidated by poor installation or commissioning.  As part of the carry forwards rule, boilers installed during 2014 that do not have this warranty will have their savings deflated by 25%, whereas boilers that do have the warranty will only be deflated by 20%.

The warranty paper work must include a signed declaration from the customer confirming that no charge was made for the warranty.  Presumably energy suppliers who have already exceeded their HHCRO target will now be contacting boiler installers to request that such a warranty is put in place retrospectively or at the very least that they are issued from now on.

 

GDHIF Blow To Solid Wall and Boiler Industry

 

Yesterday DECC also announced that due to “an impressive response” the GDHIF solid wall insulation grant will be reduced from £6,000 to £4,000 and the customer contribution increase from 25% to 33%.  A month ago DECC were warned at the ECO Steering Group meeting about so called ‘phantom vouchers’ where door knock companies were racing around signing people up to sell on for a profit yet no action was taken to slow down the spend.  Stories are also emerging of companies falsifying the customer contribution and worst still giving a £1,000 cash back to customers making a mockery of the GDHIF compliance rules.

Applicants who apply for their SWI grant before 23.59 tomorrow will still receive the £6,000 grant.

In addition to the reduction in the SWI grant, DECC have also cancelled the flue gas heat recovery unit as a measure as of the 4th August.  This will come as a blow to gas engineers who have used the £1,000 cash back as a way to back fill the slump in demand for HHCRO boilers.

I am sure you will be pleased to know that according to the DECC press release, Ed Davey is “delighted” about the whole thing, feel free to post your own views and feelings on our LinkedIn forum here!

Full DECC press release here.

 

ECO Statistics Released

DECC have issued the latest ECO statistics which show a continued plummet in insulation activities, now we know why!  Full details here.

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