The green deal and energy company obligation (ECO)
Opportunities and issues in social housing
19th March 2012
This is a short briefing on the background and latest developments in the Green Deal and ECO, primarily for Encraft’s existing customers in the social housing sector. It sets out the background to the Green Deal; why it is important for social landlords; the key concepts, controversies and issues, and sensible next steps.
The Green Deal is the Government’s flagship policy to encourage a step change in retrofit activity across all types of buildings. The objective is to deliver significant reductions in CO2 emissions from existing buildings, and the intention is to leverage around £7 billion of private funding. The Green Deal is a market mechanism, not a grant scheme, but it will be supported by the Energy Company Obligation (ECO) which is a grant scheme and which will replace CERT and CESP with similar levels of funding (£1.3 billion a year).
The Green Deal is potentially important to social landlords for several reasons:
- Tenants may be offered Green Deal packages independently, and may seek landlord approval for apparently attractive improvements which will have long-term impacts on the liabilities of the landlord and future tenants of the property.
- It will no longer be possible to access CERT/CESP funding, and ECO funding will only be available through accredited Green Deal installers.
- Significant ECO funding is available for solid walled properties, which may be attractive to some landlords with significant stock in this category.
- In some circumstances, Green Deal finance may be a cost-effective source of off-balance sheet funding for large scale retrofit programmes.
- The Government plan to make it compulsory (through Building Regulations) for all boiler and window replacement programmes to be accompanied by consequential improvements to the energy efficiency of the building, using the Green Deal as the mechanism for evaluating what measures are required.
Final consultation on the Green Deal closed in January 2012, and the Government are expected to announce its final form in late Spring, for implementation from October 2012. This briefing note is based on the consultation proposals, and on-going informal discussions with DECC and should be read in that context.
Read the full viewpoint here.