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Wed August 10 2022

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Green Deal failure forces Carillion to restructure

3 Oct 13 Carillion is having to restructure its energy services division because of the lack of expected Green Deal work and likely delays to the Energy Company Obligation (ECO) scheme.

Its reward for demonstrating faith in government promises is a £40m hit in the teeth – the charge it is taking to pay for restructuring.

The board said that it did not yet know how many people would have to lose their jobs.

Carillion paid £300m to take over energy services group Eaga in 2011 on the expectation of massive workload.  The government promised that its flagship Green Deal policy – where homeowners get ‘free’ energy-saving improvements paid off over time through their fuel bills – would upgrade 14 million homes in the first seven years and 26 million homes by 2030.

Carillion dived in, bought the expertise and capacity, and signed Green Deal partnerships with local authorities including Birmingham City Council.

However, eight months in and across the whole country just 12 homes had Green Deal plans signed by the end of August. A further 677 had applied. The promised 14 million in seven years has begun to look unlikely.

In a statement to shareholders this morning, Carillion said:

“The development of the Green Deal market continues to be slow and ECO may now be subject to further delays.  Consequently, we will restructure this area of our business during the remainder of 2013 to ensure that it is aligned in size to the markets in which it operates.

“We are still assessing the extent of the restructuring required, while ensuring we maintain an effective offering and service delivery model.  Currently, we expect total non-recurring operating charges of some £40m in 2013.”

Despite this, however, across the group as a whole the order book and pipeline of contract opportunities both remain strong and continue to support its expectations for 2013. Medium-term targets for growth remain unchanged, the board said.

Carillion has also announced today that it has been picked as preferred bidder for a 10-year programme of energy-saving home improvement works for local authorities in Sussex, which is expected to generate £100m in revenues for the company.

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