Energy Suppliers Incentivised To Insulate

20 December 2013

Energy suppliers will be incentivised to continue providing home insulation in the wake of reforms to Government initiatives, it has been revealed.

The Chancellor of the Exchequer, George Osborne, recently announced that the Government would be making changes to the Energy Company Obligation following criticism from energy companies, opposing politicians, and even members of the coalition Government.

The Energy Company Obligation currently requires the ‘Big Six’ energy companies to foot the bill for installing energy efficiency measures in the UK’s poorest homes.

Under the scheme, householders receiving set benefits are entitled to free Loft Insulation, free Cavity Wall Insulation, and free boiler replacement. Grants for External Wall Insulation are also available depending on how the property is currently heated.

The scheme is designed to help cut the cost of fuel bills for those that need help the most.

But after a number of energy companies cited the scheme as a reason for an increase in energy prices, which were announced for the beginning of December, the Government has decided to review the situation.

New guidelines are set to be put in place in April 2014.

Before these new measures are implemented, the targets energy companies are expected to reach in terms of the number of properties they install home insulation into will be unclear, something that has been heavily criticised by supporters of the Energy Company Obligation.

Speaking with BusinessGreen, Richard Twinn of the UK Green Building Council said: “There is a real risk the energy companies would simply stop what they are doing because they wouldn’t know what they have to complete.”

The Government hopes to ensure this isn’t the case, and is considering offering additional incentives to the energy firms.

According to BusinessGreen, one proposal is to offer a 1.75 uplift for measures completed above 25% of the initial target, and a double weighting when surpassing 35% of the target.

In effect, this would mean energy companies would only need to carry out four in seven installations once they pass the 25% mark to reach their quota, and just one in two when they pass 35%.

Critics are worried that this potential scheme would prove harmful, reducing the number of properties receiving External Wall Insulation, Cavity Wall Insulation, and Loft Insulation under the Energy Company Obligation. With fewer properties being made more energy efficient, those at the biggest risk of fuel poverty will continue to pay higher bills.

According to the latest figures, 388,128 energy efficiency home improvements have been fitted between the beginning of January and the end of October, 98% of which had been made possible through the Energy Company Obligation.

The Government is expected to reveal its incentive package in February.

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