Government's own figures show the Green Deal will be far less effective than existing energy efficiency measures

The previous post on this site looked at whether the flagship Green Deal programme was likely to achieve success. It asserted that the so-called Golden Rule – the requirement that the cost of a home energy efficiency programme be covered by the savings on utility bills – would only be met by cavity wall insulation measures. When I wrote that piece I hadn’t read the long Impact Assessment that accompanied the recent DECC consultation document. The projections in the Impact Assessment show extremely low levels of expected takeup of Green Deal measures.[1] The number of new cavity wall insulations is projected to fall from an average of about 500,000 per annum over recent years to about 100,000 a year at the start of the Green Deal, a reduction of 80%. And cavity wall insulation is the single most cost-effective home improvement (other than loft insulation in one of very small number of homes without any at all).

These are shocking figures. In effect, the government is admitting that the Green Deal will not result in a substantial number of home energy efficiency improvements.  It would have been better to stay with the existing programme of support.

The chart below is taken from page 17 of the recently published DECC Impact Assessment, a 300 page document that is intended to demonstrate the effectiveness of the new programme.

Figure 1: Historic and projected CWI installations under CERT, the counterfactual and option 1

Notes on this chart.

CWI. Cavity wall insulation

CERT. The existing programme of support for CWI, funded by the energy companies and thus indirectly by consumers

Counterfactual. What would have happened if the Green Deal were not introduced and, very importantly, the CERT scheme is abandoned as planned. Please note that the counterfactual could have been the continuation of CERT.

BAU = Business as usual. The levels of BAU installation after 2012 run at about 30,000 a year. There is assumed to be no subsidy and no Green Deal financing.

Uptake (survey) and Uptake (actual, Ofgem) are estimates of the number of home in which new cavity wall insulation was added in each of the years from 2003. These works were usually subsidised by the Government’s CERT programme, an obligation on energy suppliers (essentially, the Big 6) to provide heavily discounted energy efficiency measures, particularly for poorer households or households containing pensioners.

CERT extension. This number, about 800,000 is the expected number of installations were the CERT programme of subsidised installations to be extended for a further year.

DECC modelling. The expected number of homes installing new cavity wall insulation under the terms of the Green Deal, by which the cost is recouped from future payments added to the household’s electricity bill. The words ‘GD only, no ECO’ mean that only the impact of the Green Deal is estimated and the extra impact of the new subsidy programme, the Energy Company Obligation is not calculated. But the ECO is not primarily intended to subsidise CWI. CWI is meant to be cost-effective and should not require any part of the ECO.

[1] Thank you to the two individuals who pointed this chart out to me.