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Challenges and opportunities for energy efficiency in the home

Date
11 June 2013
Challenges and opportunities for energy efficiency in the home

Damian Ryan, Senior Policy Manager, The Climate Group, writes about the challenges and opportunities for energy efficiency in the home, as we launch our exciting contest to find sustainable home technologies, #EarthHack, in partnership with Marblar, IKEA and Philips. 

Improving energy efficiency in the home is widely accepted as a central pillar in any comprehensive climate and energy strategy. In theory, it is an area crammed full of low-cost or even negative cost carbon and energy mitigation opportunities. Insulation of lofts and walls, replacement of incandescent lights with LEDs, and the introduction of smart meters and appliances, can all deliver fast and significant payback to householders.

These well-known facts have not been lost on governments, as a huge variety of energy efficiency programs have been introduced around the world at city, state and national level over the last decade.

UK Green Deal

Here in the UK, the evolution of household energy efficiency policy led to the introduction of the Green Deal program earlier this year.

Widely seen as an innovative and ground-breaking program, the Green Deal is a shift away from the grant-based initiatives that have traditionally been used to directly subsidize energy efficiency actions.

In an age of austerity, the Green Deal is intended to help scale up energy efficiency refits in the UK’s 26 million homes without direct government funding, by allowing homeowners to carry out efficiency improvements at no upfront cost. Instead, repayments are made in regular instalments through savings achieved in monthly power bills.

A ‘golden rule’ is used during the assessment process to ensure that the cost of improvements does not exceed the energy savings made. And because repayments are tied to the property and not the occupier (homeowner or tenant), the perennial ‘principal-agent’ dilemma -- which has always acted as a key barrier to energy efficiency improvements in rented property -- is meant to be resolved.

Challenges

For supporters of energy efficiency efforts (which should be everyone!), the Green Deal is the kind of program that you want to see succeed. It was therefore somewhat frustrating to read reports in the Guardian newspaper over the last week of problems with the program.

First, there was the Parliamentary Energy and Climate Select Committee blasting ministers for failing to set clear targets that would quantify success. The committee was also critical of the complexity of the program, an issue that has been raised previously by others.

Then, this week, details were released showing that the number of cavity wall installations had plummeted an extraordinary 97% from the previous year, as the Green Deal replaced previous grant-based schemes. Just over 1,100 homes were insulated compared to nearly 50,000 a year earlier.

These are not minor problems for the Green Deal program and must be addressed.

At the same time, it would be wrong and short-sighted to throw out the proverbial baby with the bath water. The Green Deal, as an innovative policy mechanism, has a place in the energy efficiency tool kit.

Business demand

Hundreds, indeed perhaps thousands, of businesses – many of them SMEs, co-operatives, and non-profits – have been gearing up to put the Green Deal into action. These businesses need to be supported.

There is also clear demand for the products that make homes warmer and cheaper to run. One local organization in my own area working on the Green Deal and related projects, said their order book was full.

The lesson from all this would seem to be that we have not cracked the challenge of home energy efficiency improvements just yet. The Green Deal is clearly part of the solution, but it is not the silver bullet.

Solutions

Development and better communication of the government’s complementary ECO (Energy Company Obligation) program aimed at hard to insulate homes, would be one helpful step. And introduction of energy efficiency feed-in-tariffs to capture so-called ‘negawatts’, as proposed by Green Alliance and others, could also be transformational.

Private sector innovation should not be forgotten either, including through initiatives such as the EarthHack challenge, which The Climate Group launched this week with crowdsourcing platform Marblar, and Philips and IKEA.

The solutions to energy efficiency in the home might not always be straightforward, but the opportunities remain substantial -- and the rewards huge.

And don't forget: On June 18 at 4pm GMT, we're hosting a live Google+ Hangout with some of the judges. Find out more.

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