Transcript Update from Scottish Power

Energy Company Obligation
SECAN Update
Robert Marjoram
Senior Account Development Executive
3rd November 2014
Government Autumn Ambition
Targets – key changes
• CERO will be reduced by 33%, then HHCRO, CSCO and CERO targets are pro
rata extended from 31 March 2015 to 31 March 2017.
• CERO - at 31 March 2014 any delivery in excess of 25-35% of current phase 1 &
2 will receive an uplift of 1.75-2 times the carbon score primary measures only.
This excludes Excess Action.
• The CERO uplifts at 31 March 2014 generate bonus carbon which can be
applied towards the target. These ranges will be consulted upon before they are
finalised.
• 1.75x uplift on all excess >35% of phase 1 and 2
Potential
ECO
Changes
• CERO 2015 to be a non enforceable target but a 10% increase will be
made to under delivered CERO
• HHCRO and CSCO 31 March 2015 targets must still be met. CERO can fall
short by revised 31st March target but any shortfall will be incurred as additional
obligation at a multiple of 1.1 times.
Eligible Measures – key changes
• HHCRO and CSCO – no change
• CERO (only SWI and Hard To Treat Cavities can qualify as primary measures
installed)
• Easy cavity walls, loft insulation and district heating will become eligible
primary measures for CERO.
• A minimum SWI sub-obligation of 100k measures for the industry until
March 2017.
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ECO Policy Changes
Government
Response to
the ECO
Consultation
– Summary
Levelisation Mechanism
• Threshold and Uplift as per the Term Sheet – threshold of 35% (Phase 1 and 2) and uplift factor of 1.75
• Uplift for primary measures only above the threshold (threshold made up of primary measures only).
Carry-over Cap
• There will be no cap on over-delivery against 2015 targets.
Carry-over Rules
• All CERO and CSCO surplus action can be carried forward with no rule changes.
• In the case of HHCRO surplus action installed from 1st January 2014:
– A deflated score (0.75 without warranty and 0.8 with warranty) will apply for replacement gas boilers.
– An uplifted score (1.40 without warranty and 1.45 with warranty) will apply for insulation and boilers in
households whose main space heating systems are ‘non-gas’.
– The warranty requirement is for a one year installation warranty (no annual service) provided at the time of
installation with a customer declaration that there was no charge for the warranty.
– Warranties are obligatory for HHCRO surplus action (boilers) from 1st January 2015.
– The deflator and uplifts will continue to apply in ECO2 (from April 2015)
CSCO
• Additional qualifying areas
• Rural rule changes - Lowest 25% of LSOAs in settlements under 10,000 population
SWI Minimum
• Government will introduce a SWI minimum of 4MtCO2 by 31 March 2017 - apportioned according to market
share.
Targets
• The 33% Reduction will be applied to Phase 3 only
• The 2015-2017 targets remain as consulted on (2.25 years) apart from HHCRO, which has reduced by £0.1bn to
reflect the updated policy decisions and market delivery data – this depends on a move away from gas boilers.
Mandation
• There will be no mandation of: GDARs, the use of Green Deal Installers, lodged EPCs, Brokerage, Green Deal
blending with ECO, packages of measures, the use of ESAS, limits to customer contributions under HHCRO,
delivery of low cost CERO measures to low income households and delivery to non-gas fuelled households.
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Key ECO Policy/Regulatory Milestones
DECEMBER 2013
Chancellor’s Autumn Statement Announcement
• The March Consultation introduced
uncertainty as DECC language created
concern.
MARCH 2014
DECC Published The Future of ECO Consultation
• The final response was in line with original
expectations, with the exception of the
HHCRO Boiler deflator.
JULY 2014
DECC Published Response to the Future of ECO Consultation and The Draft
ECO Amendment Order (No.2) was laid in Parliament
• The industry has been delivering ‘Interim
Measures’ at our own risk since April 2014.
AUGUST 2014
Ofgem Published the Changes to the ECO Guidance Consultation and Draft
ECO 1.2 Guidance
SEPTEMBER/OCTOBER 2014
Draft ECO2 Order due to be published by DECC/due to be laid in Parliament
and 1st ECO2 Guidance Consultation to be published - due mid/late Jan.
NOVEMBER/DECEMBER 2014
• Certainty comes in November when all the
changes come into effect – many of which
will be backdated to 1st April 2014.
• We await the draft ECO2 Order/Guidance in particular the Boiler Warranty
specification – required 1st January 2015.
ECO 1.2 Guidance to be published, ECO Amendment Order (No.2) to come
into effect and 2nd Ofgem ECO2 Guidance Consultation to be published.
MARCH/APRIL 2015
ECO2 Final Guidance due to be published, ECO1 comes to an end on 31st
March and ECO2 begins on 1st April
• The focus will soon turn to ECO policy post
2017 – particularly in light of the new Fuel
Poverty (energy efficiency) target.
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ECO 2015- 2017
Ofgem
Consulting
• Ofgem consultation on Draft ECO 2015-17 HHCRO Guidance link below:
https://www.ofgem.gov.uk/ofgem-publications/90828/eco21consultation.pdf
The HHCRO requirements will have an impact on measures delivered from 1 January 2015.
Some of these requirements relate to whether certain measures can be credited towards a
supplier’s ECO2 HHCRO. These are:
• Demonstrating whether a premises is non-gas fuelled.
• Introducing qualifying warranties for boiler replacements.
• Introducing warranties for electric storage heater replacements.
Non Gas fuelled premises
• An uplift may be applied to the cost saving of a heating qualifying action if the measure is
installed in a non-gas fuelled premises under ECO2 (next consultation will have more
information on uplifts)
• HHCRO surplus actions under ECO1 may be applied to ECO2 if installed between 1st Jan
2014 and 31st March 2015 these will be subject a conversion factor (between 1.35 & 1.45
depending on the measure)
• The ECO2 order also confirms the proposed definition of a non-gas fuelled premise as the
following :– The main space heating system of a premises includes any heating systems present
that are not fixed room heaters.
– Where the premises is only heated by fixed room heaters then these will be the
assumed main heating system.
Warranties for replacement boilers
• All replacement boilers installed must be accompanied by a qualifying warranty. This
requirement will apply to all replacement boilers, irrespective of fuel type and whether they
are qualifying or non-qualifying boiler replacements.
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