Struggling Green Deal forces Carillion to restructure energy division

Construction and support services company Carillion has said it is to restructure its energy services division due to the slow uptake of the Government's energy efficiency scheme, the Green Deal.

Earlier in the year, the company noted that the slow start to the Green Deal market, together with the delayed start to the Energy Company Obligation (ECO) market, has affected revenue expectations from energy services.

It also stated that the development of the Green Deal market continues to be slow and ECO may now be subject to further delays.

Consequently, the firm has decided to restructure this area of its business during the remainder of 2013 to ensure that it is “aligned in size to the markets in which it operates”.

The company says it is still assessing the extent of the restructuring required, but expects a total non-recurring operating charge of £40m in 2013.

Speaking exclusively to edie, Carillion chief sustainability officer David Picton, said: “Whilst development of the Green Deal market continues to be slow, meaning that we have to align this area of our business to the markets in which it operates, Carillion remains clearly focused on working with both public and commercial organisations to make it successful wherever possible.

“Not only are we committed to being a leading sustainable business, we also remain convinced of the very real benefits this work can have at a community level – with lower fuel bills for households – and to the economy through training, job creation and opportunities for the local supply chain and SMEs.”

Despite its decision to restructure, Carillion has recently been selected as the preferred bidder by West Sussex County Council, which led the procurement for the Sussex Energy Saving Partnership (SESP), for delivering energy saving initiatives in the region.

The 10-year contract, which is expected to generate up to £100m of revenue for Carillion over 10 years, aims to deliver energy savings of £30m per annum for Sussex residents over 20 years.

Stressing the importance of local authority initiatives, Picton said: “The UK urgently needs to address energy efficiency in its buildings and homes, and to support households in tackling fuel poverty.

“Over the long term, Green Deal can be a national and regional catalyst to bring this to life, and specific programmes like SESP will drive this forward in specific areas so we are delighted to be appointed as Preferred Bidder to help deliver real practical benefit to Sussex families,” added Picton.

Detailed planning will now start with a view to launching the programme early in 2014. This is one of a number of energy savings initiatives being led by the SESP, working with local authorities across East and West Sussex and Brighton and Hove City Council.

The programme aims to deliver energy saving measures to up to 17,000 households by 2017, potentially rising to 680,000 households over the next 25 years.

Leigh Stringer

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