Following national problems with the Government’s flagship energy efficiency Green Deal programme, Cabinet members at Birmingham City Council are set to approve the city’s withdrawal from its own local version of the initiative.
A report to cabinet on September 22 recommends the issuing of a termination notice to Carillion Energy Services (CES) to end the Birmingham Energy Savers (BES) Green Deal Project, effective from April 1 next year, in line with a break clause contained within the partnership agreement drawn up in 2012.
The report outlines that the council and Carillion had no chance of hitting targets established for BES because of the failure of the national Green Deal and changes in the support offered by the Government to green initiatives since the launch of BES.
The goals were based on a number of nationally-based assumptions on how the market for Green Deal would develop and included delivering Green Deal measures to at least 15,000 homes and at least 40 of the council’s public non-domestic properties.
The nature of the framework KPIs may still be very relevant but unfortunately as the Green Deal market has not materialised, the levels set for many of the KPIs are now considered to be unrealistic and unachievable regardless of the efforts of CES as the delivery partner.
Amongst the issues cited as causing the national Green Deal failure and the locally-experienced issues were:
– The lack of national marketing to drive demand for the uptake of the Green Deal.
– The time taken to complete the Green Deal process being extensive and complex.
– The ECO subsidy that was due to be committed by energy companies towards the installation of energy efficiency measures was lower than initially expected. Therefore this required the householder to provide a much larger financial contribution to implement Green Deal measures than previously expected.
– Doubts over the central tenet of the “golden rule” whereby the costs of repayment never outweigh the savings on the bill.
– Landlords being unable to take advantage of Green Deal due to existing legislation surrounding the Consumer Credit Act which subsequently needed to be amended.
– Concerns that although the concept of a house holder passing the remaining repayments on to the next owner is attractive to them, buying a dwelling that has a Green Deal Finance arrangement tied to it, may make the property less attractive to a buyer.
– A 7 per cent interest rate set centrally by The Green Deal Finance Company to be paid for the financing of the Green Deal works against a personal loan rate of 3 to 4 per cent available at the time, and therefore such works being done outside of the Green Deal framework.
– Government confirmation that Green Deal for businesses has been put on hold for the foreseeable future.
The Cabinet report also recommends that the partnership break, although taking effect in April 2016 will be structured in such a way that CES can complete their existing construction contracts with the council.
Cllr Lisa Trickett, Cabinet Member for Sustainability at Birmingham City Council, said: “Everyone at the council and Carillion Energy Services has done their very best to make this partnership work – but when you are asked to deliver something that is based on a flawed central government model and significant changes in the energy efficiency market, you are faced with an impossible job.
“Through Birmingham Energy Savers, we have started the huge task of reducing CO2 and tackling fuel poverty, which affects far too many people in the city, key issues we must address if the city is to become truly sustainable.
“With the government constantly moving the goalposts there was absolutely no chance anyone could have hit the final target of 60,000 homes and 1,000 non-domestic buildings across the city at no net cost to the council.
“We need to break away from this arrangement and explore the other options that are out there to ensure we lift as many households out of fuel poverty as quickly as possible and reduce carbon emissions in the process.”
Notes to editors
1. The Energy Company Obligation (ECO) is a government scheme to obligate larger suppliers to deliver energy efficiency measures to domestic premises in Britain.
ECO was introduced in January 2013 to reduce Britain’s energy consumption and support people living in fuel poverty by funding energy efficiency improvements in homes. The larger energy companies are set obligations to install insulation and heating measures in order to achieve reductions in energy usage and heating costs. ECO works alongside the Green Deal as a way of providing consumers support and funding for these measures.