Article as published in Local Government Chronical - 13th October 2011
Retrofitting existing homes with energy efficiency measures is a key policy goal of both national and local government. Bringing about a step change in delivery will be crucial for carbon reduction, helping households better insure themselves against rising energy prices, reducing fuel poverty as well as supporting energy security. However, there is significant change coming in national policy and crucially how it will all be funded.
The results of the Coalition's much trumpeted consultation around its flagship Green Deal are due at any moment. And beyond this, policy extends into a new Energy Company Obligation. Feed in Tariffs, Renewable Heat Incentive, EU funding and how all this potentially comes together.
Local authorities have been key players in delivering domestic energy efficiency to date and will be even more crucial going forward. They are uniquely placed to pull together all the various policy levers to best effect. However, to achieve this will take some navigating and clear strategy. Some local authorities seem to be already on the way while others lag behind. Equally local government coffers are likely to be more stretched than ever before for the foreseeable future, which means getting the right scheme design will be more critical than ever.
Existing policy covering domestic energy efficiency - CERT (Carbon Emissions Reduction Target_ and its smaller but more complex cousin CESP (Community Energy Savings Programme) - is not very user friendly and has primarily been aimed at energy companies with local authorities as an after-thought. As a result there has often been an uneasy marriage between the two. Energy suppliers have to date had most of the money to support domestic energy efficiency but very prescriptive regulations to meet, for example, targeting specific ratios of household demographic, with specific measures. Local authorities often have a much broader remit and position energy efficiency alongside other initiatives such as water use and recycling. Frustrations develop when energy companies appear unwilling to support what are ultimately great initiatives.
CERT and CESP are set to finish in December 2012 and in whatever follows there needs to be a "handbook" that is also written for the public sector audience as well as more thinking around the household and consumer who will ultimately need to be engaged if the whole thing is to fly..
To date there has been a wide divergence across local authorities in terms of delivery of domestic energy efficiency. Kirklees Council is an example of a scheme that has seen terrific results and claims to be the largest local authority household insulation scheme. The Kirklees model was relatively focussed on home insulation, supported by energy supplier funding from Scottish Power and a door to door community engagement programme that was trusted by local residents. According to DECC statistics Kirklees leads the way with others such as Isle of Anglesey, Carmarthenshire, South Ribble and Wyre which on average have managed to insulate 21% of homes.
This contrasts starkly with the poor performing London Boroughs including City of London, Westminster, Kensington and Chelsea, Hackney, Hammersmith and Fulham which on average, have insulated less than 1% of homes. Scratch below the surface and the reasons for this become clearer. The Kirklees-led scheme was buoyed by a significant capital injection from the sale of a local asset, whilst some of the London boroughs have a disproportionately low number of cavity wallwalls. This is a key measure to get the energy suppliers on board, not to mention all the logistical challenges of vans and kit getting around the capital. It will be interesting to see whether the LDA's RE:NEW programme will now redress this.
What this all comes back to is that success or failure, being a leader or lagger (no pun intended) is largely about having a clear strategy and direction. Authorities such as Kirklees have really got their heads around and embraced the opportunity presented by CERT and its predecessor, the Energy Efficiency Commitment. CERT is complex enough and even though it was only introduced in 2008 it has suffered the shifting sands of ministerial preference with numerous policy changes since then. However, that pales into significance compared to the skill required to navigate through the policy that is currently unfolding.
Some local authorities are already on the case and Birmingham Energy Savers (BES) is the leading example. Birmingham City Council has got in early on an ambitious Green Deal approach. Birmingham's aim is to leverage equity and bank finance, possibly including the European Investment Bank, and deliver via a Green Deal model bolstered with energy supplier (ECO) and feed in tariff income streams. This could result in a significant fighting fund of up to £1bn, according to reports. The outcomes that could come from this include lifting 3,000 homes out of fuel poverty, improvement to 15,000 homes and 40 public buildings as well as creating 4,500 jobs in and around the City. The financial model behind the BES model is impressive but finance is only one part of the jigsaw. It sounds obvious but being clear on objectives from day one is paramount. Is it best to go for a focussed programme, for example cavity and loft which is where Kirklees started, or a more holistic approach encompassing renewable energy. Is the scheme principally about carbon reduction or reducing fuel poverty? There is an overlap between the two but there can also be tensions if the objectives are blurred. A more holistic approach can make more sense to the local authority and can help to create a single initiative around waste, water, recycling and energy efficiency but can bring complexity involving multiple internal departments, agencies and funding parties. A focussed approach as in the case of Kirklees can hit serious numbers and make a significant impact in one area. The process of arriving at this objective is not always straightforward and can involve other local political drivers, compliance with central government targets or determined by where there are available resources.
Once objectives are set, data can be the next hurdle. In energy efficiency terms, just understanding the housing stock you have, what's possible and what's been done already is not straightforward. The data is often out there but can involve extensive mapping and modelling, pulling in sources such as the English Housing Survey, the Home Energy Efficiency Database(HEED), local authority data as well as paid for sources. DECC is currently developing a National Energy Efficiency Data Framework (NEED) which helps pull together various pieces of data around household energy consumption and the effectiveness of different interventions by property type. Interestingly in an age of free flowing data quite a lot can be achieved from a desk top, negating the cost and expense of physical survey at least to inform programme design and costings.
When it comes to the critical step of delivery, customer engagement remains crucial. Again local authorities tend to have a clear advantage as whatever residents tend to think about local services, they generally trust a local authority over a private company or even an energy supplier. If you are attempting to offer multiple energy efficiency measures it is best to push for a single visit. Repeat visits will risk disengagement from the householder and a single assessment can then act as a hub to a range of measures and delivery partners. However this visit has to be paid for and an independent team outside of the contractor base could eat resources. The Kirklees door by door, street by street approach to achieving sign up on the scheme is one proven technique but not always necessary in all wards if the supporting marketing is good.
Many local authorities appoint managing agents to manage this process but again there can be a myriad of choices around which type of organisation is most effective, who is adding value and who is simply adding cost by earning a margin in the process (and/or duplicating process).
The steps a local authority needs to go through are all logical from objective setting, finance, scheme design, marketing and roll out, but each presents its own set of challenges with a policy framework that is getting more complex not less, not to mention an ever greater urgency to act. We are already seeing some of the larger authorities making moves including Birmingham, Hampshire and Bristol. However, we need to ensure others follow and seize the initiative as all are well placed to provide the necessary leadership in the post 2012 world.
