We attended the National Insulation Association (NIA) Members Briefing Event today at the Jury’s Inn, Hinckley Island Hotel in Leicestershire.
The Event was well attended by stakeholders across the industry and representatives from the Department for Business, Energy and Industrial Strategy (BEIS) were in attendance to present an outline from the consultation documents of what ECO3 might look like.
As most in the industry will know, ECO2t comes to an end at the end of September. ECO3 will start in October and run for three and a half years until 2022.
We regard the opportunity to have our say as extremely important in contributing to the shape of the new ECO3 phase to try and maximise the benefits for our clients. We will be submitting our response to the BEIS consultation before the deadline on Sunday 29th April.
Below is a summary of the headlines from the consultation.
- CERO targets will be dropped altogether, the scheme will be 100% Affordable Warmth
- Benefit eligibility will be widened, income thresholds will be dropped from tax credits and additional benefits will be added including disability and child benefit (with an income threshold)
- Qualifying Boilers are now renamed ‘Broken Boilers’
- Broken boilers, of all fuels (apart from renewables), will be capped at 35,000 per annum
- All deemed scores will drop by at least 30%
- Non gas qualifying boilers will lose their 45% uplift, so will reduce even further, but gas boilers lose their 20% deflation and get a boost in the revised deemed score calculations, so go up
- Oil and solid fuel boilers will be removed as eligible measures
- Non condensing gas and LPG boilers can be upgraded on an uncapped basis if an insulation measure is installed alongside
- Homes upgrading to a new district heating or renewable heating system do not have to have an insulation measure installed and do not need to be inefficient
- First time central heating, which includes homes with old/broken storage heaters, can be upgraded without insulation alongside
- POPT is being all but removed, as long as you install the measure to at least 67% of the property
- Energy suppliers may receive an unlimited carry over from ECO2t to ECO3 and a small ‘carry under’ of around 10% of the last 18 months’ target
- LA Flex is proposed to be increased to 30% of the target, up from 10%
- A new Innovation element of 10-20% may be introduced
- RHI and ECO will no longer be able to be combined
- 15% Rural target will remain but will now be based on Affordable Warmth
- 17,000 home solid wall target will remain, but it looks like this may not actually be ring fenced for solid wall insulation
The BEIS consultation document contains 42 questions, such as how ECO targets are calculated. The following is based on elements that I believe could have the biggest impact, and also which could hold the biggest opportunities.
Carry Over: BEIS are proposing that energy suppliers have an unlimited carry over of ECO2t works into ECO3, but excluding oil or solid fuel boilers. If deemed scores drop by 30%, with many dropping by as much as 50%, energy suppliers will likely want to take advantage between now and the end of September, as costs are clearly going to have to increase significantly for delivery to continue. The unlimited carry over is in my opinion a positive move, which should be supported by the industry, as it will prevent a hiatus over the summer as suppliers meet their targets over the coming months.
LA Flex: BEIS are consulting on an increase of LA Flex from 10% of the current Affordable Warmth target, to 30%. This could potentially have been higher, but because it doesn’t look like the 10% will be spent this time round, BEIS may have struggled to convince ministers that a higher level was warranted. In my view, LA Flex represents one of the biggest opportunities under ECO3, and many local authorities have only recently become involved or have taken time to find their feet, to find Flex eligibility that works in their area and create partnerships with installers. I would prefer to see LA Flex left uncapped, or, if a cap has to be put in place, a level of 40% rather than 30%.
Deemed score changes: When deemed scores were introduced, it was identified that there was a difference between the typical score achieved through an EPC, and the new deemed scores. A 30% uplift was applied to all deemed scores at this time, but this is now to be removed. This will have the effect of reducing all scores across the board by at least 30%, therefore necessarily pushing up the market cost for ECO funding rates. Other reductions are also being made the 45% uplift currently applied to off gas heating upgrades is being removed. This has a bigger impact on some measures than others, for example, a broken oil boiler heated 3 bed semi having an air source heat pump installed, will see a reduction of 43% in its score, whereas an LPG broken boiler swap in the same house only drops 13% overall.
Oil Boilers: When ECO2t started there was a surge of oil boiler installations, with around 11,500 installed in under two years, eating up a large part of the ECO funding budgets, and with the Government’s Clean Growth Strategy stating a desire to move people off of oil, BEIS are proposing a complete removal of oil boilers from the scheme alongside solid fuel boilers. There is a hope that doing this will also enable more homes to be upgraded due to the lower costs of gas boilers and that more insulation measures will be targeted. However, I believe that this will leave people in rural areas and who do not have access to mains gas, those with some of the highest fuel bills, with no help whatsoever.
I would encourage all stakeholders to complete the consultation before the deadline on the 29th April 2018, as it is important you have your say on the changes that will be introduced in ECO 3.