Changes to the accreditation of measures between EEC2 and CERT

1. Changes to the accreditation of measures between EEC2 and CERT Urszula Kulpinska 4 September 2007

2. Qualifying action in CERT • Qualifying action is an action that promotes a reduction in carbon emissions for the purpose of • Achieving improvements in energy efficiency • Increasing the amount of electricity generated or heat produced by microgeneration • Increasing the heat produced by a plant which relies wholly or mainly in biomass and its capacity does not exceed 3MWth • Reducing energy consumption

3. Innovative qualifying action in CERT • Market transformation qualifying action is an action which was not approved as a qualifying action under The Gas and Electricity (Energy Efficiency Obligations) Order 2001 and which is expected to achieve a significantly greater reduction in carbon emissions than other qualifying action of that type. The intention is that it will be administered in the same way as innovative action under EEC2 • Demonstration qualifying action is an action which might reasonably be expected to promote a reduction in carbon emissions where is has not been possible to determine a specific carbon saving

4. Criteria to establish whether a notified action under CERT would result in reductions in carbon emissions • In order to make an assessment that an action results in a reduction in carbon emissions, Ofgem must be satisfied that: • The measure used in the supplier’s notified action would result in a reduction in carbon emissions • The way in which the action is undertaken – the delivery mechanism – will result in a reduction in carbon emissions • The supplier’s action would lead to a reduction in carbon emissions which is additional to that required by minimum legal requirements • The supplier’s action is additional to that which would be achieved without the supplier’s input Similar to EEC2, Defra proposes that the CERT obligation relates to reductions in carbon emissions due to the supplier’s activity in the domestic sector in Great Britain. The Order is expected to make the provision for this.

5. Additionality • Additionality must be demonstrated within all schemes. We propose that it is demonstrated as follows: • for measures delivered in social housing stock, a declaration with specific wording should be provided • for retail schemes which intend to change the market share of the product (eg cold appliances) EPoS data should be provided • for retail schemes where business as usual data doesn’t exist (eg DIY loft insulation), accreditation could be based on the retailer's marketing strategy. A marketing plan should be submitted to Ofgem • for microgeneration measures installed in new build it is necessary to provide a declaration confirming the percentage of on site microgeneration required to obtain a planning permission and the percentage of generation which is additional to any legal requirements (eg Merton rule)

6. Ofgem intends to remove the distinction in savings between fuel types for all insulation measures (loft insulation, tank jackets, glazing etc); there will be a single carbon saving representing the weighted average across the domestic fuel mix in Great Britain Professionally installed loft insulation the variation in categories is proposed to be removed; instead carbon savings would be accredited from less than 60mm and 60mm and above The range of final thicknesses would remain the same as in EEC2 (200mm, 250mm and 270mm) DIY loft insulation Marketing plan is proposed to be used to demonstrate additionality Cavity wall insulation Average carbon savings would be accredited in line with Defra’s model, however if it is not possible to insulate more than two thirds of the wall area, Ofgem considers that a separate accreditation is appropriate Measures - insulation

7. The distinction in savings between fuel types is proposed be maintained for all heating measures Boilers as the market is already transformed, we consider that it is no longer appropriate to accredit the saving for replacing a B-rated boiler with an A-rated boiler However, the carbon savings could be accredited for a replacement of D-rated exceptions to the Building Regulations with an A-or B-rated boiler Fuel switching Suppliers should demonstrate how their promotion of fuel switching to the owner occupier sector will lead to an increase in the uptake of such measure Measures - heating

8. Measures - lighting • The government has an aspiration to phase out GLS lamps. The proposal is to phase 100W GLS by 2009, 75W by 2010, 60W by 2011 and 40W by 2012. If suppliers were to promote energy efficient lighting under this arrangement, this would be considered qualifying action • In line with Defra’s model we propose to increase the lifetime attributed to CFLs from 6,000 hours to 10,000 hours • The distinction between medium/high and low use is proposed to be removed and one carbon saving would be accredited to all CFLs, including promoted through the retail route • Halogens and diachroics will be accredited separately • Mail order lamps–sensors are proposed be limited up to 10 per household, and a minimum charge for CFLs to be reduced to 40p

9. Measures - appliances • As the cold appliance market is nearly transformed, it is no longer appropriate to accredit savings based on the difference between the market average and A-rated appliances. We have proposed two alternatives: • only A+ and A++ appliances are accredited based on the difference between the market average and the consumption of A+ and A++ appliances OR • the carbon saving would be accredited if the supplier increased the market share of the A-rated product. Only this proportion increase would be eligible for accreditation in CERT. • The carbon savings for A-rated appliances would be accredited based on the difference between the average energy consumption (D to B) and A-rated appliances • The carbon savings for A+ and A++ appliances would be calculated in a similar way based on the difference in the average energy consumption (D to B) and A+ or A++ rated appliances

10. Measures - appliances • Trade-in schemes – if the accreditation of A-rated appliances based on increased market share is taken forward, the trade-in mechanism is likely to be dropped • The fridgesaver mechanism will continue to operate, but different energy savings will be assigned to each eligible appliance. Suggestions are welcome on how we should evaluate savings for this mechanism • Consumer electronics – to ensure additionality, we need to consider market penetration of the efficient models. This is likely to be assessed on a case by case basis and we are likely to consider each product type disaggregated by market segment

11. Measures - microgeneration • UK Microgeneration Certification Scheme provides an independent assessment of installers of microgeneration systems and technologies to ensure that the appropriate standards of installation are met and maintained. • The scope of the scheme includes a number of technologies, the majority of which being eligible for CERT • Technical specifications are being developed for each technology by UKMCS Technical Working Groups • We propose to approve only UKMSC accredited products and installers, which would give us confidence that the measures are delivered to appropriate standards • The carbon savings for the microgeneration technologies will be finalised over the next few months • where a saving cannot be determined, suppliers could apply to have this measure approved through the demonstration route

12. Monitoring • Monitoring requirements will mostly remain the same as in EEC2. The following changes should be noted: • Technical monitoring questions have been divided into minor and major failures. All problems should be rectified, but the supplier will only fail on the major failures • We propose 5 per cent technical monitoring on microgeneration measures and that 1 per cent of recipients benefiting from those measures should be monitored for customer satisfaction • For CFLs, we propose to limit the 1 per cent utilisation monitoring to a maximum of 1000 recipients

13. Estimation and determination of a reduction in carbon emissions • The CER target differs from the EEC2’s as it related to carbon rather than energy and it not lifetime discounted. The CER target represents the reduction in carbon emissions achieved by the measures over their lifetime Carbon saving = improvement in energy efficiency*carbon co-efficient*lifetime • Where the improvement in energy efficiency is not available and the measure is considered conventional qualifying action, the improvement in energy efficiency should be quantified on an ex post basis • Carbon savings for insulation and heating measures will be accredited based on the property type and the number of bedrooms

14. Assessment and reporting • Assessment procedures • The same assessment procedures and processes for completing schemes are proposed to remain in place as in EEC2 • We consider that scheme notification should consist of an CERT scheme notification pro forma only detailing how the carbon savings will be achieved in relation to the Priority Group, estimate of carbon savings from this action and supplier’s cost contribution to the measures • Quarterly reporting • The same procedures will remain for quarterly reporting, these reports must show the savings achieved from actual installations and not from agreement made • To enable more robust reporting, it would be helpful if suppliers provided more detail on the number of measures. We propose to extend the reporting on the number of measures to include fuel switching, CFLs and microgeneration