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agilityeco.co.uk
Presented to the Sustainable Homes “Brave New World” Conference
11th October 2016
Gearoid Lane
Bridging the gap in an age of austerity:
Funding and financing for low carbon retrofit for Housing Associations
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AgilityEco is a young company with a good track record of developing and delivering community energy projects
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ECO Cuts
ECO ambition and funding rates cut
Funding Cuts
FIT, RHI, special funding “pots”
Rent Cap
Cutting available capital
Dramatic cuts to ECO SWI, communal heating Fully funded schemes dead ECO now small share of cost
Massive FIT reduction Free solar PV schemes gone Some talk of solar/battery – beware false promises
Other funding cuts RHI reductions GD Communities, Central Heating Fund, GDHIF, etc. gone
The Conservative government has dealt social housing low carbon works with a crippling “triple whammy”
…and Brexit may bring further difficulties on EU funding and financing streams
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Positive features:
Reduced complexity
New HHCRO cap on boilers
More targeted on fuel poor (smaller CERO)
Affordable Warmth “flexible eligibility”
E, F, G rated social housing Affordable Warmth eligible
Continued SWI minimum, but…
…overall ECO has very little left for Social Housing:
Overly conservative cost assumptions => ECO too small
Tiny SWI target => very low funding
Most “easy measures” in social housing already done
Appetite for “part-funded” schemes lower given financial pressures
The ECO transition year (April 2017-Mar 2018) has some small positives but will not see any real improvement
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We developed a social financed solar structure, taking advantage of “community pre-registration” rules to avoid FIT cuts:
Retained 12-month window at September 2015 FIT rates Fully funded rooftop solar for communal S.H. blocks Social finance debt package, off LA/HA balance sheet
Attractive, 4 LA/HA partners, 200 rooftops, £6m PV capex
But the outturn was disappointing overall:
Huge Ofgem delays in granting pre-registrations Massive complexity imposed by lending structure Astronomical legal costs LA/HA’s imposed complexity and slow moving in approvals Unexpected technical challenge
Project delivered but on a smaller scale than expected
With tighter LA/HA finances, non-recourse finance may have attractions – but we have learned some tough lessons
Lessons learned – unconvinced non-recourse bank finance works in this type of project
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If capacity/appetite to part-fund then top-up funds may be available:
ECO Funding: several pockets of funding next year, but will only be a small proportion of cost of works – can work well for capital works programme
Third Party Part-Finance: non-recourse finance may be possible, e.g. repaid through FIT/RHI receivables, but beware complexity!
There may still be some fully-funded measures possible:
Solar PV: in very specific situations, may still be a funding solution: particularly: high on-site demand, good yield & low access/install cost
LED Lighting: leasing structures for LED lighting, eg in communal areas
Easy measures: in the unlikely event of unfilled cavities, lofts, there will be funding
Other activities: new opportunities in providing funded advice and support to vulnerable households….
There are only 2 options for delivering low carbon retrofit social housing works. Right one depends on your finances.
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Regulation Heat network metering & billing: Tightening regulations requiring HM&B may create stimulus for taking a more holistic approach on communally heated dwellings PRS minimum energy efficiency standards: Re-launch of MEES with financial test will drive action in PRS (and may have knock-on impact for social housing?) Consequential improvements: Increased general construction activity. Retrofit works driving more Part L improvements
New financing opportunities Low interest rates and abundance of finance available will drive opportunities LA/HAs are seen as attractive counterparties to lenders RHI assignment to funder (other assignable revenue streams? service charges?) Is crowdfunding a lower cost, lower complexity alternative to non-recourse finance? Will a re-launch of Green Deal create opportunities?
In summary, in our view the areas where the best opportunities remain are: Simple insulation measures and LED: Full funding/financing options may still be available SWI, Communal Heating etc: Part-funding from sources such as ECO, rest from balance sheet funding Solar, Renewable Heating: Innovative financing structures, but for right projects & avoiding complexity
There are some positives that may create scope… Developers/landlords need to be agile in ever-changing times
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Project LEAP - Warm Home Discount Industry Initiative
- £30m per annum, available to 2021
- Funding for schemes targeted on fuel poverty alleviation
- Administered by Ofgem, who sign-off and audit each industry initiative
- Our scheme, Project LEAP, delivers LA/HA led in-home support
Energy Price Comparison/Switching - Often the biggest energy bill reduction comes from simply
switching suppliers
- Councils and some large HAs have typically considered three approaches to energy retail
- We believe that own-branded switching offers a very attractive alternative:
- Low-cost, rapid, easy set-up - Always gives best advice to residents - Revenue stream for LA/HA to reinvest in local services
- We have recently supported Portsmouth City Council to launch a price comparison and switching service
With a dearth of retrofit opportunities, we are seeking to support hard-pressed residents in other ways
Collective Switching White Label Full Licence
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For further information or discussion, please contact:
Gearoid Lane
07767-111 980