UK EEOS: Lessons learned and future challenges Tina Fawcett

Transcription

1 Environmental Change Institute UK EEOS: Lessons learned and future challenges Tina Fawcett Brussels, 14 October 2016

2 Description of UK EEO Lessons learned Future challenges Outline

3 UK scheme overview Began in 1992 on a very small scale gradually built up to large scale scheme in (delivering annual savings of around 1% of residential energy use). Scale in terms of costs and energy savings reduced in current phase ( ). From 2018, new ECO is expected to focus on fuel poor only, which is likely to further reduce savings. Apart from very early years, for residential sector only. Obligation is on large energy retailers (with exception of part of the scheme , obligation placed on large electricity generators an experiment which was not repeated). There have generally been six obligated parties, all of whom are large, sophisticated companies.

4 Implicit annual energy savings target (TWh lifetime) Energy savings targets 140 UK EEO - implicit annual energy savings targets, Note: UK targets have not always been specified in TWh, most set as carbon targets, which is why these figures are presented as implicit targets. Source: Rosenow 2012, Rosenow et al , author estimate

5 Costs per customer 80 UK EEO costs per gas plus electricity customer ( per year) original revised Note: costs up to 2012 are actual, from 2013 onwards ex ante estimates (historically higher than actual costs)

6 Energy prices can be a sensitive political issue: pressure to change policy in 2013/14

7 Measures installed , residential This is the period which had greatest focus on mass installation of low cost measures. The main part of the scheme CERT installed the following: Measure Cavity wall insulation Numbers 2.6 million Solid wall insulation 50,000 Professional loft insulation CFLs Heating controls Efficient cold and wet appliances 3.9 million 309 million 1.5 million 4.4 million One in five GB households received a CERT measure. Source: Ofgem-eServe, 2013

8 Current scheme: Energy Company Obligation, This was designed to complement the Government s other policy Green Deal a loans policy which has now been discontinued. Less of a focus only on energy saving, more on delivering affordable heat, and supporting high cost measures. Three separate sub-schemes. Savings target & focus on high cost measures reduced in 2014 due to concern about the costs EEO was adding to energy bills. Transition extension for will be smaller in terms of energy company spend (26% reduction), with more of a focus on the fuel poor.

9 Future changes in scheme design Current ECO ( ) Low cost insulation (CERO) Insulation to certain areas (CSCO + rural) Heating + insulation for the fuel poor (Affordable Warmth) Solid Wall Transition ( ) Low cost insulation Heating + insulation for the fuel poor Solid Wall Fuel poverty obligation ( ) Heating + insulation for the fuel poor Solid Wall? * Not to scale! Adapted from: DECC (2016) Eco: Help to heat. Department of Energy and Climate Change, UK.

10 Lessons learned (1) EEOs have delivered very substantial improvements in energy efficiency in UK households, particularly in the period of high obligations Until the sudden and unsuccessful changes adopted in 2012 to accompany the Green Deal (a loans policy), EEOs had developed incrementally and grown steadily in scale, Placing obligations on energy suppliers in a competitive market has been successful in that targets have, with rare exceptions, been delivered. However, energy suppliers have not moved to an ESCO business model. The approach of requiring a strong focus on measures in low income groups has been characteristic of UK EEOs. This has enabled all income groups to benefit.

11 Lessons learned (2) The UK is almost unique in restricting its EEO to the household sector. There is no convincing logic for this. As in most countries, EEOs have been used primarily to deliver relatively low cost energy efficiency measures. The experiment with ECO, ceasing support for low cost measures and focussing on a more expensive measure, solid wall insulation, has not been successful and was essentially abandoned from 2014.

12 Challenges for future policy: UK The UK is using its EEOS to tackle fuel poverty a policy formerly paid for out of general taxation. Will this retain public support, and is it a sensible way of addressing fuel poverty? The UK is likely to continue to move away from EEOS as a major delivery policy for energy efficiency, just as the policy is spreading to more EU countries. The UK currently has no policy to encourage uptake of residential efficiency measures by the able to pay How to develop policy to deliver savings from renovating the existing housing stock?

13 Challenges for future policy: general Balance of developing policies meeting a diversity of goals, without the policy developing unmanageable complexity. Are low cost intervention options are reducing in the residential sector? How can Article 7 policies support deep and complex refurbishment, technical innovation or behavioural change? Should EU policy specifically on renovation of existing buildings be developed or is it better to retain a flexible policy like Article 7? Refurbishment delivers important comfort and health benefits as well as energy savings should these be valued? Can energy efficiency policy be strengthened without losing public and political support? Do we need to put obligations on building owners?

14 References / further information Ofgem E-Serve, 2013a. The final report of the Carbon Emission Reduction Target (CERT) Ofgem, Available on the web: Rosenow, J., Energy savings obligations in the UK A history of change. Energy Policy 49, Rosenow, J., Platt, R., Flanagan, B., Fuel poverty and energy efficiency obligations A critical assessment of the supplier obligation in the UK. Energy Policy 62, Ipsos MORI, CAG Consultants, UCL, Energy Saving Trust, 2014a. Evaluation of the Carbon Emissions Reduction Target and Community Energy Saving Programme. Defra, London. ENSPOL reports D2.1.1 & D3.1 see

15 UK schemes in outline Name of scheme Energy Efficiency Energy Standards of Efficiency Performance 1-3 Commitment 1 Energy Efficiency Commitment 2 Carbon Emissions Reduction Target Community Energy Savings Programme Energy Company Obligation Abbreviation EESoP 1 - EESoP3 EEC 1 EEC 2 CERT CESP ECO Period Coverage Domestic and SME electricity customers (plus gas from 2000) Domestic gas & electricity customers Domestic electricity & gas customers Domestic electricity & gas customers Domestic electricity & gas customers Domestic electricity & gas customers Implicit annual target 8.4 TWh (lifetime) 21 TWh (lifetime) 43 TWh (lifetime) Approx. 104 TWh (lifetime) Approx. 15 TWh (lifetime) Approx. 30 TWh (lifetime) (prior to redesign in 2014) Annual expenditure by energy companies (actual figures) 104 million 167 million 400 million 911 million 234million 130 million 209 million 500 million 1139 million 292 million Figures not yet available