The consultation, issued on 31 January, sets out proposals in four sections with a general closing date of 27 April; however, section two, covering Part L (conservation of fuel and power), includes proposals for additional ‘consequential’ improvements in existing buildings, with a submission deadline of 27 March 2012. This is to tie in with the planned introduction of the Green Deal scheme in October this year.

What is proposed?

The paper proposes to introduce, on a phased basis, requirements for additional energy efficiency improvements to be carried out when other notifiable work is planned, and Green Deal finance is available as an option to meet the costs.

Consequential improvements would be required in the following circumstances:

• Extensions or increases in habitable space – all existing domestic buildings that undergo works to add an extension, and increases in habitable space (i.e. loft and integral garage conversions). (Consequential improvements are already required for buildings over 1000m²).
• The replacement of specified controlled services or fittings – for homes, the replacement of a boiler or a percentage of the home’s windows. Views are sought on whether there are appropriate trigger points that could apply across the board to non-domestic buildings.
• The initial provision of a fixed building service, or an increase to the installed capacity of a fixed building service only in buildings over 1000m² – these triggers are already in the Regulations.

If introduced, this would mean that an owner or occupier who carries out work to their building (e.g. an extension, loft conversion or replacement windows) would be asked to undertake additional work that is “technically, functionally and economically feasible”. Although the use of Green Deal finance would not be compulsory, the availability of this option is considered to be important so that any additional measures required could be installed at no upfront cost. If Green Deal finance were unavailable (due to failure to meet the Golden Rule), then the additional measures would be deemed not to be economically feasible and need not be installed.

Identification of what additional work is required may be made by reference to a Green Deal assessment, an EPC or otherwise, but the decision must be approved by Building Control. The range of improvements that may be required will be drawn from the SAP list currently being updated for use in generating domestic EPC and Green Deal assessments.

When replacing domestic windows or boilers (also notifiable work), the requirement for consequential measures will be limited to one, some or all of the following:

• Loft insulation
• Cavity wall insulation
• Hot water cylinder insulation
• Draught proofing

What are the impacts?

The impact assessment suggests that the requirement for consequential improvements will have a ‘significant impact’ and produce large carbon savings. It also identifies increased work for small builders.

However, there are some possible negative impacts: the requirement for additional work may deter homeowners from carrying out any improvement work at all, especially where the work requires additional contractors and/or extended timescales; they may be disinclined to apply for consent or to notify Building Control of planned work; from the local authority point of view, there will be an increased workload with Building Control officers required to assess and approve planned consequential measures.

What next?

There is much more detail in the consultation documents. The full Part L consultation also includes proposals for tighter carbon dioxide emission standards for new homes and non-domestic buildings, to take the next step towards ‘zero carbon’ standards, plus tighter performance standards for works to existing buildings. It can be found on the Communities and Local Government website.

What do you think? Do you welcome these proposals, and will they drive take-up of Green Deal finance? Please post your comments – or this or on other important issues in this consultation.

Solar PV panels

The Government has announced its improvements to the FIT scheme following the Phase 1 consultation on solar PV. It has also published two further consultations: Comprehensive Review Phase 2A on solar PV cost controls, closing on 3^rd April, and Phase 2B on FIT tariffs other than solar PV, closing on 26^th April.

We’ve summarised the immediate impacts and key proposals for solar PV, particularly those likely to affect the public sector.

Immediate changes

In response to the Phase 1 consultation the following decisions have been taken:

• A tariff of 21p/kWh will take effect from 1^st April 2012 for domestic-size (≤4kW) solar panels with an eligibility date on or after 3^rd March 2012. Other tariff reductions apply for larger installations.
• Properties installing solar panels on or after 1^st April 2012 will be required to produce an Energy Performance Certificate rating of ‘D’ or above to qualify for a full FIT.
• From 1^st April 2012, new ‘multi-installation’ tariff rates set at 80% of the standard tariffs will be introduced for solar PV installations where a single individual or organisation is already receiving FITs for other solar PV installations. The threshold is set at more than 25 installations: Individuals or organisations with 25 or fewer installations will still be eligible for the individual rate.

Comments

The reduction in solar PV tariffs was expected. The requirement for EPC ‘D’ rating or above is rather less stringent than anticipated, and it has been estimated that half of all properties already meet this requirement. Those that do not must be brought up the required standard or receive a reduced tariff.

The multi-installation tariff, 16.8p/kWh for ≤4kW installations, will further reduce the financial return for organisations – such as local authorities and housing associations – looking to roll out solar PV across a social housing portfolio. Combined with the reduced standard tariffs, it may mean that this option is now financially unattractive, and therefore the number of installations on social housing will be greatly reduced. This will of course also apply to most ‘rent-a-roof’ operators.

Phase 2A consultation: solar PV cost control

This consultation proposes tariffs to be applied to solar PV installations after 1^st July 2012, and sets out a mechanism for the degression of tariffs thereafter.

• Proposed tariffs for ≤4kW installations post-July 2012 range from 13.6p/kWh to 16.5p/kWh. These will then reduce according to pre-planned degression, contingent degression and annual reviews.
• For solar PV, a 5% tariff reduction is proposed in October 2012, followed by a further 10% every 6 months.  If actual deployment levels exceed 125% of expected levels, an additional ‘contingent digression mechanism’ would be applied to bring forward the proposed tariff reductions. It is possible that this could result in tariffs changing more frequently than once every two months.
• A table of solar PV tariffs, modelled using the 10% baseline degression proposals, shows the payment for a ≤4kW system starting at 21p/kWh in April 2012, reducing to 12.9p/kWh by October 2012 and down to 7.7p/kWh by April 2015.

There is a proposal to reduce the tariff lifetime for new installations from 25 to 20 years and options to review the level of export tariffs including possible index-linking.

Comments

The proposed degression models introduce further uncertainty to the FIT scheme. It will be impossible to calculate payback and returns with any confidence, since the tariff paid may reduce sharply between project implementation and installation dates, with only two months’ notice of each reduction.

DECC’s press release and links to the consultation papers can be found here

Allocation period

The ‘primary allocation period’ will run from the start of June to the last working day of July. During this time, participants must request, pay for and surrender the correct number of allowances. Difficulties for participants may arise due to:

• Lack of any invoice or bill for allowances (usually required before payment can be made)

• Insufficient time for payment to be processed – both internally and by the Environment Agency – during the allocation period (some organisations have 30-day or even 60-day payment terms)

We recognise that it may not be possible to extend the allocation period beyond the end of July, as the deadline for surrender of allowances is set by the CRC Order.

Instead, we suggest that the proposed allocation period should open earlier, allowing requests for allowances to be made from the start of May. This may require some estimation (or forecasting) by participants, but would at least ensure that there is adequate time for payments to be made, and received, prior to the allowance surrender deadline.

Fees

The regulations make provision for an additional, unspecified fee to be charged for the allocation of allowances. This is in addition to the current registration fee (£950) and annual subsistence fee (£1,290) already charged to CRC participants.

We believe that making provision for this separate charge is an unnecessary additional administrative burden. If the current level of registration and annual subsistence fees is insufficient to cover the cost of Scheme administration, then these should be raised accordingly. This would maintain a level of simplicity and transparency in the charging regime.

Allowance price

Although this draft regulation makes reference to the price of allowances, the future price is set by the Treasury and will be announced in the Budget.

We strongly recommend that the allowance price is set and notified to participants well in advance, for example for the duration of each CRC Phase. Carbon reduction measures take many months or years to plan and implement; greater certainty over the future price of carbon would allow more accurate costing of payback periods and future savings, resulting in more projects delivered more quickly. The imminent Budget should include an announcement of CRC allowance prices for the next three years, at minimum.

The draft regulations can be found here

We’re planning to offer a ‘data verification’ service during June/July, to audit data and the annual report before it is submitted (and, of course, used as the basis on which to buy allowances). 

Our full audit costs £2,500 +VAT and normally takes 5 days (2-3 days onsite). Given the very tight timescale between collating data and reporting/buying allowances, we’d only be available to do a handful of these at the appropriate time. 

We now propose to offer the option of a two-stage audit: We can audit your CRC governance, processes/procedures and evidence pack documentation at any time of the year, before or after the reporting deadline, but we would undertake a one-day onsite data verification during June/July, to allow for sign-off of your annual report data prior to submission. 

The full audit fee would remain the same. Alternatively, we can offer the one-day data verification as a stand-alone for £500 +VAT. 

Please contact us if you’d like to know more.

As usual, the events will be held in locations around the UK, with three events as follows:

Tuesday 20 March – London

Wednesday 21 March – Manchester

Thursday 22 March – Glasgow

Network members may book up to two places using the booking form below. Numbers are limited by venue size, so please book your place now to avoid disappointment.

The provisional programme is also now available. Members should note that each event will be broadly split into two: the morning will cover issues relating to the Green Deal, whilst the afternoon will focus on the CRC.

If you are not yet a member of the network, please contact us to join.

In December 2011, we asked you to complete a survey regarding the energy management systems that were used within your organisation. A total of 26 organisations replied; 24 local authorities and 2 NHS Trusts. Here are the results and a brief analysis.

1)      Where is your data mainly stored for CRC?

At first glance, it is obvious to see that the most popular choice of software for respondents is Systemslink, with roughly a third of the total. This is twice the number that uses either TEAM or Carbon Counter, and almost 4 times the number of organisations that use Stark.

A closer inspection will note that roughly a quarter of organisation use either Excel or an adapted Environment Agency (EA) Excel spreadsheet to record the CRC data. This would suggest that many organisations have built a system internally which is specific to each organisation.

It is also worth noting that 8% outsourced their CRC obligations, which is something that many organisations were reluctant to do in previous years.

There were 6 different systems identified (and possibly more depending on what systems the outsourced consultants use), which suggests that a number of methods available to manage the CRC. Whatever system is used must be kept transparent for auditing purposes.

2)      What, if any, additional software is used for data storage and reporting for CRC?

Excel, unsurprisingly, is used by an overwhelming majority of organisations as either their primary or secondary data storage system.

What is more interesting about the answers to these questions is that the majority of organisations that put down “Stark”, “Systemslink”, or “TEAM” as their additional software used Carbon Counter as their main software.

It’s also worth noting that 19 of the 26 respondents (73%) have additional software, and 4 out of 26 (15%) have 2 additional data storage software.

3)      Changes in software over the last year.

Whilst Carbon Counter and Systemslink have had organisations starting to use their software over the last year, TEAM and Stark have lost some of their clients. The comments relating to software sheds some light on this:

Overall perception of:

Environment Agency

Although some people consider the EA Source tool to have no real problems, there is no feedback suggesting that this is a good choice. There is an issue that it has “numerous versions, with version monitoring on them,” which is considered to be “very time consuming”. Furthermore, it isn’t thought of as especially user-friendly and the support from the EA has been sub-standard.

Systemslink

Across the board there was a very positive response. (3 out 10 responses simply said “excellent”).The Systemslink team “try to be as pro-active as possible”, notably by developing the CRC module (at no extra cost). It’s also user-friendly, and they maintain a high level of client support.

TEAM

Described as “ok but poor support”, “unreliable” and “appalling!”. The main issue seemed to be the TEAM was slow in adapting to the new requirements of councils and as such many people simply switched to an alternative EMS. It’s also worth noting that TEAM’s CRC module has an additional cost and doesn’t seem to work as well as Systemslink’s CRC module.

Excel

Everyone has been happy in the flexibility of Excel, and in many instances this has been the basis of their reports for a number of years pre-CRC.

Carbon Counter

Whilst new to many organisations, most responded by saying (tentatively) that Carbon Counter was “good so far”. It’s also considered relatively easy to use.

The Department for Energy and Climate Change (DECC) has today published a new draft of the CRC Energy Efficiency Scheme allocation regulations. There are three key points of interest:

1. Dates for purchase and allocation of allowances
2. Price of allowances
3. Fees

The regulations make provision for the sale of allowances in the first phase of the Scheme (2011-12, 2012-13 and 2013-14). Two allocation periods are provided for – an annual Government sale (the primary allocation period) and an opportunity for the Environment Agency to finalise the processing of late requests (the secondary allocation period). 

The primary allocation period for buying allowances for the 2011-12 compliance year is 1st June to the last working day of July 2012. Account holders will not be able to request allocations in the secondary period. As the cap has been removed there is no need for the safety valve mechanism, so this has been removed from the regulations.

The price of allowances for 2012 allocation is £12, but it is pointed out that this has been announced for 2012 only, and that future prices are a matter for the Budget process.

The regulations also make provision for the Environment Agency to “require the payment by an account holder who requests an allocation of allowances of a fee of an amount determined by reference to the costs of allocating the allowances”. The regulations do not specify the amount of such a fee.

Local Energy’s Peter Chasmer commented: “These regulations highlight another reason for buying allowances in advance for an entire Phase. Each time you purchase allowances, there is likely to be a fee, whether fixed or a percentage, so by purchasing only once, participants can minimise transaction fees.”

The draft regulations can be found here and comments to DECC are welcome by 10th February 2012.

‘The Rough Guide to Community Energy’ is a recently launched free book that encourages people to launch carbon-cutting and renewable-energy projects in their local communities.

According to the Guardian: “The book covers everything from setting up a group, to picking a renewable technology, as well as providing advice on finances and governance. It also features many case studies of real-world groups.”

To read the book online, or request a printed copy, please follow the link here

For some time now there has been speculation as to the potential advantage of buying allowances at the beginning of the phase and then surrendering them at the end of each year as required.

Here at Local Energy we have developed a spreadsheet which can be used to work out whether it is worth buying your CRC allowances in advance. The spreadsheet gives examples of scenarios where it would be beneficial to purchase allowances in advance with either your own reserves or using a loan.

To join the discussion about CRC purchasing strategies, please visit the Local Energy LinkedIn group here

If you are a member of Local Energy’s Carbon Saving Public Sector (CSPS) network and you have not recieved the spreadsheet, or you would like to join the network please contact Matthew Noble – matthew.noble@lgiu.org.uk. 02075542875

Membership of the network will prepare your authority step-by-step for the October 2012 launch of Green Deal. In addition, the CSPS network will help you to join up Green Deal with other low carbon initiatives such as the Renewable Heat Incentive, Feed in Tariffs and the CRC Energy Efficiency Scheme. The network provides:

-          Two delegate places at regional events. Events will be in February, June and September and supported by members of Local Energy, the Energy Saving Trust and other organisations such as DECC.

-          Advice, guidance and support on the Green Deal and on other legislation such as RHI, FITS, and the CRC. Local Energy will be available to answer your questions and solve your problems by email, phone and online and our partnership with the EST gives us access to expertise in a host of other energy saving areas.

-          A preliminary audit of your CRC data if you are a participant in the scheme.

-          Regular Updates including briefings, fact sheets and explanation of changes to legislation.

-          Opportunities to network with other local authorities in person and through our online networks to find solutions to shared problems.

If you are interested and would like to speak to us please contact

Matthew Noble – matthew.noble@lgiu.org.uk

0207 554 2875

CSPS Info Pack