ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Somewhere between a ‘Comedy of Errors’
and ‘As You Like It’?
A brief history of Britain’s ‘Green Deal’ so far
Paper by Pedro Guertler, Sarah Royston and Dave
Robson
presented by Pedro Guertler
Head of Research, Association for the
Conservation of Energy
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Overview
• The Green Deal: What is it?
(In theory)
• A history of its development
(And early implementation)
• Conclusions
• Discussion
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
The Green Deal
What is it, in principle?
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
What is the Green Deal?
• Home energy efficiency finance mechanism
• Designed to address barriers of:
– Up-front capital cost
– Long pay-back periods of costly improvements
• Does this by:
– Offering a commercial rate, long term fixed-interest
loan for improvements
– Being attached to the property, paid back via, and
whoever is responsible for paying, the electricity bill
– Ensuring repayments needed to pay back loan are
less than the value of the energy savings created
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Origins and ‘ideology’
• Inspired by ‘PACE’ programmes in the USA
• Aim to ‘rebalance’ funding: away from
socially-funded towards ‘individually paid
for’ energy efficiency
• All major political parties were proposing a
variation of it
• Socially-funded energy efficiency support is
now only for technologies which don’t pay
for themselves
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Customer and supply chain ‘journey’
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Previously…
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
A history of the Green Deal’s
development…
…and early implementation.
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
(Some of) the cast
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Market-driven
• “This is a market mechanism, funded by
private capital, which we believe will deliver
far more to consumers than any sort of topdown Government programme” (DECC,
2010)
• “…a more market-focussed approach […],
where competition amongst Green Deal
providers is likely to drive take-up beyond
the levels expected under CERT or the option
of no policies” (DECC 2012)
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Market-driven. Really?
€ millions
3,000
2,500
ECO (to March 2015)
2,000
Cashback (to March
2014)
1,500
Municipalities (to March
2013)
Training
1,000
Marketing
500
0
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
The industry gets ready
• “…there is a real opportunity to stimulate
the market […] Whether it’s the real deal
or not, the industry is ready” (Kingspan
Insulation 2011)
• Financial Times reported positive outlook
for investors in Kingfisher shares
• Industry players set up ‘The Green Deal
Finance Company’
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Aggressive ambition
• “[It] will be a revolution. […] The most
ambitious energy-saving plan ever put
forward. A once-and-for-all retrofit that will
make every home in Britain ready for a lowcarbon future.” (Huhne 2010)
• “The biggest home improvement
programme since World War II” (Huhne
2010)
• “Europe’s most innovative and
transformational energy efficiency
programme” (Barker 2010)
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Aggressive ambition
• All homes to benefit by 2030…
• …supporting 250,000 jobs in 2030…
• …in an energy efficiency market worth
€8.25 billion per year…
• …whilst saving 34% of direct CO2
emissions from housing by 2020
(compared to 2008)
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Ambitious. Really?
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Shifting ambitions – projections
400,000
Additional impact
of ECO
350,000
Delivery of CWI per quarter
Green Deal only,
above BAU
300,000
250,000
BAU': No Green
Deal or ECO
200,000
CWI needed to
help meet IO
150,000
CWI delivered
100,000
Carbon Plan
ambition
50,000
2022 Q3
2021 Q4
2021 Q1
2020 Q2
2019 Q3
2018 Q4
2018 Q1
2017 Q2
2016 Q3
2015 Q4
2015 Q1
2014 Q2
2013 Q3
2012 Q4
2012 Q1
2011 Q2
2010 Q3
2009 Q4
2009 Q1
2008 Q2
-
“…a more market-focussed approach […], where competition amongst Green Deal providers is
likely to drive take-up beyond the levels expected under CERT or the option of no policies” (DECC
2012)
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
120
eceee @ Presqu’île de Giens, June 7, 2013
Shifting ambitions – rhetoric
2010 = 100
100
Size of market (turnover)
80
60
Number of homes
retrofitted
40
Number of jobs
supported
CO2 emissions
20
0
2010
2011
2012
Rhetoric Tracker™ © 2013 C.O.D. Science Inc.
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Stakeholder reactions
• “We think there is a significant risk in leaving it
to the market, as that has never worked
anywhere in the world and is unlikely to happen
in the UK” (David Kennedy, Committee on
Climate Change, 2011)
• “[Predictions were] produced by DECC
economists, a notoriously hidebound lot in a
department traditionally more interested in
promoting big projects – from nuclear reactors
to windfarms – than in persuading people to
save energy.” (The Daily Telegraph 2012)
• “The Green Deal Impact Assessment is already
out of date” (Barker 2012)
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Reframing the ambition (Nov 2012)
Wherever possible,
we want to see
that we underpromise…
…and over-deliver
in terms of the
measures that are
installed in
people’s houses.
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Some hope: ‘consequential improvements’
Right?
Wrong.
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Some hope: early launch date
• October 2012, with “Excellent customer
experience from day one” (Davey, 2012)
• “We want to launch steadily” (DECC, 2012)
• “It will be a soft launch.” (Barker,
September 2012)
• “Most aspects […] will start on 1 October
[…] finance plans only from January 2013.”
(Davey, September 2012)
• “…was not, in fact, a launch.” (Barker,
October 2012)
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Initial results 1
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Initial results 2
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Initial results 3
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Conclusions
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Risk of failure heightened by…
• Reliance on vast number of components
of the Green Deal to fall into place at the
right time – or to fall into place at all.
• Huge mismatch between rhetoric and
the programme’s development
• A very clear case of how not to manage
expectations.
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Why?
• Politics: The Green Deal is a Government
‘flagship’ policy
• Institutional capacity: The Government
was not in denial about problems with
Green Deal development, but simply did
not perceive them
• ‘Year Zero’ syndrome: The old policy
framework is associated with the
previous government
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
So…
• Is it a ‘Comedy of Errors’ or ‘As You Like
It?’
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Discussion
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future
ACE Research
eceee @ Presqu’île de Giens, June 7, 2013
Discussion
• Questions? Comments?
• What are your views on moving in the direction
of more market-based mechanisms?
• How to address underlying problems?
• Parallel experiences or insights?
www.ukace.org
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Twitter: @uk_ace
Thank you.
ACE aims to reduce overall energy demand to ensure a secure and sustainable energy future