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FPS Consultation Response To Energy Company Obligation ECO3: 2018-2022

May 8, 2018

The FPS responded to the Government consultation on Energy Company Obligation ECO3: 2018-2022 on behalf of its members.

ECO is a Government programme aiming to deliver energy efficiency measures in homes across Great Britain. The current ECO scheme is due to end on 30th September 2018.

This consultation covers the future ECO for the period 1 October 2018 to 31st March 2022 and
sets out the Government’s high aspirations and commitment to delivering these measures whilst adhering to the Clean Growth Strategy.

If you would like to know more about the ECO programme visit https://www.ofgem.gov.uk/environmental-programmes/

Whilst there were many questions to answer in the consultation the main focus of our response was Question 16.
Please see our response below:

Question 16. Do you agree with our proposal to exclude the installation or repair of oil and coal fuelled heating systems?

We do not agree with the removal of oil heating systems for the ECO consultation moving forward, we cannot give our position for coal.

We are not trying to protect the heating oil industry at all costs and we recognise and support the Government’s work to meet the 2050 carbon reduction target but feel strongly that oil can be part of the solution not the problem.

More than one million homes in rural England, Scotland and Wales are heated by oil as well as a further 250,000 businesses. 16% of English Households who use oil for heating are classed as fuel poor, the national average is 11%!

Removing oil from ECO3 will directly affect those people most in need.

You state, under ECO2 from April 2017 to December 2017 there have been 11,407 oil boiler replacements installed which represents 3.5 times the average number of oil boilers installed under the ECO scheme thus proving the need was there.

You also say ECO is a programme to deliver energy efficiency measures in homes across Great Britain and to provide householders with affordable warmth there seems little sense is limiting the options to homeowners. By including oil and promoting the replacement of old oil boilers to oil condensing boilers, this meets two key needs; it will reduce fuel consumption thus leading to lower energy costs for customers as well as reducing CO2 emissions.

The best long-term solution to tackling fuel poverty is to make it cheaper for people to heat their homes through installing energy efficiency measures. Improved insulation in addition to a direct boiler replacement offers a quick, low cost and effective use of funds as this will both significantly reduce heating costs and reduce CO2 emissions.

Modern high efficiency oil condensing boilers are on average more than 90% efficient. Installing an oil condensing boiler is an excellent way to reduce running costs compared with non-condensing boilers and a fuel saving of up to 30% can be expected. A more efficient oil condensing boiler can also reduce CO2 emissions by 30%.

In the Industrial Strategy, this Government sets out its ambition to drive productivity across the whole economy, helping to make this a country that works for everyone. As part of achieving that, the Government says it is determined to bring down the costs of energy for all consumers and that is also at the heart of ECO3.

We consider that our sector can continue to deliver the most cost-effective method of heating to the off-grid consumer, this can be seen under the recent report dated 31 Jan 2018 by Independent provider of home heating costs, Sutherland tables, which indicates that heating a standard 3-bedroom home in Great Britain is £1048 per annum compared to an Air source heat pump radiator system at £1681 per annum and electricity is £1910 per annum. Furthermore, heating oil has been the cheapest off grid energy since Jan 2015 according to Sutherland Tables thus placing our sector in a strong position for a cheaper heating cost which we believe is one of the key aims of the consultation. This would also reduce the numbers of households which meet the current fuel poverty criteria.

You talk about assistance under RHI, but the fuel poor are also excluded from RHI as they can’t afford the high upfront costs to install renewable technologies and importantly, many renewable technologies are not the solution for all housing, especially housing in rural areas which tend to be older properties with poor insulation. We believe supporting oil boiler replacements with modern oil condensing boilers under ECO 3 would both reduce heating bills whilst also making a significant contribution to reducing CO2 emissions.

It could also help those families who can’t afford the RHI.

The Energy Savings Trust estimate that the cost of installing heat pumps is at least £6000, external wall insulation £8000 & internal wall Insulation £4000.Compare these costs to around £2000 for an oil condensing boiler of similar heat output or £1600 if subsidised by a nationwide £400 government boiler replacement incentive scheme, or free for the poorest households under ECO.

We understand designing policies to address the issues of both climate change and fuel poverty poses a significant challenge, but the ECO3 proposals also fail to consider the potential future development of liquid bio-fuels as a replacement for kerosene.

We believe the heating oil industry has a vital role to play in helping the Government reach the right decisions on the best way forward for off grid energy solutions. We recognise the work of the Government to meet the 2050 carbon reduction target, but as we have stated previously oil and – more long-term – a bio product, can be part of the phased solution.

The Government has stated that they are technology neutral but BEIS’ initial direction, outlined in the ‘Clean Growth Strategy’, did not appear to be technology neutral as it seemed to only encourage moving rural households and businesses – currently using oil heating –
to electrically driven heat pumps to cut carbon emissions from the heating sector.

We believe you need to look at alternatives as this is not feasible due to high installation and running costs of installing heat pumps for off grid homeowners; the requirement for additional National Grid generation and infrastructure costs and as many have already experienced in the recent bad weather, outage issues.

We can put forward an alternative, credible solution with Government support to achieve genuine energy savings in the short term and CO2 emission reduction through research into bio fuels to smooth the changeover to a decarbonised heat supply. By allowing oil to be part of ECO3 this could provide an ideal springboard for the introduction of modern, high efficiency oil condensing boilers to replace approximately 400,000 standard efficiency models still in use, the majority of which are thought to be in fuel poor households, which could then run on a bio-fuel as soon as this becomes available on the market.

From the last ECO submission government acknowledges the positive impact that the significant number of boiler replacements delivered to date has made for many low-income households, by omitting oil from ECO3 fuel poverty would certainly increase and rural house-holds would be discriminated against.

The Federation of Petroleum Suppliers (FPS) request a meeting to discuss further.

Full details of the consultation document can be found here:

If you have any questions about this please contact a member of the FPS team

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