The report also provides evidence of the impacts resulting from a sharp fall in industry confidence with regards to the government’s management of energy efficiency policies.
Confidence in government's energy efficiency policies down 180 points to an all-time low
Jump in projects commissioned, with public buildings topping list of upgrades for the first time since reporting began
36% of respondents are not confident in government's management of wider economy - but 41% think it is effective
Energy efficiency supplier confidence falling but respondents expect significant market improvement in Q3
Compiled from the results of a confidential, quarterly industry survey, it clearly evidences industry trends and has become one of the sector's leading sources of market intelligence. The report covers both energy suppliers and consumers, providing differentiated resurd, Bellrock and Schneider Electric, the latest report shows the energy efficiency market monitor falling for the second consecutive quarter, from just below 100 points in Q1 2015 to 51 points in Q2 2015. Download the graph here: Market Monitor)
This represents a decline in supplier order books, sale prices and government action. Suppliers responding to the survey said that two of their top three concerns were regulation and subsidy/policy support. When asked about the government's management of energy efficiency policies alone, supplier confidence hit an all-time low in Q2, with more than 60% of respondents citing ineffective management. This represents the biggest quarter on quarter fall following Q1 which saw the confidence indicator break out of the negative zone for the first time - reaching zero. Download the graph here: Policy Confidence
Supplier confidence in the government's management of the wider economy also fell in Q2, although the change on Q1 was less steep than that of energy efficiency policy. Respondents citing ineffective management increased by 3/4, but still accounted for just 36% compared to the 41% citing effective management. Despite this gloomy picture, respondents are confident of a turnaround in Q3 and expect the market monitor to bounce up to 115 points, which, if achieved, will be the highest market monitor points score since the research was launched in 2012.
By contrast the energy efficiency consumer respondents reported an increase in project commissioning in Q2. Typically, around 70% of consumers report commissioning energy efficiency projects each quarter. Q2 2015 saw a jump in project commissioning following an extended downward trend in the market. At almost 80%, this quarter represents one the highest take up rates since the survey began. Download the graph here: Projects Commissioned)
When it comes to technology choices, consumers continue to favour high-efficiency lighting over other individual technologies and this solution is included within 63% of energy efficiency projects. When combined, controls (in the form of lighting controls, 34%, and general building controls, 31%) offer some collective competition for the top energy efficiency technology selection. Solar PV has also sustained its recent gains, with 22% reporting uptake in Q2, perhaps in response to the proposed FITs changes.
The capital cost of respondents' energy efficiency projects remains wide-ranging and volatile. Overall however the long-term trend is towards sustained growth in project size. Starting at around £60k in 2012, the current median project value is circa £110-120k despite material decreases in the volume of the very largest projects (£500k+) in the last two quarters.
Energy efficiency landscape
The above trends must be considered in the context of the operational landscape. Ian Jeffries at EEVS commented:
"A notable theme in this quarter's research has been the lack of support that the energy efficiency sector feels it has received from the UK government.
"Interestingly, however, the policy landscape has shifted somewhat since the survey was carried out.
"For example, in July the new Conservative government announced its much-publicised cuts to renewable energy subsidies and, shortly afterwards, a less prominent Treasury-led review of energy efficiency and carbon taxation. This perceptible swing in favour of energy efficiency could be a shot in the arm for a sector reporting a loss of confidence.
"Allied to this, there is increasing political optimism that the upcoming COP21 negotiations in Paris will yield a new global climate agreement.
"If so, these recent UK policy changes may suggest that encouraging energy efficiency through higher taxation could be UK government's preferred approach, at the expense of incentivising renewables. If nothing else there's certainly lots to look out for, and it will be interesting to see how the sector responds to these issues in the coming quarters."
Download the full report here. Those interested in taking part in the next survey can register here.