The Green Deal was launched over a year ago in early 2013. DECC has recently published the latest statistics for May 2014. At the same time, DECC published the results of its Green Deal customer journey survey.
June’s report on the latest statistics confirms continued growth in Green Deal plans. Dig a little deeper behind the numbers and there are static conversion rates, continued low utilisation of Green Deal providers and installers, and a potential bottleneck forming before installation.
Customer need
Improved energy efficiency is a major component of how the UK aims to reduce its emissions footprint and achieve its carbon targets.
The challenge, and the big win, is in solving the retrofit problem.
The Green Deal is an attempt by government to engage the majority of householders in investing to improve the energy efficiency of their homes, thereby reducing energy demand (and bills) and cutting emissions.
Households spend around £32 billion on domestic energy each year and the price of electricity for domestic customers has increased by around 6% on average over the last few years.
Reasons given by householders for having a Green Deal assessment were to cut energy bills (52%), because the assessment was free (46%), to make their home warmer or more comfortable (37%), because of concerns over rising bills (31%), because improvements may be free or at greatly reduced price (23%) and to improve energy efficiency (22%).
Affordability – in the form of cutting bills and taking advantage of free services – is a common theme.
Assessments
Around 23,800 assessments were carried out in May 2014, up 8% from around 22,000 in April. There were 839 newly confirmed Green Deal plans in May 2014, indicating a conversion rate of around1.8%, the same as for April and the highest since September 2013.
The number of assessments not converted to Green Deal plans since May 2013 now stands at around 230,000. However, some of these assessments may have resulted in installations under ECO or through self-financing.
Advisor numbers have continued to grow and now stand at 3,747, up 5% on April. However, the number of assessor organisations has fallen for the first time. Advisor utilisation has remained at around 6 to 6.5 assessments per advisor per month on average. Of course some advisors will be busier than others, though on average this still represents substantial under-utilisation for work related to Green Deal.
With up to 75% of households not paying for assessments, this represents an investment of £millions in marketing (or ‘loss leader’) activities for Green Deal. And with conversion rates remaining low and flat despite this investment, the sustainability of the go-to-market model must be questionable.
Of those householders having chosen to install a measure following an assessment, the payment method used included: it being free or paid for by the local authority (38%), third party (not Green Deal) finance arranged through the Green Deal provider (17%), use of ECO subsidy (16%), from personal savings (14%) or using Green Deal finance (2%).
Confirmed plans
The number of newly confirmed Green Deal plans is down 11% on April to 389 plans. The number of outstanding confirmed plans, i.e. not yet being installed, continues to rise and stands at 863 in May 2014, up 14% on April. The pool of confirmed plans represents around 60% of all pre-live plans, up from 50% in February.
Over the last three months, around 40% of confirmed plans have started being installed each month. The time spent before being installed is around 2.5 months on average.
The number of Green Deal providers continues to increase, standing at 151 in May, of which 144 serve the domestic market. Utilisation of Green Deal providers is increasing and is at around 9.5 pre-live plans per provider in May 2014, the highest level experienced so far.
Whilst encouraging, these numbers represent low utilisation for Green Deal providers.
Plans being installed
The number of plans newly being installed (i.e. moving from confirmed) continues to grow strongly, up 31% on April and around three times the number in February. The total number of plans currently being installed has grown over the last four months, accounting for 40% of pre-live plans, down from around 50% in February and 60% in October 2013.
The number of plans being installed has grown less quickly than that for confirmed plans (i.e. those not yet being installed). Does this indicate a bottleneck in moving plans from confirmed to installing?
In each of the last two months, around 40% of plans have completed installation and become live, up from below 30% in March. Plans now spend around 2.5 months being installed, down from around 3.5 to 4 months in March.
The age profile of plans being installed has become younger over the last three months.
The number of Green Deal installers rose by less than 1% in May, effectively flat. Utilisation of installers has continued improving over the last four months, though slowly and stands at more than 20% less than the peak in 2013. In May 2014, around 22.5 plans were being installed for every 100 Green Deal installers, on average.
The most commonly installed measures using Green Deal finance in May 2014 were Solar PV (33% of measures reported as being installed), new boiler (22%) and cavity wall insulation (15%). This differed somewhat from stated intentions after completing the assessment.
Draught proofing and hot water cylinder insulation were commonly stated intentions for installation, with almost none being done using Green Deal finance, most likely due to the low cost involved. There were relatively fewer stated intentions to install boilers and solar PV following assessment, though both were the most commonly installed measures using Green Deal finance.
Overall householder satisfaction with installation of measures is high, with 84% or more rating very or fairly satisfied across a range of metrics.
The only prominent source of dissatisfaction (among those factors tested) was from how clean or tidy the home was left following installation.
What’s next
The analysis will be updated following publication of the next monthly report on 22nd July.
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To learn more about The Venturing Firm, please look at our web site.
Sources
DECC, Green Deal and Energy Company Obligation (ECO): monthly statistics (June 2014), June 2014, https://www.gov.uk/government/publications/green-deal-and-energy-company-obligation-eco-monthly-statistics-june-2014
DECC, Green Deal customer journey survey, June 2014, https://www.gov.uk/government/publications/green-deal-customer-journey-survey-summary-report-quantitative-survey-wave-2
Green Deal Oversight and Registration Body, http://gdorb.decc.gov.uk/find-a-green-deal-supplier/advanced
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