1. Ofgem ECO 1.2 consultation Summary of district heating workshop 13 August 2014

2. Amending Order (ECO1.2) CERO target reduction Changes to CSCO areas New CERO primary measures Early CERO delivery uplift Optimum carry forward of excess actions Interim provision  Changes up to March 31 2015  First obligation period (OP1)  Laid 22 July 2014  Coming into force ~ Nov 2014  Applying from 1 April 2014 Proposed legislative changes in ECO 1.2 – based on the legislation laid by DECC

3. 3 Key areas of our consultation ECO 1.2 changes: New CERO primary measures: minimum insulation level to support a secondary measure Connections to a district heating system: pre-conditions under CERO and CSCO In addition we are also consulting on the following issues unrelated to the ECO 1.2 changes: Compliance with building regulations: installation of a measure General comments on our guidance (version 1.2)

4. ECO 1.2 consultation timeline Key datesActivity 22 JulyDECC laid amending Order 11 AugustOfgem launch consultation 22 SeptemberOfgem close consultation Late OctoberOfgem publish response to consultation and final guidance Early NovemberAmending Order comes into force

5. Connections to a DHS: DECC ECO amending Order: “a connection to a district heating system where that connection is made to premises which— i.do not include the top floor of the building in which those premises are located, and where the walls of those premises cannot be insulated; or ii.have flat roof, loft, rafter, room-in-roof or wall insulation” The policy intent is for premises which are being connected to a DHS under CERO or CSCO to be insulated NB For (i) we refer to “those premises” as premises within a multi-storey building which are not located on the top floor. 5

6. Connections to a DHS: Ofgem 6 Ofgem’s consultation: “Pre-conditions for premises which are being connected to a DHS, for the measure to be claimed under CERO or CSCO: 1.The premises must have either ‘roof-space insulation’ or ‘wall insulation’ in place. 2.For premises in a multi-storey building, which are not located on the top floor of the building, the total exterior-facing walls must be insulated unless they cannot be insulated.” We must judge if a roof-space area or exterior-facing wall area “cannot be insulated” NB ‘Roof-space’ insulation is flat-roof insulation, loft insulation, rafter insulation or room-in-roof insulation. ‘Wall insulation’ is external wall insulation, internal wall insulation or cavity wall insulation.

7. Pre-condition 1 We will consider that this is met if: – the total roof-space area or exterior-facing wall area of the premises is insulated, or – if part of the total roof-space area or exterior-facing wall area (not exceeding 50%) cannot be insulated then the remaining part is insulated. 7 PRE-CONDITION 1: The premises must have either ‘roof-space insulation’ or ‘wall insulation’ in place.

8. Pre-condition 2 We will consider that this is met if: – the total exterior-facing wall area of the premises is insulated, or – if part of the exterior-facing wall cannot be insulated then the remaining part is insulated, or – all of the exterior-facing wall cannot be insulated. 8 PRE-CONDITION 2: For premises in a multi-storey building, which are not located on the top floor of the building, the total exterior-facing walls must be insulated unless they cannot be insulated.

9. Defining ‘roof-space area’ ‘Roof-space area’ means: – for loft insulation, the area of the floor of the loft – for rafter insulation, the area of the rafters – for flat roof insulation, the area of the roof – for room-in-roof, the area of the room-in-roof including the common walls, gable walls and ceiling – for properties with more than one roof type, and/or more than one type of roof-space insulation installed, the sum of the areas as explained above. 9

10. Pre-conditions for connections to DHS under CERO and CSCO Type of premises Roof-space insulation (% of area insulated) Wall insulation (% of area insulated) DHS eligible under CERO or CSCO? Most premises (including premises located on the top floor of a multi-storey building) 100% Yes 0-49%100% Yes 100%0-49%Yes 50-99%0-49% Yes, if we judge the uninsulated roof-space area cannot be insulated 0-49%50-99% Yes, if we judge the uninsulated wall area cannot be insulated Premises within a multi-storey building which is not located on the top floor n/a100%Yes n/a0-99% Yes, if we judge the uninsulated wall area cannot be insulated 10

11. Reasons for our proposals We are proposing that there must be a minimum level of insulation installed to meet the intent of the legislation. Without this, DHS connections could be installed at a property where only a nominal amount of insulation had been installed. This is also consistent with our current pre-conditions for a premises being connected to a DHS under CSCO which we consulted on at the start of ECO. 11

12. Defining “cannot be insulated” Proposed reasons for judging that a roof-space area cannot be insulated: – it is not possible to access an area of the roof space in order to install the insulation – the occupier (or landlord, as applicable) of the premises refuses to consent to installing the insulation on reasonable grounds other than cost Proposed reasons for judging that an exterior-facing wall area cannot be insulated: – it is not possible to access the wall in order to install the insulation – it would be unlawful to install the insulation – the occupier (or landlord, as applicable) of the premises refuses to consent to installing the insulation on reasonable grounds other than cost 12

13. Questions for the break-out sessions Do you agree that insulation must be installed to at least 50% of the roof-space or exterior-facing wall area to support a connection to the DHS? Do you agree with our proposed reasons for why a roof-space or exterior-facing wall area cannot be insulated? Are there any other reasons/scenarios that we haven’t considered? If so, how could suppliers demonstrate for compliance purposes that the roof-space or exterior-facing wall area cannot be insulated in these scenarios? 13

14. Break-out sessions 14 The following slides summarise the main discussion points of the workshop participants in each of the breakout groups

15. Main points: group 1 15 Debate across all groups about whether costs should be a good enough reason for not being able to insulate Considered how the pre-conditions could apply for non- standard multi-storey buildings General agreement with the 50% de minimis level Would like Ofgem to provide examples of acceptable evidence The cost of planning permission could become a problem if planning becomes a method of evidencing Discussed if pre-conditions should have to apply for upgrades to a DHS

16. Main points: group 2 16 Generally agreed with the 50% minimum. Suggested it could even be higher How to define “reasonable grounds” Discussion about standards of pre-existing insulation and what “adequately filled” means Issues with insulating the top floors of multi-storey buildings How projects started under ECO 1.1 rules are affected Possibilities for aligning ECO with RHI

17. Main points: group 3 17 Conventions required for measuring wall area (including or excluding openings?) and roof-space area It can be unlawful to insulate a roof space if there are protected species living there How to determine the threshold for “cannot gain access” Discussion about insulating non-standard properties How to get at pre-existing rafter/room in roof insulation to find out what standard it has been installed to. How to check the standard of this insulation and evidence it

18. Next steps Written responses to our consultation should be submitted by 9am Monday 22 September We will publish a response and final guidance at the end of October 18