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Green Deal Explained and the Current Situation

Posted on: 2011-07-22 13:35:01

The Green Deal and Energy Bill 

CIBSE Key Issues

Green Deal Explained

This article explains where the Bill has got to, how the Bill may affect the work of those in construction and why you may want to keep abreast of developments.

Green Deal and the Energy Bill

The Coalition has introduced the ‘Green Deal', a framework to enable private firms to offer energy efficiency improvements to homes, community spaces and businesses, with the intention "to revolutionise the energy efficiency of British properties."  The Green Deal is a key element of the Energy Bill currently coming towards the end of the parliamentary process. This article explains where the Bill has got to, how the Bill may affect the work of CIBSE members and why you may want to keep abreast of developments.

If the UK is to reduce carbon emissions from the existing building stock, then they need to be a whole lot more energy efficient. The Coalition has recognised this, and have introduced the Green Deal to address this need. The policy was first envisaged under the previous government to drive the energy refurbishment market. The concept is simple: buildings can be refurbished to use less energy and savings on the energy bill pay for the energy efficiency measures over time.  The detailed reality is turning out to be significantly more complex.

Originally called "Pay as you save", the scheme is now known as the "Green Deal".  Initially intended for home energy efficiency improvements costing a few thousand pounds, it has now been opened to both domestic and non-domestic buildings, and, as long as the measures can be funded from reduced energy bills, there is no limit on the costs that may be covered under the scheme. The money will come from "Green Deal providers", who will create a new business from providing funding and helping to provide energy efficiency upgrades to homeowners, tenants and businesses.

This article explains the basic principles of the Green Deal. There is a great deal of work being carried out by the Department of Energy and Climate Change, the Department of Communities and Local Government, various industry for a BSI Steering Group, as well as a wide range of industry and trade bodies, all addressing different aspects of the Green Deal. This work is on-going, and is likely to be announced in stages over the coming months.

The Golden Rule

The fundamental principle of the Green Deal is that the energy efficiency measures that are installed will be paid for through a charge on the electricity meter, which must not exceed the anticipated savings on the total energy bill due to the measures. SAP and SBEM, the software used to calculate asset ratings for energy performance certificates, will be developed to calculate the anticipated savigs and to test whether any proposed measures will meet the Golden Rule.

 There is some discussion about whether a simpler method of calculating the costs and savings from standalone energy efficiency projects may be allowed for non-domestic works, such as a boiler replacement and heating system upgrade, or a lighting replacement scheme. In principle any energy using system replacement or upgrade ought to be amenable to a simple calculation of the installed cost and the project energy savings. This would certainly reduce the costs of the assessment, and the issue is still under discussion.

Landlords and Tenants

Where a building is owner occupied, be they residential or commercial occupiers, the Green Deal is relatively straightforward. Were the building is occupied by tenants, be they social or private tenants in the residential sector, or business tenants in the non domestic sector, then a whole additional issue comes into play. Who needs to give consent, who can enter into a green deal plan, and what happens when the tenant moves on? What will the landlord have to do? Do they pick up the energy bill and green deal charge during a void? And how will the existence of a Green Deal plan affect the letability of the property? Will it add value, or detract from it?

The simple answer is, nobody knows, although there are a number of groups working on the issues and trying to provide safeguards and incentives to address these concerns. This is an issue to be watched carefully, and reported on as decisions emerge in the coming weeks and months.

Stage 1: Assessment

Anyone who wants a Green Deal package to fund improvements will require an assessment by an independent accredited assessor, who will determine the current performance of the building and consider what energy efficiency measures are likely to be suitable. They will then assess the anticipated savings from the proposed measures. There is a concern that, as currently proposed, the assessment will not take any account of the operational energy use of the occupant.

Green Deal Assessors

Assessors will already be energy assessors, but will require further competences to carry out Green Deal assessments. It is not yet clear how those competences will be assessed. Energy Assessors can either obtain an NVQ, or be accredited on the basis of prior experience. The Department of Energy and Climate Change (DECC) are currently consulting on the arrangements for Green Deal Assessors and it is not yet clear whether the prior experience route will be open.

Consulting engineers have professional qualifications and have been assessing buildings, devising refurbishment schemes and advising clients on the costs and savings those schemes will deliver, it would be strange to require them to obtain a further NVQ to allow them to do this for the Green Deal. CIBSE is currently in discussion with DECC about these proposals.

Once the Assessor has determined which measures are likely to meet the Golden Rule, they will provide a report recommending the measures to the potential customer. The assessment will be funded by a provider, but the assessor must be independent of the providers. More detail on the financial mechanisms is awaited.

Stage 2: Obtaining funding and Installation

Armed with the Green Deal report, the customer is then free to approach any Green Deal provider for finance to fund the recommended measures. Once they have the funding agreed, the provider will arrange for an accredited installer to undertake the work.

Green Deal Installers

Once a package of measures has been tested against the Golden Rule, then an accredited installer must install the measures. Installers will have to be accredited, and will be required to work to a Publicly Available Specification, or PAS, which is being developed by BSI. This is due to be consulted on shortly, with a draft for consultation expected in August (see Box). Arrangements for the accreditation of the installers are also under development.

 Publicly Available Specification 2030 is being developed by BSI to provide a specification for the installation of energy efficiency improvements in existing buildings, particularly where such installation is undertaken within the remit of the United Kingdom Green Deal Financing Mechanism. It is anticipated that a draft for comment will be released shortly. CIBSE will publicise this to members through the website, the electronic newsletter and, if time permits, CIBSE Journal.

The Energy Bill: Progress to date

The Energy Bill has completed the Committee Stage, which is where MPs can propose and debate amendments. It will return to the House of Commons in September, and then to the Lords. It is currently expected to receive Royal Assent in the early Autumn.

One amendment proposed in Committee was to provide enabling legislation for the roll out of Display Energy Certificates to all buildings over the current size threshold. Although this was defeated in Committee, Greg Barker, the Minister responsible for this aspect of the Bill, gave assurances that the government was considering introducing such an amendment when the Bill returns to the House. It is currently unclear whether this will be successful, as the Chancellor of the Exchequer is reported to be very concerned about the effect on business, viewing it as a burden. CIBSE is working with the UK Green Building Council to make the case that DECs are a benefit to business.

The Green Deal is due to come into operation in October 2012. Before then the Energy Bill must be passed, the secondary legislation to enable accreditation schemes and financial provisions must be introduced (starting with a consultation in September or October 2011) and detailed industry guidance is due to be released in Spring 2012.

Further Information:

Click here for the DECC webpage for the Green Deal