An example of a boiler that could be scrapped

A good start to the New Year: the Energy Saving Trust is rolling out the Boiler Scrappage Scheme announced in the pre-budget report. This is one of the NHER’s key recommendations to the Government, so it’s good to see things moving quickly.

The aim is to improve Britain’s energy efficiency, to save people’s energy bills, and boost the gas fitting and boiler manufacturing industries. Three birds—one stone.

Although as you’d expect, the scheme is not perfect: it missed a chance to make better use of EPC assessors, and it could be open to a touch of abuse.

First the good bit:

☺£400 will encourage people to act on EPC recommendations

Boiler replacement is recommended in 63% of domestic EPCs. It’s one of the most common recommendations we make, and one of the biggest CO2 savers.

But it’s also one of the more expensive home improvements, which is why many landlords and homebuyers opt to soldier on with old, wasteful boilers until they break down. They needed some incentive to replace the G-rated horrors sooner rather than later.

Now, thanks to the Reheat Britain campaign^†, they’ve got it. The Boiler Scrappage scheme gives £400 cashback on getting a G-rated boiler replaced with an A-rated model (or a renewable heating system, for example a biomass boiler, which could deliver even greater cash and emissions savings).

Here’s a typical cost / payoff breakdown:

• A straightforward boiler replacement costs on average £2,500, according to the HHIC
• A family sized home should then start saving £200 a year on gas bills, which would normally mean pay-off within 121⁄2 years
• With an additional £400 cashback, this shortens the payoff time to 101⁄2 years

I’m expecting a lot of property owners to take this up, if for no other reason that they would eventually have to do so anyway—there’s no word yet on how long the scheme will run for, but you’d be disappointed to miss out on what is effectively a 16% discount.  And for Horizon, it means that every time we write this recommendation on our EPC reports there is an increased chance it will go ahead.

All good so far… However, there’s a downside I can see:

☹ No independent assessment means the scheme can be abused

There’s a flaw in the Energy Saving Trust scheme: it relies on householders and installers to decide for themselves whether a boiler really is eligible.  This means identifying it as G-rated, and (unless the owner is over 60) making sure it is in working order.

Without independent assessment, this scheme’s open to be taken for a ride because both parties have something to gain for being ‘creative’. Is there any other party who independently could tell whether a boiler really is G-rated and in working order?

EPC assessors, of courrse!  Just ask OFGEM, the energy watchdog, which runs the CERT funding scheme (domestic energy suppliers subsidising home energy efficiency work in order to meet a CO2 reduction target). Under CERT you can also replace an old boiler, but OFGEM felt that it was

❝ extremely important that the identification of G-rated boilers to be replaced
be conducted by an independent party. The best way to achieve this is through
EPCs.❞ [source: ofgem pdf]

The government clearly differs from its industry watchdog on this, as the Energy Saving Trust scrappage scheme will accept the signature of “the competent person you have asked to install your new boiler”—in other words, someone whom the scheme is designed to benefit in the first place.

Since two of the three purposes of this scheme are

1. to lower householders’ heating bills
2. to reduce CO2 emissions,

why not carry out an EPC as a way of checking eligibility?  It adds more value than just an independent voice: an EPC assessment would also give homeowners recommendations on other energy saving measures, pointing them in the direction of cost saving insulation and grant funding that they might not otherwise be aware of.

So, a missed opportunity.

All in all, is the boiler scrappage scheme brilliant or flawed?

We’ve had lots of CERT-inspired initiatives like insulation grants and distribution of low energy lighting, but since CERT is down to energy suppliers acting under obligation, they tend to go for the easy wins (which even includes just doling out advice such as turning off equipment on standby).

The boiler scrappage scheme goes for one of the tricker (i.e. higher cost) measures. Boosting big-ticket measures for home energy efficiency was always going to be one of the harder things to get right, so overall I’d applaud the Government for going for it.

Meanwhile, let’s hope the potential for fraud won’t be too glaring a weakness for the scheme: most people will act honestly. As for the missed opportunity for carrying out EPCs: the scheme has only just launched, perhaps the Energy Saving Trust will revise its procedures once things get underway, but in the meantime we’re doing our best to spread the news about energy efficiency funding measures through this site!

Action: how the boiler scrappage scheme works

If you’re convinced to go ahead with a replacement, here’s what to do:

1. Check that your boiler’s on the eligible list
2. Get a Gas Safe registered fitter round to quote on replacing your boiler with an A-rated alternative
3. Register for your £400 cashback voucher with the energy Saving Trust
4. Get the work done within 12 weeks of the voucher arriving
5. Pay the bill, then send off the voucher plus the bill: you get £400 cashback

“It’s all very well suggesting home improvements, but where do you think we’re going to find the money for that?”

The good news is, though: in many cases, there’s free money available to do it. More surprisingly still – it’s money we’ve already paid out!

For example, take a look at a source of funding called CERT funding, which has been running since April 2008.

Energy suppliers – the ones we paid our bills to all these years – have been obliged by the Government to stockpile cash to help us fix our homes and save on our energy bills along the way. This is because they’re all committed to a Carbon Emissions Reduction Target, which is where the initials CERT come from.

Who is eligible for a grant under CERT? Almost anyone. All you need is a home that’s heated by gas, electricity, coal, oil or LPG. That doesn’t rule out many homes we’ve assessed.

To be even more eligible, if you’re in receipt of certain state benefits or if you’re over 70, you’ll be in the Priority Group. This means you’re more likely to get 100% of the funding for your efficiency-boosting home improvement.

CERT money could pay for some of the best energy-saving home improvements you could make. For example: cavity wall insulation, which is one of the most overlooked home improvements, could be installed on a grant and it will cut your heating bills year on year.

Imagine that: money to do the work, and money off your bills in the future.  You can see why this grant stuff is worth paying attention to.  (Read more about how to get a CERT-funded home improvement).

What about Social Housing providers – borough councils, city councils, social landlords and housing associations?  You can also get access to CERT funding to improve your tenants’ properties. A good starting point would be to read the National Housing Federation’s leaflet on how to get grant funding (view the PDF here).

British Gas also works with a direct funding agency to help you apply for the money – and you don’t even need to be a B.G. customer (you’re helping them meet their target, remember!)

Will your tenants remember to thank you for reducing their bills, though? That’s one thing I can’t promise!

P.S.

CERT isn’t the only programme – there’s also CESP (the Community Energy Saving Programme), and Warm Front, and the grant landscape does change from time to time. We’ll talk about those in another mention, and we’ll keep you updated on changes (especially if you follow me on Twitter).