Energy efficiency frozen out by government neglect

Too much of the UK’s housing stock is old and wastes energy, but the latest government initiatives to tackle the problem lack ambition – and detail. Mathew Beech reports.

Energy efficiency schemes have been with us for 22 years now, but instead of a clear, long-term and stable policy developing over this period, uncertainty reigns as the sun begins to set on the current tranche of initiatives.

The Energy Company Obligation (Eco) rolled over into its second and much reduced form last year, and will be extinguished in 2017. Rising from its ashes will be a streamlined and lower cost programme – with lower ambitions to match.

There are fears that scaling back the energy efficiency programme even further (Eco was trimmed back as it was extended from Eco1 to Eco2) and a lack of clarity over what will replace it in 2017 will not only harm the rate at which energy efficiency measures are installed, but the industry as well.

The chancellor’s autumn statement confirmed that there would be a new approach between 2017 and 2022 – heralding the fifth incarnation of energy efficiency policy since 1994 (see timeline below).

As part of this package, a target was set for this parliament (five years) that one million homes benefit from retrofit measures. This compares to a target of one million homes set by the coalition government for the period June 2013 to March 2015. In reality, 1.2 million homes had measures installed.

The new domestic energy efficiency supplier obligation will run for five years from April 2017, and the Treasury said it would have a value of £640 million a year, rising with inflation.

At face value, it looks as though the scheme has been shrunk because the obligation on suppliers to install energy efficiency measures will fall on fewer homes over a longer period of time than previously, condemning customers in draughty properties to suffer in cold silence.

UK Green Building Council chief executive Julie Hirigoyen slammed the move, saying it will mean jobs lost in the sector and vulnerable households “continue to be trapped by unaffordable energy bills”.

She adds: “The chancellor repeatedly talks about productivity, but here he is discouraging investment and destroying a market.”

Despite the announcement of a new scheme that the government says will lop £30 off annual energy bills because it is cheaper than its predecessor, critics say the lack of clarity surrounding it is hamstringing the energy efficiency sector.

National Insulation Association chief executive Neil Marshall says energy suppliers urgently need clarification to give them the confidence to continue with installing measures, while Eon’s strategy and regulation director, Sara Vaughan, adds that clarity would allow the sector to invest and deliver on government aims. “If government gives us what we need, then we will give government what it needs,” she says.

However, there is more to the government’s new energy efficiency plans than just a scaled back obligation on suppliers.

The Treasury has also set out plans for £295 million to be provided over five years to improve the energy efficiency of schools, hospitals and other public sector buildings. A further £300 million of funding will be offered to help develop 200 heat networks big enough to support more than 400,000 homes and leverage up to £2 billion of private capital investment.

Energy secretary Amber Rudd reiterated in her policy reset statement at the end of last year that energy efficiency remains “important” and added that support under the new scheme would be targeted at those in fuel poverty.

On top of this, she stated that the new scheme would be streamlined compared with the red-tape laden Eco, allowing it to be more cost efficient and less of a burden on energy bills.

As SSE head of energy services Keith Armstrong says, there is now “a golden opportunity to build on previous programmes” and the details “on a simplified, extended scheme are needed to help the industry maintain momentum”.

All the sector needs to put this in place is for the government to provide that detail.