Demonstration Qualifying Action

1. Demonstration Qualifying Action Charles Hargreaves 4 September 2007

2. The aim of Demonstration Qualifying Action • To encourage the suppliers to trial new measures • Give the suppliers freedom to run trials on measures without an energy/carbon saving • Potential to increase the scope of the measures accredited in the CERT programme • Give suppliers confidence in the return they should expect from carrying out trials of new measures

3. How is it defined ‘A Demonstration Qualifying Action is an action that may reasonably be expected to promote a reduction in carbon emissions’

4. Demonstration Qualifying Action submissions Submissions should detail • How is the action expected to reduce carbon emissions • How the supplier will • determine the whether the action has reduced carbon emissions • assess the effectiveness of the action at reducing carbon emissions • The estimated cost of the project

5. Potential scale of the activity • It has been proposed that Demonstration Qualifying Action with Market Transformation Activity should make up no more than 5% of each suppliers’ obligation • Consequently under the proposals in Defra’s consultation the more Market Transformation Activity a supplier carries out the less Demonstration Qualifying Action it will be able to have accredited

6. Ofgem’s suggested framework • Trialling a new technology • Trialling a consumer reaction to a technology • Trialling consumer behaviour to better information • This list is not exhaustive and other proposals can be submitted • Comments welcome in response to the consultation

7. Suggested framework cont. • Trials need to be in addition to what has already been proposed • Trials can extend existing activity • This could include extending the Energy Demand Trials

8. Reporting • Suppliers are required to report to Ofgem on the action carried out, the results and the conclusions drawn • Ofgem considers it appropriate to publish the results of these trials • Suppliers might want to protect intellectual property • Ofgem is seeking views on two reporting frameworks • A longer report providing all the detailed data • A shorter report with the summary of results and conclusions

9. Determining the carbon emission reduction to be accredited • The Demonstration Qualifying Action translation factor provided in Defra’s consultation paper is £60.20/tC lifetime • The carbon saving to be accredited is: The cost of Demonstration Qualifying Action divided by the Demonstration Qualifying Action translation factor

10. Trial design • Statistical soundness will be an important selection criterion preferably with independent validation • Trials need to be designed so that the results can be applied to population as a whole • Trials that are limited to a small sub group of the population will have a limited application

11. Trial design cont. • Trials should distinguish between different interventions as well as analysing the combined effect • Where appropriate a control group must be part of the trial design • It will be important to assess the durability of any change

12. Key points • Demonstration Qualifying Action is a new component of the CERT programme • It will encourage the suppliers to determine the energy saving from new products • Monitoring Demonstration Qualifying Action will be a new duty for Ofgem, we welcome comments on our proposals to ensure this component of the scheme is a success