Following yesterday’s announcements – the NIA have released a schedule of the main points raised, relating to energy efficiency:
- As well as higher wages and pensions, and lower taxes, the government is implementing a package of measures to reduce the projected cost of green policies on the average annual household energy bill by £30 from 2017. The bulk of these savings will come from reforms to the current Energy Company Obligation (ECO) scheme.
This will be replaced from April 2017 with a new cheaper domestic energy efficiency supplier obligation which will run for 5 years. The new scheme will upgrade the energy efficiency of over 200,000 homes per year, saving those homes up to £300 off their annual energy bill, tackling the root cause of fuel poverty and delivering on the government’s commitment to help 1 million more homes this Parliament.
- The government will provide £295 million over 5 years to improve the energy efficiency of schools, hospitals and other public sector buildings. Separately, over £300 million of funding for up to 200 heat networks will generate enough heat to support the equivalent of over 400,000 homes and leverage up to £2 billion of private capital investment.
- Domestic energy efficiency supplier obligation – The government will implement a domestic energy efficiency suppler obligation for 5 years from April 2017, with a value of £640 million per year, rising with inflation (CPI).
The NIA have also spoken to DECC about these announcements and advise as follows:
- The new £640m per year domestic energy efficiency supplier obligation represents a reduction in expenditure of around 20% compared to the cost of delivering the current ECO.
- DECC still envisage that there will be a one year extension to the current ECO with some minor changes to the existing scheme from April 2017.
- The fully fledged new scheme would then kick in from April 2018 for four years.
- Simplifying and reducing the cost of compliance of an ECO extension and its replacement is seen as a priority which would enable more to be spent on delivering hard measures.
- Gaining agreement from Treasury to a 5 year Obligation Scheme was important in providing greater clarity and longevity.
- DECC will also be looking at what can be done outside the new fuel poverty focussed obligation to increase activity in the Private Rented Sector, Social Housing Sector and Able-To-Pay Market.
- DECC is very keen to work with NIA in the design of the ECO extension and new obligation.
- The NIA will be obtaining further details of the £295m announced for public sector buildings and briefing members further on this.