Lobbyists for distributed green power today warned the Johnson administration against bowing to backbench pressure and scrapping the green levies included in rocketing power bills.
The Association of Decentralised Energy, formerly the Combined Heat & Power Association, said suspending the Energy Company Obligation (ECO) is likely to result in businesses failures. Instead Whitehall should boost outlay on insulating the UK’s leaky housing stock, reputedly among the worst in western Europe, the ADE urges.
Introduced in 2012 under the Cameron-led coalition, the ECO’s first embodiment was intended to streamline a rag-bag of measures to boost insulation and save heating bills for poor families. It sat along side the Coalition’s discredited Green Homes Grant, abandoned due to its complexity and high cost to householders
Conservatives including MPs in the Net Zero Group have signalled displeasure at the levy, and asked for its suspension or scrapping.
In terms of impact on bills, energy regulator Ofgem calculated last August that the ECO, now in its fourth iteration, makes up with other environmental levies around 15.3% of the typical yearly household dual fuel bill, quoted by the regulator at £1,131 annually.
Those ‘other levies’ include collections from all bill-payers towards the Warm Homes Discount targeting poor, colder residences, towards the Renewables Obligation, and for payouts to around 1 million eligible, continuing beneficiaries of the Feed-in Tariff. The latter closed to new entrants in March 2019.
The ADE’s 150 members include installers, energy providers, and councils. It remains strongly in favour of the ECO and the estimated £1 billion of yearly investment expected to flow from its fourth phase.
Today the association warned that rumoured talks between Chancellor Rishi Sunak and Johnson’s No10 about the ECO’s abolition leave them “deeply concerned”.
Lily Frencham, the ADE’s head commented: “Rumours around the potential cancellation or postponement of the ECO scheme are alarming.
“ECO is the government’s flagship energy efficiency policy and is a critical way in which we protect vulnerable energy consumers; while it is not the whole answer it continues to have a vital role to play. Cutting ECO now would only hurt vulnerable consumers, at a time when they need more support than ever. It’s essential this doesn’t happen.
“The investment flowing through ECO is critical to building and maintaining the supply chain that are needed to deliver net zero, Frencham said.
“A reduction or – worse yet – cancellation of ECO at this stage will decimate the industry and leave the UK even further behind on a real plan to deliver the transition.”
Combined heat and power schemes currently provide 7% of UK electricity, the ADE calculates.