Recommendations on a Framework for the Energy Efficiency Levy Programme

Published date01 June 2007
Energy SectorSustainability
NI £5 Levy Framework






Recommendations on a


Framework for

Northern Ireland’s Energy Efficiency Levy Programme


Prepared by:


The Energy Saving Trust



Presented to:


The Northern Ireland Authority for Utility Regulation



June 2007

The Energy Saving Trust


EST is a non-profit organisation that promotes energy saving, funded by government and the private sector. Set up after the 1992 Rio Earth Summit, we have two main goals:

  • To achieve the sustainable use of energy

  • To cut carbon dioxide emissions, one of the key contributors to climate change

To achieve these goals, we work with households, business and the public sector:

  • Encouraging a more efficient use of energy

  • Stimulating the demand and supply of cleaner fuelled vehicles

  • Promoting the use of small-scale renewable energy sources, such as solar and wind.


Our Members


The Secretary of State for Environment, Food and Rural Affairs

The Secretary of State for Transport

The First Minister for Scotland

The Secretary of State for Northern Ireland

The Welsh Assembly Government

BG Group plc

BP Oil UK Ltd

BG Microgen

Centrica plc

Calor Gas Ltd

Innogy plc

Johnson Mathey

EDF Energy plc

Manweb

Northern Ireland Electricity

National Grid Transco plc

Phoenix Natural Gas

Powergen plc

ScottishPower plc

Scottish and Southern Energy

Shell International Ltd

















1. INTRODUCTION 5

1.1 Background to the Energy Efficiency Levy Programme 5

1.2 Proposals for a new Energy Efficiency Levy Programme 5

1.3 The Role of the Energy Saving Trust. 6

1.4 Report Format 7

1.5 Equality Impact Assessment 7

2.0 BROAD FRAMEWORK 8

2.1 Eligible Initiatives 8

2.2 Eligible costs 9

2.3 The Funding Available 9

2.4 The Focus on Fuel Poverty 10

2.5 Levy Projects to tackle fuel poverty 11

For the next three year phase of the Levy, 2007/08 - 2009/10, it is proposed that the 80% of Levy funding ring fenced for schemes aimed at priority group customers continues to be spent in a similar manner, with a slightly extended scope. The priority group funding will therefore be split into 4 distinct sections. This decision will be reviewed based on experience gained from 2007/08. The following sections discuss each in turn. 11

2.6 Levy Projects for Non-Priority Customers 15

2.7 The Opportunity for Second Tier Suppliers 15

2.8 Project Monitoring 15

2.9 Auditing 16

3.0 SETTING THE OVERALL ENERGY SAVING TARGETS 16

3.1 Energy Savings from Supplier's Projects 16

3.2 Targets based on "Accredited Discounted Lifetime energy Savings" 17

3.3 Types of Fuels Eligible to be Saved and 'Fuel Standardisation' 17

3.5 Non-Priority and Non-Domestic Customer Projects 19

3.6 The Lifetimes of Energy Efficiency Measures 20

3.7 Direct Cost Assumptions – Non-Priority Group Work 20

3.8 Indirect Cost Assumptions 21

3.9 Third Party Funding Assumptions 22

3.10 Energy Efficiency Levy Targets 23

3.13 The Overall Energy Saving Target 24

3.14 Incentive to Exceed the Target 25

3.15 The Impact on Targets of Second Tier Supplier Activity 25

3.16 Customer Financial Savings 25

3.17 Carbon Savings 26

APPENDIX 1 – ADMINISTRATIVE PROCEDURES 28

1.0 BIDDING FOR ENERGY EFFICIENCY LEVY FUNDING 28

2.0 PROJECT SUBMISSION 28

2.1 Project Reference Numbering 28

2.2 Project Submission 29

2.3 Written Description of the Scheme 30

2.4 Technical Details of the Project 31

2.5 Project Approval 31

3.0 PROJECT MONITORING REQUIREMENTS 32

3.1 Customer Satisfaction Monitoring 32

3.2 Quality of Installation Monitoring 32

4.0 INTERIM PROGRESS REPORTING 33

5.0 PROJECT COMPLETION REPORTING 33

6.0 ANNUAL REPORTING 34

7.0 AUDITING 34

APPENDIX 2 – CUSTOMER SATISFACTION SURVEY EXAMPLES 36

APPENDIX 3 – SAMPLE PROJECT POST IMPLEMENTATION PROFORMA 38

SCHEME COMPLETION POST-IMPLEMENTATION FORM 38

APPENDIX 4 – GUIDANCE ON THE USE OF ENERGY EFFICIENCY MEASURES 39

1.0 Insulation measures 39

1.1 Loft insulation 39

1.2 Cavity wall insulation 40

1.3 Draught proofing 40

1.4 Hot water tank insulation 41

1.5 High Efficiency Cylinders 41

1.6 Radiator panels 42

2.0 LIGHTING MEASURES 43

2.1 Compact fluorescent lamps (CFLs) 43

2.2 Luminaires 43

3.0 HEATING MEASURES 44

3.1 Boilers 44

3.2 Heating controls 45

3.3 Solar Panels 46

4.0 ENERGY EFFICIENT APPLIANCES 47

4.1 Introduction 47

4.2 Energy saving data used for cold appliance projects 48

4.2.1 Incentive projects 49

4.2.2 Trade In Projects 49

4.2.3 Cold Appliance Disposal 50

4.3 Wet Appliances 50

4.4 Jug Kettles 51

5.0 OTHER RELEVANT LEGISLATION 51















A FRAMEWORK FOR NORTHERN IRELAND’S ENERGY EFFICIENCY LEVY PROGRAMME



1. INTRODUCTION


1.1 Background to the Energy Efficiency Levy Programme


The Energy Efficiency Levy Programme was introduced in Northern Ireland as part of a review of the price controls on Northern Ireland Electricity plc (NIE) by NIAUR in 1997/98. EST was asked by NIAUR to assist in the development of a suitable framework and energy saving target for the operation of the programme, which has been implemented on an annual basis since 1997/98.


Initially, the programme was based on a levy of £1 per customer (equating to approximately £665K per annum), with an annual energy saving target of 55GWh. The size of the Levy has gradually increased over the years, reaching a level of £2.05 per customer with an annual energy saving target of 122 GWh by 2001/02. The concept and operation of the Energy Efficiency Levy Programme was very similar to the Energy Efficiency Standards of Performance (EESoP) Programme, run by the public electricity suppliers in GB, the major difference being that suppliers were awarded a financial incentive to overachieve their annual target. NIAUR advised that a suitable level for this incentive would be £4,000 for each GWh saved (RPI linked) above the target.


In 2002 NIAUR consulted on the future of the Levy. Following the consultation a new Framework for the operation of the Levy was developed. The Framework covered a five year period between 2002/03 to 2006/07 with funding based on £5 per customer increasing annually in line with RPI.


In recognition of the widespread problem of fuel poverty in Northern Ireland, this new phase of the Levy required that 80% of the available funds were spent on schemes that focussed on alleviating fuel poverty. Two different types of fuel poverty scheme were implemented. Half of the funding was spent on supporting the Warm Homes Plus programme, by providing the necessary insulation measures when the full Warm Homes Plus grant had been spent installing a heating system. The rest of the funding was spent on schemes that provided a full package of insulation and heating measures to poorly insulated and/or poorly heated homes, thus ensuring that the properties were 'fuel poverty proofed'. This approach proved very successful, with approximately 3500 homes 'fuel poverty proofed' and a further ca 5000 homes “fuel poverty proofing assisted” (via Warm Homes/Warm Homes Plus).



1.2 Proposals for a new Energy Efficiency Levy Programme


In March 2006, NIAUR conducted a further...

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