Keeping pace with the Green Deal

Green Deal, SummitSkills
Spelling out the Green Deal — guidance from the Department of Energy & Climate Change.

With the Green Deal firmly on the way to come into effect in Autumn 2012, we look at how it will work and the opportunities its provides for reducing the UK’s energy consumption and carbon emissions — as well as the opportunities for business.

The Government’s Green Deal initiative aimed at transforming the energy efficiency of existing buildings with an innovative approach to finance is set to move ahead rapidly with the Energy Act having become law. Not only will the Green Deal play an important role in reducing the UK’s energy consumption and carbon emissions, but it will also provide major business opportunities for the building-services engineering sector.

The chief executive of SummitSkills, Keith Marshall, says, ‘The message from Government is clear. Green Deal is now on a countdown to becoming reality, and skilled engineers in the building-services engineering sector will play a leading role in ensuring this ambitious scheme’s success. Forward-looking employers need to be preparing now, looking at the skills in their workforce and identifying how to plug any skills gaps with accredited training.’

The Green Deal is described by Climate Change Minister Greg Barker as a ‘massive business opportunity’, which is expected to attract capital investment of £15 billion in the residential sector alone by 2020 and support 250 000 jobs.

But before looking further at the business opportunities and the provision of training to ensure those opportunities can be exploited, a detailed look at what the Green Deal is all about and how it will work.

That information was provided at a recent CIBSE conference on low-carbon retrofit by Professor David Strong of David Strong Consulting.

Quite simply, David Strong asserts, ‘The Green Deal will be the major show in town, the only show in town, to encourage the take up of green engineering for the existing building stock.’ And the Green Deal applies to the commercial sector as well as the domestic sector and will include owner-occupiers, and the private and social rented sectors.

In his presentation of what he called ‘What you always wanted to know about the Green Deal — but you were afraid to ask’, David Strong summarised current thinking by the DECC (Department of Energy & Climate Change).

The first, and key principle, is that the customer receives a package of energy-efficiency measures at no up-front cost from a Green Deal provider.

The cost of the measures will be paid back over the long term (such as 25 years) through repayments made via energy bills.

The customer’s energy supplier will act as a conduit to pass the Green Deal repayments to the Green Deal provider. David Strong elaborates that the charge will be on the electricity bill and not on the gas bill, even though reductions in the cost of cooking, heating and hot water are likely to be the main savings.

Then we have what has become known as the ‘Golden Rule’ — namely that the cost of the repayments will be equal to or less than the likely savings on the energy bill.

Green Deal finance will not be structured as a conventional loan. The customer will not be liable for the capital sum, only the repayments — and then only while they occupy the property. Responsibility for payments is passed on to the new occupant.

Skills development — Keith Marshall.

Along with the Energy Company Obligation, which replaces CESP and CERT, the Green Deal is regarded as ‘game changing’ by the Government when it comes into effect from Autumn 2012.

Even at this stage, there are major concerns about how successful the Green Deal will really be. Those concerns stem from a DECC-funded pilot scheme in Sutton, south-west London, where only 67 homes out of 126 adopted the energy-efficiency measures put forward.

The implication is that finance alone is not a sufficient incentive and that the major disruption that might be caused by, for example, insulating solid walls, could be a deterrent.

The Sutton trial was carried out by B&Q, the London Borough of Sutton and social enterprise BioRegional. Energy-efficiency measures included insulation, draught proofing, boiler upgrades and solar PV.

What the trial also indicated is that energy-efficiency measures are more likely to be taken up if they improve aesthetics and comfort.

The two fundamental planks of the Green Deal, the availability of finance and expert assistance in selecting and implementing energy-efficiency measures, were indicated by feedback from homeowners as making eco-upgrades more affordable as there was no upfront capital to pay.

The average spend per household was about £13 000, funded through a 40% grant and an interest-free loan for the remaining 40%. Householders could choose to make repayments over a period from 10 to 25 years.

Back to David Strong and the future of the Green Deal. He describes the process as having four stages.

• Assessment

• Finance

• Installation

• Repayments and follow up

Starting with assessment, robust and impartial assessment is the gateway to the Green Deal, and it includes the fabric and occupancy. The advice report will recommend measures and packages. Once an assessment has been prepared, it can be used as the basis for a Green Deal quote from any provider. The intention is that finance will be available from the private sector.

Energy-saving measures must meet strict criteria, including satisfying the ‘Golden rule’. Possible measures at this stage could include various forms of insulation for the building fabric and heating system. Lighting fittings and lighting controls are on the cards as are water-efficient taps and showers. There is a good range of potential HVAC solutions, including condensing boilers, air- and ground-source heat pumps, heating controls, heat-recovery systems, mechanical ventilation for non-domestic buildings and flue-gas heat-recovery devices.

Key elements of the finance aspects have already been referred to above (‘Golden rule’, not a normal loan and repayments). Another key aspect is that finance will only be available for approved measures by accredited installers following accredited assessment. Not only must appropriate consent be sought before a Green Deal is taken out on a property, but its existence must be disclosed to future owners or renters of the property. In addition, a Green Deal cannot be taken out on a property without appropriate consent having been sought. In particular, tenants cannot enter into a Green Deal Scheme.

There will be stringent requirements for installers and products, with the Green Deal requiring standards and certification for products and installers.

To practise under the Green Deal Scheme, installers will need to meet certain standards and carry the Green Deal quality mark/logo. When work has been completed, the installer will be required to sign it off and inform the finance provider so that repayments can begin.

A key part of the process is the development of a standard by the BSI. This Publicly Available Specification is being developed over about six months and will cover the following.

• Certification of products and materials.

• Technical criteria for installation,

• Installer competence via appropriate qualifications.

• Customer conduct and complaint processes.

• Provision of warranties to cover work carried out.

This standard will be implemented through accredited certification bodies, with independent certification of certification bodies by bodies such as UKAS.

With the Energy Act having already become law, an essential stage in the progress of the Green Deal is in place.

Early in 2012, secondary legislation is to be laid in Parliament, and early adopters will work with Green Deal providers over the development of packages in advance of legislation.

Finally, in Autumn 2012, the first Green Deals will appear and the Energy Company Obligation will be introduced. Autumn 2012 will also see the introduction of the Renewable Heat Incentive for small commercial and residential buildings.

SummitSkills, as the sector skills council for the building-services-engineering sector and representing employers in the air-conditioning and refrigeration, electro-technical, plumbing, heating and ventilation industry has taken the need for training to heart. The council is working with the Department of Energy & Climate Change and the Microgeneration Certification Scheme on a quality-assurance mark giving access to Government financial incentives to remove the upfront costs of energy-efficiency measures.

Keith Marshall explains, ‘As BSE operatives increasingly develop their skills into these new low-carbon and microgeneration technologies, SummitSkills wants to make sure installers don’t waste time and money on sub-standard training. Businesses which spend resources on the right training will more quickly get MCS-certified, giving them the edge over their competitors.’

To provide employers with the information they need about the scheme, Green Deal Connection roadshows are running until March 2012. These events have been organised by a partnership between SummitSkills and other sector skills councils for the built environment — Asset Skills and CITB-ConstructionSkills. For more information about venues and dates call 0845 678 2888.

Earlier this year, SummitSkills set up the National Skills Academy for Environmental Technologies — a nationwide network of accredited training providers in clean and renewable technologies. Employers looking for accredited training in their area so as to waste no time in getting MCS-accredited can contact the Skills Academy on 01908 303971.

The Green Deal has been a long time in its development, but it is becoming very clear just how much is being vested in it by the Government and how big a business opportunity it presents. Contract energy management companies have long built businesses based on investing to reduce clients’ energy bills and getting their return from the cost savings. The Green Deal presents similar winning opportunities.

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