Energy efficiency for low income households Presentation to Clean Energy Week, 25 July 2013 - Dr Gill Owen Research Program Leader, Consumers and ...
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Dr Gill Owen Research Program Leader, Consumers and Energy Markets, Monash Sustainability Institute Energy efficiency for low income households Presentation to Clean Energy Week, 25 July 2013
Outline of presentation • Fuel poverty • Measures to tackle fuel poverty • Some examples from the UK - Warm Front, CERT, ECO, Green Deal • Some considerations for energy efficiency policy for low income households in Australia Monash Sustainability Institute 2
Causes of fuel poverty • low income • homes that are difficult/expensive to heat or cool (building fabric and/or appliance factors) • lack of capital to fund energy efficiency improvements • energy prices • Plus many vulnerable households need extra heat due to age, disability, illness and/or being at home all day Monash Sustainability Institute 3
Effects of fuel poverty • Cold linked to strokes, heart disease , asthma and other respiratory illnesses. • Heat - more than 20,000 excess deaths attributable to heat - particularly elderly people - in western and southern Europe during the hot summer of 2003. • Quality of life and mental health • Ability to pay for other essentials – heating/cooling or eating ? • Risk of energy debt and disconnection • All of these can cause costs for the public purse – health system, social services, energy bill concessions (particularly if percentage based) Monash Sustainability Institute 4
Fuel poverty definitions • Fuel or energy poverty has not been defined in Australia • Can be defined based on actual spending or required spending • UK definition is households who need to spend more than 10 % of their income to achieve a warm home • UK Government Fuel Poverty Strategy (originally November 2001, updated 2013) Aims - to end fuel poverty by 2018 • Legislative requirement - Warm Homes and Energy Conservation Act 2000 Monash Sustainability Institute 5
Ways of tackling fuel poverty
• Help with fuel bills –
• e.g. energy concessions schemes in Australia;
• various benefits in the UK (mostly for pensioners)
• Help with bills is valuable help but can place
considerable burdens on public expenditure
• Energy saving schemes – can help provide a long
term solution by reducing bills
Monash Sustainability Institute 6Funding options for low income energy saving schemes • People on low incomes lack capital to pay upfront and may have difficulty getting affordable credit – so how to fund? • Four options – • government (taxpayer) funding ; • energy company obligations (e.g. VEET) (consumers fund); • providing affordable and accessible credit ; • some combination of the previous three (e.g. a small taxpayer funded incentive plus affordable credit) • Need to have a specific focus on low income households – e.g. as in South Australia, otherwise more measures likely to go to better off households Monash Sustainability Institute 7
UK energy saving schemes
• Warm Front
• Carbon Emissions Reduction Target
• Energy Company Obligation
• Green Deal
• Key measures for low income households :
• Insulation of roof space and cavity walls
• New or renovated heating systems
• Others include : Draughtproofing, efficient
appliances and lighting
Monash Sustainability Institute 8Warm Front scheme – England • Central Government (taxpayer) funded • Owner occupiers and private tenants on low incomes • Grants for heating and insulation improvements - up to £2700 per house • Main measure – gas central heating • Scheme ended January 2013 • Similar schemes in Wales, Scotland, Northern Ireland (devolved powers) carry on • Help in England now provided via ECO (consumer rather than taxpayer funding) Monash Sustainability Institute 9
Reviews of value for money review of Warm Front • National Audit Office - savings of around £300 per year for each household over lifetime of the measures (2009 energy prices) • 86 per cent of households satisfied with the work done • few complaints - quality of work high ; quality control system • delivery of the Scheme largely effective • Latest Government review - At its close the scheme had assisted over 2.3 million households, average saving of £610 per year on their energy bills (2011 energy prices) Monash Sustainability Institute 10
Carbon Emissions Reduction Target (CERT) • Existed in various forms since the mid-1990s • Energy retailers required to achieve specified levels of energy savings - incentives customers to invest in energy saving measures • Subsidised measures – loft (roof space) and cavity wall insulation, CFLs • Priority Group (PG) requirement to tackle equity issue – all customers pay for CERT, but retailers unconstrained would do more work for better off who need less subsidy • 40% of CERT had to be delivered for the priority group to ensure low income and vulnerable share the benefits • CERT replaced by ECO from 2013 Monash Sustainability Institute 11
Energy Company Obligation (ECO) • Energy Company Obligation (ECO) begins in 2013 – obligation on energy retailers so costs flow through to all customers as in CERT • Three elements – Carbon Target, Affordable Warmth and a Carbon Savings Community Obligation (CSCO). • Affordable Warmth and CSCO focused on low income households (heating and insulation) – estimated £540 million per annum of ECO’s estimated £1.3 billion per annum • Carbon target element subsidises high cost measures – solid wall insulation – alongside Green Deal Monash Sustainability Institute 12
Green Deal • Energy saving scheme for homes and small and medium enterprises • GD providers (energy retailers and others) install measures at no up-front cost to the customer and recover costs via electricity bills over 25 years (“Golden rule” - bill savings should exceed costs) • Some local authorities involved in delivery • Repayment associated with the property rather than with the occupant (attached to electricity account); if occupants move, obligation to pay Green Deal charge passes to new occupier • Won’t be suitable for some fuel poor (e.g. under-heating, concerns about credit) hence role for ECO Monash Sustainability Institute 13
Some considerations for energy efficiency policy for low income households in Australia • Target energy saving schemes to low income households - priority groups • Focus available subsidy (either paid for by taxpayers or consumers) on low income households • Develop low cost loans/ group purchasing options (examine Green Deal type initiatives ?) • Mandatory disclosure of energy performance of housing to improve information availability ? Monash Sustainability Institute 14
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