Strike while the iron’s hot
Landlords have until 12 December to deliver carbon emission and energy savings targets. Christopher Paul, partner at Trowers & Hamlins explains
It’s human nature. Everyone wants to be involved in the newest and brightest initiative, yet sometimes the shock of the new leads us to miss out on opportunities that are right before our eyes.
Many social landlords are focused on the green deal, the government’s flagship retrofit programme, no doubt trying to work out the implications for their residents, property management and existing works programmes.
But it’s important to remember that the carbon emissions reduction target and the community energy saving programme will remain in force until December 2012, imposing targets on the big energy suppliers.
They remain interested in funding measures such as insulation, lighting, heating, micro-generation and community heating in order to meet their obligations.
Barriers to take-up
So why can these arrangements take so long to get off the ground? For some social landlords, procurement formalities are acting as a barrier to delivery.
Procurement issues can arise where an energy supplier or a contractor both fund and deliver the energy efficiency works through their own supply chain. From a procurement perspective, the delivery of works is likely to mean that the resulting arrangement is a public works contract and caught by the procurement legislation.
In valuing such a contract, landlords would have to take into account the level of CERT/CESP funding received and the amount it is contributing.
A pure funding arrangement (where an energy supplier funds CERT/CESP measures but does not perform the works) is unlikely to be caught by the EU procurement regime. Energy companies are likely to require contractual commitments from landlords to ensure their investment is spent on the proposed measures, delivered to a good standard and in a timely manner in order to protect their investment.
Having entered into such a funding arrangement, the landlord would then procure the works through existing supply chain arrangements or via a new procurement (although the December 2012 deadline to deliver CERT/CESP makes a procurement exercise less attractive).
A key question for social landlords will be whether existing arrangements cover the proposed measures. In many cases, general construction and mechanical and electrical frameworks may extend to eligible measures.
The common procurement vocabulary codes by which the European authorities categorise contracts contain very little detail on energy saving measures. Accordingly, more general codes referring, for example, to ‘mechanical and electrical installations’ may provide comfort, but a level of due diligence will need to be undertaken on this issue in a timely manner. This approach could allow landlords to obtain funding for works without conducting a fully regulated procurement.
Given the limited timeframe for CERT and CESP funding, procurement formalities should be considered at the earliest opportunity. Nimble landlords still have time to reap the benefits.