The future of the Energy Company Obligation (Eco) has been hanging in the balance since the chancellor announced proposed changes last December.
As part of its Eco consultation response, the EUM Group held a supply chain roundtable for businesses delivering the scheme. The unanimous verdict? The drawn-out way in which Decc is handling the changes has caused a multitude of problems. It is now imperative that Decc works alongside Ofgem to make Eco a workable and cost-efficient scheme.
Immediately after December’s announcement, the carbon price plummeted. Smaller, often terraced, houses were suddenly rendered “loss-making” under the scheme’s flawed carbon-scoring system. Installers and assessors cited thousands of properties deemed eligible for Eco measures that were suddenly turned down, leaving what had been a relatively stable industry in disarray.
Energy suppliers are being forced to postpone work or suspend it indefinitely, unsure as to whether measures installed today will count towards future targets or whether the rules of the game will change, leaving early adopters at a competitive disadvantage as others wait for cheaper measures and reduced targets to potentially be introduced into the scheme.
The delivery of Eco in the future could be severely affected as businesses go under or choose to move away from the peaks and troughs of recent years.
Businesses are desperate for long-term clarity, and are concerned that the proposed cuts to 2015 targets go too far and that proposed incentives for overdelivery will weaken the 2017 target – and that is within Decc’s gift to provide as quickly as possible.
However, if we are to maintain momentum in Eco and avoid damage to the supply chain, action is needed before then. A clear message from EUM’s roundtable was that Ofgem must step in to offer industry the clarity it desperately needs to prevent this investment hiatus by offering confidence that work carried out now will count towards targets, regardless of changes to the scheme.
If Ofgem could provide this certainty, the industry wouldn’t be faced with prolonged delays, peaks and troughs in workload, and cancellation of jobs for households that desperately need the help that Eco can deliver. The message from the supply chain couldn’t be clearer: the status quo is unsustainable and while we wait for long-term clarity about the future of the scheme, the ball is now firmly in Ofgem’s court.
Alex Tsimboykas, director, EUM Group