Charlotte Dingle, February 2012
The Energy Company Obligation (ECO) has now replaced the Carbon Emissions Reduction Target (CERT) and the Community Energy Savings Programme (CESP), taking over the regulation of energy suppliers. ECO is focused on helping lower income and vulnerable fuel consumers and the so called ‘hard-to-treat’ properties (usually properties with solid walls and/or no access to mains gas heating). CESP, which comes to an end in December 2012, has been a three year obligation for major energy suppliers and generators to offer free or low cost energy efficiency measures in certain low income areas. It differs from CERT in that it focuses on communities and defined areas of income deprived homes, rather than on individual households.
Where does the money come from? Energy companies will fund ECO through a ‘pay-as-you-save’ model, using money from consumers’ fuel bills. The first units of electricity are charged at a higher rate than subsequent units, which means the fuel poor can end up spending a larger proportion of their income on energy while more affluent consumers who use more energy enjoy the savings. Under CERT, energy companies were simply obliged to reach certain savings targets by promoting low carbon energy solutions to their customers. CERT asked companies to pay out £2.4bn a year, with 40% benefitting the fuel poor. Under ECO, companies only have to pay out £1.3bn, with just 25% going to help the fuel poor.
Things we need to think about - Even if a household can potentially secure savings, getting people to be interested in participating in schemes in the first place is a challenge when the benefits are not clearly explained. Under CERT, households were offered insulation for free – under ECO, this will no longer be the case. Given that take-up has been low even under CERT, this development is unhelpful to say the least. It has been clear for some time that a radical overhaul of the system used to reach fuel poor families is needed. This means more support and targeted attempts to help them make the greatest savings – and not just from energy companies. Social landlords, local authorities, community groups and other trusted face-to-face sources should be reaching out to the fuel poor and helping them work out which energy-saving schemes are best for them.
The fuel poor are also more likely to live in those hard-to-treat homes. Nearly 60% of London’s properties have solid-walls. In order to give those in hard-to-treat homes in London a fairer deal, ECO must bring in regional targets, as well as accelerating the rate at which London’s whole insulation programme is rolled out.
CERT has only delivered 4.7% of loft and cavity wall insulation across the capital so far. The Green Deal impact assessment suggests that installations of loft and cavity wall insulation are set to fall to 15% of current levels, meaning it would take a whole century just to insulate the rest of the capital’s ‘easy-to-treat’ lofts and cavity walls! This is clearly an issue.
Funding must be found to complete the insulation of these remaining homes as quickly as possible, and to facilitate the insulation industry’s transition from delivering cavity wall to delivering solid wall insulation without significant job losses. Without regional targets, its concentration of hard-to-treat homes may well mean that London will lose out on £500 million of funding between 2012 and 2015 – on top of £350 million which it has already been overlooked for under CERT since 2005. More than 30% of London’s solid-walled properties are flats, too, raising issues of consent which are not addressed by current Green Deal proposals.
So the introduction of ECO offers an invaluable opportunity to build on CERT and bring a better programme of assistance to the fuel poor. It is clear, however, that it needs a significant lift if it is to properly benefit fuel poor households across the country.