Green Deal – The role of Social Housing providers.

Matt RobertsDirector of Asset Management and DevelopmentWigan and Leigh Housing

“The biggest home improvement programme since the Second World War”…?

OR

“a useless middle class subsidy” ?

It’s here!

• Commenced October 2012

• Green Deal plans 28th January 2013

What next?

Do nothing!!

Do everything!!

Or something in between...

Options Available

• Do nothing

• Green Deal Provider

• Provide part of the service – survey / installation

• Signpost

• Using Green Deal / ECO to improve homes

Become a Green Deal Provider

Become a Provider – the financial backer

• Can access loans at low rates (DECC)

• Has a sizeable customer base

• Are experienced in communicating with residents

• Have supply chains for doing the works

• Have an interest in ensuring the homes are of good quality

Advantages

• Reduce tenants’ bills

• Lead on reducing carbon in customers homes and potentially others.

• Generate a new income stream

• Maintain a closer understanding of properties and resident needs

• Ensure quality of work

• Focus activity on reducing fuel poverty and encourage behavioural change

• Employ local people

• Be seen as an innovator

9

Risks Calculation of the Golden Rule

Energy efficiency is not always easy to sell.

Providers will take on default risk of Green Deal charges.

Liable for guarantees and warrantees put in place.

Still unclear how lenders will view Green Deal finance – stock revaluation

The Golden Rule

11

New Barracks Estate

• 78 early Edwardian properties

- Inadequate heating- limited insulation- damp- draughty- condensation

12

Some graphs!!

13

Appropriate measures

CO2 savings (kgCO2 saved per year) Cost of energy saved per year Capital cost per kgCO2 saved Capital cost versus running cost saving

14

Methodology

1. Retrofit Options Appraisala. Projected savingsb. Projected benefitsc. Forecast SROI

2. Data Collectiona. Questionnaireb. Utility datac. Focus groups

3. Resultsa. Utility Costb. Comfortc. SROI Analysis

15

The Measures

• Internal wall insulation

• Windows and doors

• Mechanical Ventilation Heat Recovery (MVHR)

• Top up loft / cavity wall insulation

• High efficiency condensing boilers

16

Projected Results – SAP Utility Cost savings

Projected Savings Estimated

17

18

Results - Whole house comfort levels

19

£353 saving

47.7% of pre retrofit average annual gas spend

20

The Golden Rule – What is the saving?

• Estimated 40% saving close to actual.

• Further savings taken in increased comfort.

• How much physical / behavioural?

• Variation based on occupants.

• Increase in electrical costs – rebound affect?

Marketing and Engagement

22

The Benefits of Wall Insulation

Reduced bills

Improved appearance

Increased comfort

Reduced carbon

23

Private Sector Offer

• CESP discount

• Contractor arranged

• Payback calculation

• Signposted funding

MARKETING AND COMMUNICATIONS!!

24

Or dis-benefits

“It is of our opinion that as a result of this work, our properties have been de-valued by at least £20,000 each, therefore it is our intention to seek legal advice on the possibility of suing the council for £20,000 per household as compensation”.

25

Changed Supplier in Last 5 Years

28%

72%

Yes

No

Need to overcome natural inertia

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Recognise benefits (or disbenefits)

Before After

But maybe…..

Providing part of the Service

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Provide Part of the Service – Possible model

Registered provider

Third party business

Funding sources

Homes Electricity supplier

Green Deal Provider

Green Deal assessment Provides finance

and installs measures

Payback

29

Assessment

• Trusted

• Know the properties – public and private

• Know the people

• Experience of retrofit

• Independent – nothing to sell

• Serious about behavioural change

But who pays for lack of take up?

30

Trust

There is a tendency for people to adopt the opinions, judgements and behaviour of others

People are more likely to install an energy efficiency measures if one of their family or peers have done

so.

Research suggests that engaging individuals as members of a community, rather than only as consumers of energy, is an important strategy for changing energy-related behaviours

31

Installers

• Frameworks delivering retrofit

• Experience of working in peoples’ homes

• Success in achieving training and apprenticeships

• Mechanisms for performance monitoring

• Quality assurance / management – PAS 2030

• Commitment to local labour

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There is an appetite!

Would you be prepared to pay towards energy efficiency measures if you made a bigger saving as a

result?

61%26%

13%

Yes

No

Blank

Working through other Green Deal Service Providers

34

Can’t do nothing

Communication with tenants

Working with Green Deal providers

Watch and wait

Focus on providing through Asset Management plans

Non Provider - Signpost

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Risks

Works carried out without consent or knowledge.

Not seen to be involved.

Potential income stream.

Not able to direct work to local businesses.

Not being seen to combat fuel poverty.

36

Need to understand the implications.

May / will need to…

Assess Green Deal providers in your area – accreditation and experience

Upskill EPC assessors to assess advice given.

Support the marketing of the service by adding your brand.

Develop a corporate approach to Green Deal enquiries.

Keep up to date records of where Green Deal undertaken – lettings / void cost.

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There is a risk that the Green Deal could in fact make fuel poverty worse unless:

• There is an accurate assessment of a home, its occupants and their behaviour in order to make the correct diagnosis and the economics of paying for them.

• We recognise that different customers need different approaches.

• We build trust in Green Deal among the fuel-poor, and overcome the mistrust that many people on low incomes feel towards official initiatives.

Word of warning – Green Deal must address the fuel poor

Using the Green Deal to improve your homes

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Using the Green Deal to Improve your Homes

Understanding your stock – maintain a strong asset database

Integrate Asset Plan and Energy Efficiency Strategy

Maximise your investment programme – trigger points

Maximise level of funding through partnerships / innovations

Conclusion

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Lessons Learnt

• Behaviours vary as do savings!

• Analysis is resource intensive

• Education and advice is essential

• Marketing is key (and expensive)

• Take up will start slow

• The industry is lagging behind

• There is a role for housing providers

• Consider long term asset planning

42

Thank You

Questions

?