13 December 2012: DECC yesterday released their consultation on the ECO brokerage. Previous posts (here and here) have highlighted the potential of the brokerage to local authorities and community groups to further access the £1.3 billion annual funding directed through the Energy Company Obligation (ECO) to support the take up of energy efficiency measures. However, Government have taken the view that local authorities and RSLs will not be able to trade on the brokerage.
The ‘Guide to the ECO brokerage‘ sets out the Government’s case:
“Why can’t a Local Authority or Registered Social Landlord trade on brokerage?
The primary objective of brokerage has always been to stimulate the Green Deal market. Therefore in the very first instance we will look to restrict trading to domestic Green Deal Providers. However, over time we will look to open the platform to other sellers. We are committed to working with social landlords and local authorities to see how this can best be done.
Will energy companies be able to pick and choose which companies they buy from on brokerage? Could this disadvantage smaller Green Deal Providers?
ECO brokerage is a blind trading mechanism. Energy companies will not be able to see who they are buying from. Therefore, if a smaller Green Deal Provider can offer ECO at a competitive price they will be able to compete on the brokerage platform.
DECC will be monitoring ECO Brokerage trading activity for any evidence of uncompetitive behaviours from buyers and sellers.”
The ECO brokerage consultation adds that:
“53. …It should be noted that all Green Deal Providers, non-Green Deal Provider delivery agents, and Local Authorities and Housing Associations/Registered Providers of Social Housing can all still access ECO directly via a direct bilateral partnership with ECO obligated energy companies, although we recognise the challenges involved in this for some providers.”
The consultation makes sets out that there was a clear majority in favour for establishing a brokerage, and hence the Government will put a brokerage mechanism in place on “a voluntary basis while it carries out this consultation asking for views, and any supporting evidence, on the need to regulate energy companies to use the brokerage service.”
The Brokerage will operate as fortnightly anonymous auction where ECO providers will be able to sell “lots” of ECO Carbon Saving Obligation, ECO Carbon Saving Communities and ECO Affordable Warmth, to energy companies in return for ECO subsidy. The auction process will be delivered by the Government Procurement Service through an e-auction online platform that allows energy companies to bid in real-time between 9am and 5pm on each auction day. Dates of first auctions are as follows:
18 December – first full test auction
15 January – first full live auction
Auctions will then take place fortnightly after that
An ECO brokerage Impact Assessment is also available to download.
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