A Manifesto for Warmth

Northern Ireland Fuel Poverty Coalition Conference 2015

Tuesday 1st December 2015

Stuart WightmanHead of Energy Efficiency Branch

Energy Division

• Energy Efficiency Directive• Existing Energy Efficiency Provision• Draft EnergyWise Proposals

– The Challenge, The Aims, Finding the Balance, Providing a Continuum of Support

– Step by Step Guide– Delivery Structures– Proposed Funding– Phased Approach– Timetable

Contents

Energy Efficiency Directive

Energy Efficiency Directive (EED)• Requires Member States to set up an energy efficiency obligation

scheme to achieve end-use energy savings of 1.5% each year from 2014 to 2020. However, as an alternative, Member States may opt to take other policy measures to achieve these energy savings among final customers.

• DETI is responsible for implementing EED requirements in NI. UK response to EED set out in National Energy Efficiency Action Plan

• NI contribution is 200GWh per year from 2016 onwards - NISEP is currently NI’s only contribution to EED (approx 40GW /yr).

• GB has the Energy Company Obligation (ECO) which is funded by all electricity and gas customers. Consideration previously given to introducing NI energy obligation (like ECO) but ruled for affordability and legal reasons.

Existing Energy Efficiency Provision

Existing Energy Efficiency ProvisionCurrent Responsibilities:• Domestic Sector (Social & Private) – DSD

• Business Sector – Invest NI

• Voluntary & Community Sector – DETI

• Public Estate – DFP

• Building Standards - DFP

• Climate Change & Emissions - DOE

Current Domestic Schemes

NISEP

Affordable Warmth BRS

Both NISEP and BRS end in March 2017 leaving no support any households with incomes >£20k.

overlap

Social Housing Schemes

Work ongoing to ensure energy savings from all existing schemes are captured for EED purposes.

Current Non Domestic SchemesNISEP provides some limited grant support for business.

Invest NI’s Energy Efficiency Loan Scheme provides 0% loans of up to £400k to business.

Many businesses (particularly agricultural) cannot qualify for 0% loan schemes because of EU State Aid de minimis rules.

No current support for voluntary and community sector.

NISEP

0% Loan

SchemeWork ongoing to ensure energy savings from all existing schemes are captured for EED purposes.

Draft EnergyWise Proposals

The ChallengeNeed to find balance between efficiency scheme to replace NISEP and BRS that will:- deliver 40-50 GWh of annual energy savings and lower total

carbon emissions;

- deliver lower energy bills to help mitigate the effects of fuel poverty and make business more competitive;

- stimulate the economy by promoting investment, creating jobs and supporting formal apprenticeship opportunities; and

- efficiently deliver high quality, cost effective energy efficiency improvements at minimal cost to taxpayers and consumers.

Aims• Bring together all Government energy efficiency

support (advice/grants/loans) for all sectors (domestic/business/v&c) under the ‘EnergyWise’ banner.

• Centrally procure energy services (products & labour) to deliver economies of scale and oversee quality.

• From 2017 onwards the scheme will replace NISEP & BRS in the provision of insulation and heating system upgrades to households.

• Deliver energy efficiency improvements to 8,500 households / year.

Finding the Balance

Higher income households, V&C & Business• Less grant

support (30%)• Higher energy

savings (68%)

Lower income households • More grant

support (70%)• Lower Energy

Savings (32%)

30%

70%

Grant Support (£)

Providing a continuum of supportGrant Level

100%

Household lncome

Affordable Warmth Grant

16%

0 £20k £30k

EnergyWise Loan

3,150 lower income households• Average grant £1,450 (58%)• 0% loans• 70% of grant pot

5,350 higher income households• Average grant £400 (16%)• Low interest loans• 30% of grant pot

EnergyWise Grant

EnergyWise ProposalsStep by Step Guide

One-stop shop for all Government Energy Efficiency Advice & Support

Voluntary & CommunityEnergyWise Grants and Loans

Business & Industry0% Energy Efficiency Loans (Invest NI)

EnergyWise energy efficiency and renewable heating loans.

Renewable Heat Incentive (RHI)

Households & Landlords100% Affordable Warmth grants for lowest income households (<£20k)

EnergyWise grants (16-100%) and 0% loans for low income households (<£30k)

EnergyWise grants (16%) and low interest loans for higher income households (>£30k).

Domestic Renewable Heat Incentive (RHI)

Step 1 - Extensive Marketing

• Measures installed will be determined on a case by case basis through Technical Energy Performance Assessments (including EPC) carried out by the service provider.

• Assessment fees of £25 and £50 will be charged for lower (<£30k) and higher (>£30k) income households respectively.

• Service provider will advise households on a range of energy efficiency options and the levels of grant and loan support available.

• Range of measures including boiler replacements, heating controls, radiators, insulation, LED lighting, draft exclusion and water efficiency kits. No boiler replacements will be installed without adequate insulation being in place.

Step 2 - Technical Assessments

• Bulk purchasing strategy will ensure value for money through lower unit costs for a wide range of energy saving measures.

• Installation costs will be reduced through geographically focused procurement of services and products.

• Providing the energy services sector with a guaranteed work stream for 7 years enables installers and suppliers to plan ahead which, in turn, can generate efficiencies in the supply chain.

• Register of ‘EnergyWise’ accredited installers and suppliers will be maintained – simple registration process.

• All work will be quality assured and poor quality could lead to installers / suppliers being struck off of the register.

Step 3 – Securing Services & Products

Once households decide to proceed, the EnergyWise Service Provider will look after everything including:

– Sourcing and securing installations services and products;

– Arranging all the household finance including grant and loans (where appropriate);

– Overseeing and quality assuring all the work;

– Payment of installers and / or suppliers;

– Securing Building Control Approval; and

– Providing customer aftercare and warranty.

Step 4 - Delivery & AfterCare

• Register of ‘EnergyWise’ accredited installers and suppliers will be maintained – simple registration process.

• All work will be quality assured and poor quality could lead to installers / suppliers being struck off of the register.

• EnergyWise Service Provider will oversee and quality assure all work and have contract with installers / suppliers.

• Separate contract between EnergyWise Service Provider and households/landlords.

• EnergyWise Service Provider will arrange / secure Building Control Approval and arrange for payment to installers / suppliers.

Step 5 – QA & Building Control

• EnergyWise Service Provider will take customer deposit (where appropriate) and secure grant support / loan finance in advance of works.

• EnergyWise Service Provider will withhold payment until completion of works.

• EnergyWise Service Provider will start collecting loan payments (where appropriate) once work has been signed off.

Step 6 – Grants/Loans & Payment

EnergyWise ProposalsProposed Funding

• Year 1 (2016/17) administration and development costs to be funded through EU ELENA funding (subject to approval). Year 1 grants will either be provided through BRS or a separate bid will be made.

• Grants from year 2 onwards to be funded through a new energy efficiency levy on electricity consumers from April 2017 after NISEP ends. Subject Business Case Approval, proposals for the new Levy will be consulted on in the New Year.

• Loans to be funded through ether Capital DEL or Financial Transactions Capital (FTC).

• Scheme income from loan interest, technical assessment fees and management fees.

Proposed Funding

EnergyWise ProposalsDelivery Structures

Project Structure / Governance

DETI SRO (C Stewart)

ProjectStructures

Ensure that Government effort in the area of energy improvements remains ‘joined-up’ under EnergyWise

Project Board(DETI/OFMDFM/DSD)

DETI PM (S Wightman)

Stakeholder AdvisoryPanel

Proposed Industry Group

EnergyWise Service

Providers

Project / Contract Management Team (DETI/SIB)

Finance Service Provider (FSP)

Managed Service Provider (MSP) & Delivery Agents

EnergyWise Customers(Households / Voluntary & Community Organisations / Businesses / ESCOs)

Marketing

Sales

Delivery

Loan/grant applications

Reporting

Energy Levy Funding

Customer Finance(EnergyWise loans/grants & RHI) grant

Funding (DEL, FTC, RHI & ELENA)Loan

Repayments

External Assurance Provider (EAP)

Reporting

Installers / Suppliers

Department for the Economy (DfE)

Delivery

Domestic RHI

Payments

Loan Repayments

EnergyWise ProposalsPhased Approach

• Phase 1 (18 months) – 2016/17 – 2017/18– Need to legislate for New Levy (including Public Consultation)– Mobilisation (IT systems and service providers)– Bed in delivery structures and funding arrangements– Test loan proposals (including bad debt)– Test grant proposals– Test Water Efficiency Measures– Test proposed levels of fees – Develop procurement arrangements with industry– Develop Quality Assurance Systems – Develop effective relationships with Building Control– Phase 1 Review / Public Consultation

• Phase 2 (5 + 2 years) – 2018/19 onwards

Phased Approach

EnergyWise ProposalsTimetable

Project Timeline – Phase 1

May 15 Oct 15 Jan 16 Feb 16 May Jun 16 July 16 Sep Oct 16

Project Initiation

Gateway Review

OBC Development

Launch Public Consultation on proposed Levy

Establish Stakeholder

Forum

OBC Clearance

Procurement

AdvertiseTenders

Gateway Review

EvaluateTenders

Gateway Review

FBC

FBC Clearance

Contract Award

Phase 1 Launch

Mobilisation

Finalise Policy for proposed Levy

Develop Levy Legislation

Project Timeline – Phase 2

Sep 17 Dec 17 Jan 18 April 18

Phase 1 Review

FBC Development

FBC Clearance

Contract Award

Phase 2 Launch

Mobilisation

Introduce new legislation

Public Consultation

Gateway Review

Thank You For Listening