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Local Government Power To Specify Renewable Energy In New Buildings At Risk

Over 50 organisations have signed an open letter to Communities Secretary Eric Pickles urging him not to scrap the Merton Rule, which is the only policy driver for renewables in new buildings until full Zero Carbon standards are introduced to Building Regulations in 2016 [1].

Signatories to the open letter range from NGOs and small installers to industry associations and major multinationals.

DCLG has proposed, in its Housing Standards Review consultation, to “amend or remove” the Merton Rule. This local government power, secured by Michael Fallon (now Energy Minister) in the Planning and Energy Act 2008 [2], enables local governments to stipulate higher energy standards for new homes than national Building Regulations, and specify the (usually modest) inclusion of connected or on-site renewable energy systems.

Scrapping this measure would damage the on-site renewables industry, weaken local democracy and lead to higher energy bills in new homes. At least until full Zero Carbon standards are applied in 2016, the Merton Rule remains essential for sustaining jobs and skills in the new build renewables industry and low carbon construction. Companies in these sectors are now on tenterhooks for a Ministerial decision.

REA Head of On-site Renewables Mike Landy said:

“The Government’s zeal for deregulation is trumping economic rationality and will lead to higher energy bills for new homes. Scrapping the Merton Rule would remove a vital bridge to the Zero Carbon standards promised for 2016, which will anyway not be fully effective until the end of this decade. The resulting cliff edge would leave the new build renewables sector with near-empty order books for five or six years, meaning vital skills and jobs would be lost.

“We call on Government to commit to a clear roadmap for introducing zero carbon standards on time in 2016, and to preserve the Merton Rule until the standards are fully effective in driving renewables in new build. Industry confidence is at a low ebb and time is rapidly running out. Why wait any longer to future-proof our homes?”

STA Head of External Affairs Leonie Greene said:

“Local authorities often rightly want to reflect local concern to reduce the impact of our built environment on the climate. Forward-thinking authorities also know that modest additional cost at the construction stage is quickly recovered by the homeowner in the form of lower energy bills and results in more money to spend in the local economy.

“We now have affordable technologies to build energy bill anxiety out of UK homes. Given the political furore over energy costs, the Government should be 100% behind local authorities demanding new homes with very low energy bills.”

Dave Sowden, Chief Executive of the Sustainable Energy Association, said:

“The figures speak for themselves: the benefits of building to a zero carbon standard more than outweigh the cost. Our analysis suggests fuel bills will be up to £100 higher than they would be had the Building Regulations not been watered down in 2013. This Government, which has made the ‘value for money’ of policy a key priority, will be disadvantaging UK taxpayers if they repeal the Planning and Energy Act.”

The most high profile example of the Merton Rule driving new build renewables is the London Plan. Over 80% of relevant London developments used renewable energy, with over 75% of those using solar power. In 2012 this ensured 87,000m2 of solar PV was installed in new build across London.

Analysis by the STA, cited in the open letter to Eric Pickles, shows that the cost of incorporating solar PV in new homes can be extremely modest – from just £1,000 per home [3] under a 10% renewables Merton Rule. The STA has also conducted analysis showing that the cost of solar hot water systems could fall by a third if the market can grow to a similar level to the domestic solar power market [4].

Zero Carbon Hub and the Sweett Group recently revised their estimates of the cost of delivering Zero Carbon Homes following dramatic cost reductions in solar PV [5]. This is the main factor resulting in the costs of building a ‘Zero Carbon’ semi-detached home falling by 57% compared with 2011 estimates.

The Hub estimates that building a semi-detached house to its Zero Carbon Standard rather than today’s standards in the Building Regulations would cost £4,100-£4,700 extra. The STA’s own analysis of an 85m2 semi-detached house suggests the current Zero Carbon Home standard would add £4,200 to build costs, but deliver bill savings of £404 over current 2013 standards [6].

This means if energy bills remain static, the cost of incorporating new build would be recovered by the homeowner in lower energy bills and Feed-in Tariff payments in less than 10 years. Given energy bills are in fact likely to rise, the actual time taken to recover the costs is likely to be considerably less than 10 years.

Naomi Luhde-Thompson, Planning Adviser to Friends of the Earth, said:

“Major flooding has put climate change back on the public’s and Westminster’s agenda. Our built environment is responsible for around a third of UK emissions. Given how affordable solar technology is now in new build, it would be crazy for the greenest government ever to prevent local authorities from making sensible use of clean, money-saving technologies in new build homes.”

Nick Molho, Head of Climate & Energy Policy at WWF, said:

“David Cameron is right when he says that climate change is one of the biggest threats facing us today. One of the key ways for us to tackle this threat, head on, is to make sure we have homes that are fit for the future. This includes making sure they emit a fraction of the emissions they do today. Maintaining strong standards for our new homes will deliver such low carbon homes that are warmer, healthier and cheaper to run for all. It is in the gift of this Government to stand firm and see that this is done by keeping the Merton Rule in place.”

DCLG had said it would provide a ‘direction of travel’ on the Housing Standards Review in January, but it has given no indication thus far. DCLG is also consulting on ‘Allowable Solutions’, which would enable developers to deliver emissions reductions off-site instead of reducing the energy bills for the new homes’ occupants.


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  1. The open letter is available for download at:
  2. For more information about the Government’s backtracking on renewable energy in new buildings, see:

    REA & STA infographic: ‘Housing Standards in Reverse’, February 2014. Available at:

    STA parliamentary briefing: ‘2008 Planning & Energy Act (the ‘Merton Rule’)’, February 2014. Available at:

    REA & CHPA briefing report: ‘Homes Fit for the Future?’, November 2013. Available at:
  3. The STA calculates that a solar PV installation of only 0.42 kWp (two solar modules) provides a 10% reduction in carbon dioxide emissions for an 85m2 end-terrace home built to 2013 building regulations and with a Target Emissions Rate (TER) of 21.7 kgCO2/m2.
  4. Zero Carbon Hub: ‘Cost of Building to Zero Carbon Drops’, 10th February 2014. Available at:

    See also STA: ‘Cost of ‘Zero Carbon Home’ plummets nearly 60% since 2011’, 7th February 2014. Available at:
  5. STA: ‘Tenfold increase in solar thermal market would bring down costs by 30%, new STA study reveals’, 11th September 2013. Available at:
  6. This calculation assumes a Fabric Efficiency of 20kgCO2/m2 for the house is equivalent to current building standards and that the developer uses the full ‘Allowable Solutions’ to purchase 11kgCO2/m2 off-site at £60/tonne (cost £1,680), then a solar PV installation of 1.73kWp (cost £2,600) achieves the Carbon Compliance level proposed in the Allowable Solutions consultation (11kgCO2/m2). The annual running cost is calculated net of Feed-in Tariff payments of £212/year.