The energy saving co-operative Green Deal+ Briefing

1. 20 November 2012 The energy saving co-operativeGreen Deal+ Briefing

2. Co-operating to save energy • 2012, UN International Year of Co-operatives, is also the year thatthe Government’s flagship energy efficiency policy, the Green Dealhas been launched • Our homes and other buildings are responsible for nearly 50% of our final energy demand and carbon emissions. Unlike some other sources of carbon emissions, the energy demand from buildings can be reduced to net zero – through energy efficiency and replacement with local renewable supply – by deploying existing technologies… • … And while ‘Powering Up’ replacement with renewable supply is critical, ‘Powering Down’ reduction of demand has to play an equal part, for us to stand any chance of hitting the UK Government’s statutory commitment to reducing carbon emissions by at least 80% by 2050. ‘Powering down’ is also financially more attractive, as it is usually much cheaper to save energy than build new generation capacity

3. Barriers – Single family homes • Retrofitting older, single-family houses is the biggest challenge in Europe • The lack of an adequate ‘offer’ is especially important for individual homeowners • There are two key barriers to transforming what is currently a refurbishment market into an energy-efficiency market: • People do not know where to find relevant information on options, prices and suppliers; there are no ‘one-stop shops’ for retrofitting • Homeowners base decisions largely on first cost rather than overall financial returns Source: Transforming the Market: Energy Efficiency in Buildings, WBCSD, April 2009. .

4. The Green Deal • The UK Government’s flagship energy saving scheme • A significant step forward in green building standards, via accreditation for: • Green Deal Assessors • Green Deal Providers • Green Deal Installers • Innovative financing via loans against electricity bills – in theory, the house not the occupant takes out the loan • Tied heavily to the £1.3bn p.a. Energy Company Obligation (ECO)

5. Green Deal progress • Officially ‘soft launched’ on 1 October • Regulations for Green Deal finance plans will not come into force until 28 January • The electricity suppliers will not be in place to collect repayments until at least this date • The Green Deal Finance Company (GDFC) will not be able to offer loans until at least Q2 2013

6. Green Deal challenges (1) – The ‘Golden Rule’ • At is simplest,the Green Deal is a funding transfer for energy saving measures, such as loft insulation and cavity wall insulation,from Carbon Emissions Reduction Target (CERT) subsidies  onto long-term loans • The ‘Golden Rule’ (capping repayments to year 1 energy savings): • Constrains Green Deal viability to a minority of homes • Leads to too much of the benefit being lost in long-term interest payments • Can lead to the short-term measures being prioritised over ‘whole house’ energy saving improvements that will create greater benefit in the longer term

7. Only a minority of homes are Green Deal viable Cambridgeshire example

8. Green Deal challenges (2) – Marketing • Promoting energy saving requires a perception shift then a behaviour shift • DECC’sown market research found that homeowners mistrust both the word “Green” and the word “Deal” • The Green Deal provides a significant opportunity to kick-start UK energy saving retrofitting… • … but also presents a significant risk of pressure selling horror stories, and a lack of perceived energy savings (electricity bills going up, even if gas and overall energy bills go down) – discrediting ‘energy saving’ in general.

9. Market tiers Architect designed Enthusiasts Afford-to-pay Will happen anyway Top end Passivhaus Real people, real homes ‘Whole house’ or led by planned disruption Architect of building expert involvement Mix of local trades Flexible finance options Part-funded by Carbon Saving ECO The mass-majority Green Deal Simple measures Fit within ‘Golden Rule’ Minimal customisation necessary Straightforward

10. The Energy Company Obligation (ECO) • ECO will and take over from the Carbon Emissions Reduction Target (CERT) andthe Community Energy Saving Programme (CESP) to distribute £1.3bn per year, when these existing supplier obligations end on 31 December 2012. • Following the January consultation, the 11 June consultation response revised ECO to target 75:25 carbon savings: heating cost reductions, in three buckets: • Affordable Warmth (25%, £325m p.a.): Largely similar to the existing CESP;any energy saving measure eligible if it reduces the cost of heating the home. Means-tested individual qualification; private tenure only. • Carbon Savings (60%, £780m p.a.):Targeted at solid wall insulation and ‘hard-to-treat’ cavities. • Carbon Saving Communities(15%, £195m p.a):targeted at the bottom 15% of Lower Super Output Areas from the Index of Multiple Deprivation (e.g. Barton in Oxford). • 15% (£30m p.a.) reserved for rural low income households in towns and villages with populations less than £10k, means tested as per Affordable Warmth.

11. ECO Brokerage • The January consultation proposed an independent • online ECO Brokerage to ensure fair and transparent access to ECO funds • Consultation responses ranged: • From 10-20% (the ‘Big 6’ energy suppliers) • … to 100% (The energy saving co-operative, in partnership with Co-operatives UK, Social Enterprise UK, and our community partners, among many others). • The 11 June DECC consultation response concededmost responses were “at the higher end of the scale” • DECC hence proposed a short further consultation on the ECO brokerage,primarily on what proportion of ECO should be channelled through it • – which will be launched next week • The ECO brokerage provides a significant opportunity for community groups (including local Councils) to direct ECO where the need is greatest

12. What local Councils are doing • Low Carbon Oxford Green Deal+: a unique partnership between City and County Councils, Universities and community groups • Birmingham Energy Savers: procured Carillion as Green Deal Provider, with City Council funding for first wave of loans (focusing on social housing and CESP areas) • Many local Councils (e.g. Cambridgeshire Districts, Bath & Northeast Somerset) opting for ‘Producer’ relationship with a delivery partner following consultation– but ‘soft market testing’ to discover what this means • Several interesting energy agency models, e.g. • Severn Wye Energy Agency in partnership with Gloucestershire Districts • USEA in partnership with Oxfordshire Districts • National Energy Foundation in partnership with Milton Keynes City Council • Marches Energy Agency are currently reviewing all of the better community-based models for Marches Sustainable Housing Partnership

13. Warming Barton

14. Why Fair Green Deal

15. A £100,000 plus scheme to enable 130 homeowners and 372 council tenants to make their homes more energy efficient  The LowCarbonHubwill work in partnership with local community group, Low Carbon Barton, to build relationships, make initial contact with residents and get them involved The energy saving co-operative will follow up with residents who want to sign up to the pilot scheme, to install energy saving improvements through trusted local tradespeople, and provide fair and ethical finance to those who need it Tenants, owner-occupiers, and private landlords will be offered insulation, improved boilers, smart meters, solar panels, and other energy saving improvements to help reduce bills, make their homes warmer and more comfortable, and tackle fuel poverty The cost of the energy saving retrofit work will be financed with money from the energy savings on bills, grants from gas and electricity supply companies, and fair finance loans from ethical providers Warming Barton Green Deal+ Pilot

16. Promotion to all households in Barton; engagement with all owner-occupied properties with the aim of recruiting 100 Energy assessments of up to 100 unimproved homes, including behavioural advice and access to improvements to household via Green Deal, ECO (tbc) and RHPP2 (tbc)in energy report to householders Evaluation report covering: assessment process installation process whole project model Warming Barton Revised Deliverables

17. 101 energy assessments signed up in 3 days!!! Warming Barton Progress

18. Warming Barton Challenges

19. “The best time to plant a tree was 20 years ago; The second best time ........is now !!!” – Chinese proverb

20. Who we are • The energy saving co-operative is a pioneering partnership between: • People who want to save energy • Co-operatives and community groups • Tradespeople such as energy assessors and installers • Working together, we will maximise our impact – combining the best of ‘Big’ with the best of ‘Local’

21. Governance and profit sharing • The energy saving co-operative is an innovative, pioneering hybrid co-operative (IPS 31331R) , with three classes of user-membership: • Individuals using the services of the co-operative – Homeowners can become members • Co-operatives and other corporate or community bodies offering the co-operative’s services – Consumer co-ops and community groups can become members • Persons and organisations delivering the services of the co-operative – Tradespeople can become members • Each user-membership class shares in governance and profits,and has dedicated seats on the Board • There is a fourth category of membership for providers of finance (non-user members, with maximum 25% voting strength and limited right to profits)

22. Purpose To provide people with the power to save energy Vision The greatest contribution to UK energy saving will be through co-operative and community solutions Values We are open, honest and fair We serve our customer members We enhance sustainable communities We earn trust in everything we do We are democratic Our purpose, vision and values

23. We can now offer five options to customers: Extending a mortgage or self-funding from savings will always be the cheapest option for those customers who can afford it Ecology Building Society’s C Change retrofit and The co-operative bank’s Energy Efficient Advance discounted mortgage products (first charge) Our own second-charge revolving loan fund, seeded by The co-operative bank then grown through professional and retail bond issues – a high priority for development, and a large opportunity for ‘teaming up’ and ‘scaling up’ The Green Deal Finance Company (GDFC) and Energy Company Obligation (ECO) for Green Deal qualifying projects, when available London Rebuilding Society’s Home Improvement Scheme equity share finance for qualifying customers (low income, 50+, own their homes) In addition will we obtain grant funding (e.g CERT, CESP, RHPP2), where possible and while available, for qualifying customers Project financing options

24. Oxfordshire’s collective and co-operative interest Powering down Home improvement Powering up Community engagement and delivery

26. Support us to help communities across OxfordshirePower Down Join us in membership class 2 (Co-operatives and other corporate or community bodies) to provide: A say in governance A share in profits via dividends A demonstration of local commitment to help us focus community engagement What we ask of Oxfordshire Environment Partnership

27. Oxfordshire working relationships • National marketing & website • Expertise & standards • Finance • Customer account management The energy saving co-operative Joint project management and administration Retrofit expert group Wallingford Eynsham ChippingNorton WestOxford NorthOxford EastOxford Local householders and tradespeople

28. How it works Community groups – Outreach and engagement The energy-saving co-operative – Local project management 1 2 3 4 5 Community engagement Energy performance assessor Energy saving advice and contracting Installation Quality control and impact measurement