Government Launches Green Deal

The Government’s new Green Deal has been launched this week.

The scheme aims to reduce fuel poverty by making energy efficiency measures such as insulation more affordable to householders. This will be achieved by allowing people to take out loans of up to £10,000 to make their homes more energy efficient. The loans will be paid back over a 25 year period through ‘small additions’ to household energy bills. These loan repayments are intended to be lower than the amount of money that has been saved on energy; this has been referred to as the Green Deal‘s ‘golden rule’. The Green Deal is intended to be taken up by up to 14 million homes. The government estimates that the Green Deal could lead to the creation of 65,000 jobs.The Green Deal may also offer households that take up the scheme £150 cash-back. Estimates place savings on energy bills at around £94 annually by 2020. It was also announced that Energy companies must contribute £1.4 billion to the scheme annually until 2020.

At the launch of the Green Deal Chris Huhne stated:

“The Green Deal is about putting energy consumers back in control of their bills and banishing Britain’s draughty homes to the history books. By stimulating billions of pounds of private sector investment, the Green Deal will revolutionise the way that we keep our homes warm, making them cosier, more efficient – and all at no upfront cost.

“The Green Deal is also a massive business opportunity for firms up and down Britain, helping to power the economy and creating jobs. From one-man bands and local authorities, to the big supermarket and DIY stores, we want as many providers getting involved as possible because that’s what will give consumers the best deal.

“I want to insulate Britain’s homes not just from the cold weather, but also from the chill winds of global fossil fuel prices. It’s these that are pushing up consumer energy prices, and it’s why our balanced package of policies aimed at achieving energy savings and shifting to more home grown alternatives is the right one for the economy and all of us who pay energy bills.

“There are certainly costs to replacing our ageing energy infrastructure with modern clean power stations, and we take very seriously any impact of our policies on what consumers and businesses pay. we’ve repeatedly taken steps to reduce this – by removing some planned levies on bills and making others more cost effective and within budget.

“But a crucial – and too often ignored -priority of our whole strategy is to reduce the amount of energy we use in our homes.”

Initial reactions to the launch of the Green Deal have been somewhat mixed.

Brian Berry, director of external affairs at the Federation of Master Builders released the following statement:

“With rising energy prices the market for retrofit work is certainly there and is worth at least £3.5 billion every year, but consumers will need to be convinced that the Green Deal makes financial sense to them. It’s pleasing therefore to see the proposed cash back incentive in the consultation, but a reduced rate of VAT for Green Deal approved measures is needed in addition to boost demand and create much needed jobs in the building industry.”

Richard Lloyd, executive director at the consumer group Which?:

“It’s difficult to see how hard-pressed homeowners will have confidence in how the ‘green deal’ might work for them if the suggested savings are initially based on averages rather than on their personal energy use.

“The ‘golden rule’ was supposed to reassure people that green deal repayments would not exceed the savings made on energy bills. But if this is based on average figures then it could be meaningless for many.

“The government estimates that average household energy bills will be 7% lower than they would have been by 2020 because of new energy and climate policies. But this is based on the big assumption that schemes like the Green Deal will appeal to consumers. If take-up is lower than expected, energy bills will be pushed up even further.

Steps have already been taken to reassure those that have raised concerns about the Green Deal.

The treasury announced shortly after the scheme was launched that £200 million had been set aside to fund incentives to those who take up the scheme in it’s early stage. Although it has yet to be determined quite what form these incentives will take, further cash-back offers, discounts on council tax and cuts to stamp duty have all been suggested.

Chief Secretary to the Treasury Danny Alexander said:

“I can announce today that as part of the Autumn Statement we will provide £200m of funding for new and additional support to enable a special time-limited ‘introductory offer’ for the Green Deal.

“An offer that could save early adopters hundreds of pounds.

“A fund to get the Green Deal off to a flying start.

“One that will work with the Green Deal mechanism and the ECO to motivate thousands of more consumers to take up energy efficiency measures, over the next two years.”

The almost immediate announcement of this incentive fund indicates the strength of will within the government to make the Green Deal a success.

£100 million released for investment in Scottish Renewables Industry

It was announced last week that the UK Government is to commit an extra £100 million for investment in the Scottish Renewables Industry.

This sum will come from the Fossil Fuels Levy which had previously been a disputed issue between the Westminster and Holyrood parliaments. The remainder of the the current Fossil Fuel Levy (an additional £100 million) will be committed to the UK Government’s proposed Green Bank which is intended to be a vehicle for targeted investment in the renewables and low carbon industries.

At this point in time there are not yet any concrete examples of where the money will be directed towards but it is expected that Scotland’s more experimental renewable industries (such as wave and tidal) will receive the majority of the Levy due to their higher costs, need for continued research and development and high energy potential. Such renewable technologies have yet to reach the point where they could be considered to be commercialised and ready for mass scale deployment.

The news was welcomed across the political, environmental and industry spectrum. Chancellor of the Exchequer, George Osbourne announced the news in Easter Ross:

“The UK Government is making sure that it gives certainty to the renewable energy sector in Scotland by providing an additional £100 million in funding. The UK coalition government is committed to creating jobs across Scotland – particularly in the green-energy sector.

“It’s great news that we have been able to cut through the arguments and the wrangling with the Scottish government that have stopped the money being invested in the past.

“It show’s how serious the UK government is in it’s support for Scotland’s green future.”

The news is particularly welcome after the controversy created by the Citigroup report which claimed that political uncertainty was undermining investor confidence in Scottish renewables. The report has since been questioned by a number of other analysts.

Niall Stuart, chief executive at Scottish Renewables released the following statement about the news:

“Scottish Renewables has campaigned for some time on the release of this fund because it could be a game changer in terms of the increase in public sector support for renewable energy technologies.

“This fund will allow government to target major opportunities for offshore wind development, marine device development and capital intensive heat technologies among others, and help work with industry to drive down costs. It will also further private investment on a scale similar to those commitments we have already seen from major global companies such as Doosan, Gamesa, and Mitsubishi.

“This is a clear sign to the industry, to investors and to the public that the government is committed to helping Scotland build a world-leading sector, one that creates jobs and opportunities for local communities across the country, as well as helps tackle climate change and cuts carbon emissions.

“Scottish Renewables has called for the Green Investment Bank to have a presence in Scotland because close to half of all renewable energy developments in the UK are situated here. We look forward to hearing more details about how the £3 billion bank will support the Scottish Renewables Industry.”

Francis Stuart, policy officer at Friends of the Earth Scotland commented:

“The challenge now will be to ensure that it is used in the best and most appropriate ways, to support Scotland’s vast renewable potential, and help fund a transition to a low carbon economy in Scotland.

“While this funding will make a welcome contribution to progress towards meeting Scottish and UK carbon reduction targets, it is still a small part of the overall picture.”

CBI (Confederation of British Industry) Scotland policy director; Andrew Dyce remarked:

“The Chancellor is to be congratulated for releasing the fossil fuel levy monies.

“These funds will have the potential to provide a much needed boost to our innovative and world-leading renewables sector, and will help Scotland to realise its low-carbon economy ambitions.”

The release of the fossil fuel levy demonstrates that the Westminster and Holyrood parliaments are capable of cooperating to help the Scottish Renewables Industry.

Playing Politics with the Scottish Renewables Industry

A political argument between the Scottish and UK Parliaments has broke out this week over Scotland’s renewables industry.

In Prime Ministers Questions yesterday David Cameron suggested that investors were being put off investing in Scottish renewables due to uncertainty about the constitutional future of the United Kingdom. However these claims do not appear to be reflected in figures released earlier on in the week.

On the 1st of November Scottish Renewables published figures that showed that £750 million had been invested into the Scottish renewables industry over the last 12 months.Scotland’s installed renewable capacity now stands at 4,620MW, increased from 3,920MW this time last year. Of this 700MW increase in capacity, the vast majority (465MW) has been from the installation of onshore wind. This can be seen to reflect the maturity of the technology as well as the attractive investment it offers.

Neil Stuart, the chief executive of Scottish Renewables issued the following statement along with the figures:

“Renewables is a massive economic, employment and environmental opportunity for Scotland. Limited public sector investment will be necessary to harness this through resourcing planning authorities, infrastructure and skills, and we believe there is a strong case for existing and new incentives to support investment in the sector.

The claim that investors were becoming discouraged away from the Scottish renewables industry came from a single analyst from the financial services organistation Citigroup. Scotland’s First Minister countered, commenting that this individual had ‘gotten the wrong end of the stick’.:

“I think to be fair to the Citigroup analyst, and we’re talking about a market analyst, he’s caught the wrong end of the stick.

“He seems to think the investment in offshore renewables in Scotland is to service the Scottish market, it’s not, it’s to service the market down south.

“The people who are analysing and actually spending the money, these major industrial combines know two things:Firstly, in order to get anywhere near the renewable energy obligations that London is going to have, England is going to have to have Scottish renewables from the sea. Perhaps the reason why all these international companies are committing funds to Scotland is because in 10 years time, without Scottish offshore wind power, then there would be a severe danger of the lights going off in England. I don’t think anybody is going to want or allow that to happen.

“Believe me, in the modern world the ability to produce power is a great asset, not a liability.”

There is also of course the possibility of exporting energy to mainland Europe in the future via the proposed European Supergrid.

Scottish Renewables also released statements about the news:

“Recent inward investment in Scottish renewables would seem to contradict the reports conclusions, which is in any event the opinion of a single analyst and not of Citigroup as a whole. Scotland has in fact had a string of successes in pinning down investment commitments from renewables companies over the past year, including Gamesa, Mitsubishi, Doosan, Techip and Gaia Wind.”

Their chief executive Neil Stuart argued that the debate over independence was itself irrelevant to Scotland’s renewables industry:

“The debate over Scotland’s constitutional arrangements is absolutely a question for the Scottish people to decide.

“If we put the politics to one side, the facts are the Scottish renewables industry has invested more than £750 million over the last twelve months, with industry plans for the future totalling £46 billion of capital investment.

“Global and UK investors have been attracted to Scotland because of our abundant wind, wave, and tidal resources, our considerable expertise in research and development, world leading innovation and a clear commitment from both Westminster and Holyrood to support the growth of the industry…

What is also clear is that Scotland’s fantastic renewables resource is key to the UK meeting its 2020 climate change and renewable energy targets, and could also make a disproportionate contribution to Europe’s 2020 objectives.

“Scottish Renewables remains committed to working with all the main political parties and government at every level to grow the renewable energy industry in Scotland.”

In an open letter to the Press and Journal, Ray MacGregor the chairman of the Global Energy Group who recently purchased the Nigg fabrication plant with the intention of converting it into a renewables hub and creating 2,000 on-site jobs remarked:

“Investment is happening in full knowledge of the Scottish Government’s planned referendum – and renewables are being deployed in part thanks to the First Minister, who has demonstrated the vision and ambition that investors want to see.”

It is unfortunate that some very encouraging news has been lost amongst the debate. It was revealed that if renewable projects that were currently under construction and had  received consent were included in Scotland’s renewable energy capacity then 58% of the country’s gross electricity consumption is being provided by renewables. Such a figure makes the 100% renewable target for 2020 seem eminently achievable.