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Technical analysis of new measures in CERT

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					EXCERT-031                                             Amended 2nd March 2009



TECHNICAL ANALYSIS OF NEW MEASURES IN CERT 
1. REVISED TARGET
It is proposed that the CERT Target is increased by 20% to 185 MtCO2
(lifetime). This represents an increase of 31 MtCO2 (lifetime). The annual
savings depend on the mix of long lived and short lived measures, and it is
possible that annual savings will increase by more or less than 20%. In the
illustrative mix, the assumed increase is 1.1 MtCO2/year.

2. NEW MEASURES
Face to Face Home Energy Advice

Home energy advice would involve face to face meetings with the
householder. It is suggested that advice on how to set heating and hot water
controls should be included.

In the calculation below, it has been assumed that a householder receiving a
home audit would save 1% of their electricity and 2% of their gas, for a
lifetime of 7.5 years. It should be emphasised that these figures are not
intended to suggest how these measures might actually behave, but simply
to form the basis for a notional carbon score for CERT purposes only.

Real Time Displays
Real time displays would only be eligible for CERT support if actively
promoted to the customer (ie the customer purchases them, or requests one
directly from a supplier). Real time displays save electricity only. A figure of
3.5% per year for 15 years has been assumed, based on the central case in
the 2007 Energy White Paper. It should be emphasised that these figures are
not intended to suggest how these measures might actually behave, but
simply to form the basis for a notional carbon score for CERT purposes only.

See Table 1. Note that these measures would be eligible for the market
transformation element of the innovation route, and thus would be eligible for
a 50% uplift in carbon score. The innovation route is ring-fenced, although it is
proposed to increase this to 10% of a supplier’s obligation. Suppliers will get
the proposed notional scores for RTDs and HEAs beyond the innovation limit,
but not the additional uplift.

3. Loft insulation
It is proposed that professionally installed top-up loft insulation (from at least
60mm) could receive an uplift in carbon score in order to make it more
attractive for suppliers to promote this measure.
It is proposed to give an uplift of 100% to installations in the Priority Group, and
50% for installations in the non-Priority Group. Even with this additional


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EXCERT-031                                               Amended 2nd March 2009


incentive top-up loft insulation would remain less attractive than for suppliers
than full loft insulation. See Table 2.

It is proposed that DIY loft insulation should also receive a 50% uplift. It is not
possible to disaggregate full and top-up installations, so all such measures
would qualify.

In the illustrative mix, it is assumed that 3.2 million lofts are insulated
professionally via the CERT programme and 1.5 million of these are loft top
ups. An estimated 750,000 of these might be carried out after October 2008
and would therefore be eligible for uplifts. The true savings from these would
be 3.5 MtCO2 (lifetime). Depending on the split of these measures between
the PG and non-PG, the uplifts would be between 1.75 MtCO2 (all in non-PG)
and 3.5 MtCO2 (all in PG).

In the mix, an estimated 1.48 million DIY loft insulations have been assumed,
of which around 700,000 are assumed to be installed after October 2008 and
are therefore eligible for uplifts. The true savings from these are estimated at
around 7.9 MtCO2. If DIY insulation receives a 50% uplift, then the uplifts would
account for 3.95 MtCO2.


4. Increasing the innovation ring fence
It is proposed to increase the innovation ring fence from 6% to 10%, and to
leave the microgeneration ring fence as 2% (ie if suppliers do at least 2%
microgeneration, their overall ring fence can now be 12%). Furthermore, the
revised percentages refer to the revised overall CERT target of 185 MtCO2
(lifetime).

                                             Original Revised
                                             Target   Target
CERT Target MtCO2 (lifetime)                      154      185
Innovation ring fence (excluding
microgen) (%)                                      6%        10%
C02 saved by innovation measures
(excluding microgen) MtCO2 (lifetime)             9.24       18.5
Uplift applied to CO2 savings from
innovative measures (excluding
microgen)                                         50%        50%
CO2 lost through uplifts on innovative
measures (excluding microgen)                     4.62       9.25

So increasing the target by 20%, and increasing the ring fence to 10%,
together have the effect of increasing the possible amount lost through uplifts
by 4.63 MtCO2 (lifetime).


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EXCERT-031                                           Amended 2nd March 2009


5. Overall effect on CERT Target
The inclusion of RTDs or advice does not, in itself, affect the CERT target. Any
uplifts will still be capped by the market transformation ring fence.

Memo EXCERT-037 presents two mixes with 2.2 and 2.7 million cavities
delivered respectively. In each of these mixes, it has been assumed that, on
average, the suppliers use half of the potential 10% set aside for the
innovation ring fence for market transformation action. This would result in
4.62 MtCO2 being lost from the target. Uplifts on loft top ups and DIY loft
insulation could result in a further 7.03 MtCO2 being lost from the target.

Together, these uplifts would account for almost 40% of the proposed
increase in the CERT Target from 154 to 185 MtCO2. Note that this is slightly
higher than the amount lost through uplifts quoted in the IA, because of
slightly different assumptions of the numbers of insulations installed after
September 2008 and therefore eligible for uplifts.

If all suppliers use the entire 10% of the innovation ring fence for market
transformation action, and if almost all the loft top ups are carried out in the
PG, the amount lost through uplifts would be: 9.24 + 3.5 + 3.95 = 16.7 MtCO2.
This represents just over half of the proposed increase in the CERT Target from
154 to 185 MtCO2. This can be considered a “worst case” scenario in terms of
the amount lost from the target because of uplifts.




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    EXCERT-031                                                         Amended 2nd March 2009


    Table 1 Possible cost effectiveness of Home Energy Advice, RTDs and RTDs with Home Energy Advice
                                                                                                                                                               Cost to      Cost to
                    Annual                                            Annual                                    Lifetime     Lifetim                           suppliers    suppliers
                    percent                                Annual     CO2               Annual                  of           e of                              per          including
                    age          Annual        Annual      gas        savings           CO2                     electricit   gas       Lifetime                lifetime     a 50%
                    saving       electricity   percenta    savings    from              savings     Financia    y            saving    CO2        Suppliers'   tonne        innovation
                    (electrici   savings       ge saving   per year   electricity       from gas    l savings   savings      s         savings    contri-      CO2          uplift
     Description    ty)          kWh/yr        (gas)       kWh/yr     kgCO2/yr          kgCO2/yr    £/year      (years)      (years)   kgCO2      bution       saved        £/tCO2
     Home Energy
1    Advice                1%            44           2%        374            19           71.09       16.61         7.5        7.5        675         £45        £66.62       £44.42
     RTD Device
     requested by
2    householder         3.5%           154            0          0            66            0.00       17.92          15          0        996         £25        £25.11       £16.74




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EXCERT-031                                                               Amended 2nd March 2009


Table 2 : Cost benefit analysis for loft insulation


 (a) PRIORITY GROUP, PRIVATE
 SECTOR
                   Annual CO2                                            Cost                                                                      Cost effectiveness
                                               Lifetim                                         Uplift required to give a cost effectiveness of
                   savings (after                          Estimated     effectivene                                                               to suppliers if loft
                                    Lifetime   e CO2
                   comfort                                 cost to       ss to                                                                     top ups are
                                    (years)    saving
                   taking)                                 suppliers £   suppliers      £20/tCO2        £30/tCO2       £40/tCO2        £50/tCO2    eligible for a 100%
                                               s tCO2
                   kgCO2/year                                            £/tCO2                                                                    uplift, £/tCO2
 Full loft
                                                                                                                                                    unchanged – no
 insulation from
                      367.16           40       14.69         338           23.00             15%           None           None           None      uplift for full loft
 <60mm
                                                                                                                                                       insulation
 (professional)
 Loft top up
                      108.17           40       4.33          355           82.05         310%              173%           105%            64%              41
 (professional)


 (b) NON-PRIORITY GROUP
                                                                             Cost                                                                  Cost effectiveness
                    Annual CO2                 Lifetim                                         Uplift required to give a cost effectiveness of
                                                           Estimated     effectivene                                                               to suppliers if loft
                   savings (after              e CO2
                                    Lifetime                cost to          ss to                                                                    top ups are
                      comfort                  saving
                                                           suppliers      suppliers      £20/tCO2        £30/tCO2        £40/tCO2       £50/tCO2   eligible for a 50%
                      taking)                  s, tCO2
                                                                           £/tCO2                                                                    uplift, £/tCO2
 Full loft                                                                                                                                          unchanged – no
 insulation           452.15           40       18.09         228           12.60         none              none           none            none     uplift for full loft
 (professional)                                                                                                                                        insulation
 Loft top up
                      133.21           40       5.33          228           42.79         114%              43%             7%             none           28.53
 (professional)


 (c) DIY LOFT INSULATION
                                                                                                       Cost
                                                                                                 effectiveness
                    Annual CO2                                                     Cost
                                                Lifetime       Estimated                         to suppliers if
                   savings (after                                             effectiveness
                                    Lifetime      CO2           cost to                         loft top ups are
                      comfort                                                  to suppliers
                                                savings        suppliers                          eligible for a
                      taking)                                                    £/tCO2
                                                                                                   50% uplift,
                                                                                                     £/tCO2


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EXCERT-031                              Amended 2nd March 2009

DIY loft
             268.76   40   10.75   51         4.74       3.40
insulation




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