Exclusive: Green Deal suffers fresh setback

The big six energy firms will not be geared up to deliver the payment mechanism for the government’s flagship energy efficiency scheme until next year, with the delay threatening to undermine the launch of the scheme in October.

The Department for Energy and Climate Change (DECC) confirmed the six major energy firms - EDF, Scottish Power, Southern Energy, Npower, E.ON and British Gas - would not be ready to deliver the payment mechanism for the Green Deal from October, with the earliest date likely to be the “first quarter 2013”.

The payment mechanism is critical to the operation of the Green Deal as it enables consumers to pay for energy efficiency measures in their home through a charge on their energy bills.

Last month Building first reported fears within the industry that the timetable for the roll out of the Green Deal was slipping, after DECC officials started describing the launch of the programme as happening “before the end of the year” in meetings with stakeholders, rather than October.

The introduction of the government’s secondary legislation required to implement the Green Deal has already been delayed. The legislation was initially set to be introduced last month, but has now slipped to June.

This week climate change minister Greg Barker insisted the legislation would be in place before the summer recess and said the programme would be launched in the “fourth quarter” of 2012.

Neil Cutland, director of sustainability consultant Cutland Consulting, said the delay to the implementation of the payment mechanism risked undermining the roll out of the programme.

“I don’t see the point of [launching the Green Deal] at all without the payment mechanism,” he said.

Brian Berry, chief executive of the Federation of Master Builders, said: “This is another signal that the Green Deal will not be launched in October. The soft launch that we have heard about is becoming a squidgy launch, it’s really quite flabby.”

Stephen Heath, external affairs director at Knauf Insulation, said: “It’s a real shame if [the payment mechanism] is not available for the first few months.”

He said he feared the delay in having the payment mechanism in place might lead to a drop in insulation activity in the transition from current energy efficiency programmes the Carbon Emissions Reduction Target (CERT) and Community Energy Savings Programme (CESP) to the Green Deal.

“If cash flow reduces or stops then insulation firms will suffer,” Heath said.

He said in his experience energy companies needed to stop doing insulation work in September to allow regulator Ofgem time to audit their carbon reduction achievements and if the Green Deal was not fully operational until 2013 then some insulation firms might go under.

But John Alker, UK Green Building Council policy manager, said the delay would give time to “sort out teething trouble in the scheme”. He said the scheme would need to have a snowball effect to drive it forward and so a soft launch in October followed by a more gradual increase in activity would be possibly be beneficial.

“It’s not very surprising. But there’s so much to sort out between now and the launch of the Green Deal a couple of months delay is not the end of the world,” he said.

A DECC spokeswoman said the move would not undermine the roll out of the programme, as people would only begin to take out Green Deal work in October, and it would take time for that work to be completed and for payments to then be collected.

She said: “What the Big Six are suggesting is not a surprise. As we have already stated, we want to launch the scheme steadily to grow the market right through to the end of the decade for what will be a twenty-year job.”

In October Building revealed that the government’s own figures showed the Green Deal could bring about 93% decline in loft lagging work.

Labour’s shadow climate change minister Luciana Berger, said the delay in putting the payment mechanism in place was “yet another blow to the beleaguered Green Deal scheme, undermining the confidence of consumers and jeopardising jobs and growth in the energy efficiency market”.

She said: “Paying off loans through household energy bills is fundamental to the Green Deal model. If energy companies are now saying they can’t deliver that, then it casts severe doubts over the scheme’s viability.

“DECC should come clean about exactly what is going on by putting correspondence from the big six about this delay into the public domain.

“Every week the launch of this scheme seems to be thrown into chaos, yet minsters are ploughing on regardless, instead of listening to those who are urging them to change course.”

She called for the government to work more closely with the CBI the Committee on Climate Change, and consumer group Which? as well as small businesses in the sector in order to create a scheme “that will actually deliver affordable bills, more jobs and lower emissions”.