Retrofitting UK housing association homes

Olivia PowisNational Housing Federation

… and then: New UK Government May 6 2010Conservative – Liberal Democrat

In with the new: Liberal Democrats Green Deal• Energy companies to simplify tariffs

• Charge families less for basic amount of energy used

• Introduce fair social tariff for disadvantaged families

• Smart meters to all households within 5 years

• Insulate all homes to decent standard within 10 years

• Raise Building Regs energy efficiency for ALL new homes

• ‘Green Loans’ (£10,000-£12,000) for home energy efficiency & micro-renewables

So ..What Stays?

2008 UK Climate Change Act:• 80% reduction in carbon emissions by 2050 • 5 year carbon budgets (June 2009)• UK share of European target 20% of energy renewable sources by 2020.• Need to develop renewable heat  and decarbonise heating sector….but• Closure of Low Carbon Building Programme and likely RHI (24 May 2010)•Smart meters•PAYS.. Of some description…

But how to pay for it?6 May 2010

Dear chief secretary,

I'm afraid there is no money.

Kind regards - and good luck!

Liam ByrneSecretary to the Treasury

£6bn cuts this year…

Sources of Funding

1.Pay as You Save2.Supplier Obligation (white certificates)3.Renewables4.ESCos5.Rents6.Carbon offsetting7.Green mortgages/bonds/loans

Pay As You Save (Green Deal)

Federation involved in the UKGBC paper on PAYS in September 2009•House has Energy Saving Measures carried out •End product is more efficient homes with lower fuel bills•Savings pay back works over 25 years•Low cost finance required •A mechanism to pay-back (rent/service charge not possible)•Need to learn from other countries on rent differentiation

Pilot Schemes•DECC/EST: 4 pilot areas, to reach up to 500 households, £4m, •Gentoo Sunderland £4.50/week ‘Green Charge’

Pay As You Save – Does it work?

Federation commissioned modelling.. •Low cost finance required - none idenitifed•A mechanism to pay-back (rent/service charge not possible)•Need to learn from other countries on rent differentiation

Pilot Schemes•DECC/EST: 4 pilot areas, to reach up to 500 households, £4m, •Gentoo Sunderland £4.50/week ‘Green Charge’

Pay As You Save – Does it work?Assessed a range of measures(£/kg CO2 saved)

Optimal Scenarios:Combined measures (total % of CO2 saved)

Value shortfall by % of savings claimed and savings shared (£)

Performance is extremely sensitive to % of value shared with participants and % of savings claimed

Supplier Obligation – White certificatesCERT (Carbon Emissions Reduction Target)•April 2008 – March 2011 (previously EEC)•Target 185m lifetime tonnes of carbon•40% of carbon saving is priority group: low income & elderly vulnerable households•Increase CERT targets/activities by 20%•Stop suppliers giving away energy efficiency light-bulbs from Jan 2010•CERT EXTENSION obligation for 21 months to December 2012.

For housing associations: • Identify additional funding to unlock and maximise on CERT delivery•Re-evaluation FUTURE OF CERT

CESP (Community Energy Saving Programme)

New obligation for suppliers and generators• Whole house, community approach• £350m of energy efficiency measures to be installed• 90,000 households in 100 projects• Low income communities • Partnership delivery with Local Authority• Aim to present an ‘offer’ to energy companies• Obtain detailed knowledge of local housing stock, condition and tenure• Help in getting community support and marketing offer

Very slow take up.. Energy companies want up to 60% contribution and to control measures

Renewables1 Feed-in tariffs (FiTs) introduced April 2010•Produce a steady ROI for households to stimulate take-up•Introduction in April 2010 – new rates; PV 41p/KwH•Can be claimed retrospectively•No Biomass – now in RHI New higher rates..Can ‘gift’ energy to tenants

2 Renewable Heat Incentive (RHI) April 2011?• Provides financial assistance to generators of renewable heat• Air and ground-source heat pumps, biomass solar thermal and CHP• Funded by a levy on suppliers of fossil fuel on all fuel bills…• Good rates were proposed but… • Closure of Low Carbon Building Programme and likely RHI (24 May 2010)

ESCO (Energy Services Company)

•Housing associations supply energy (renewable or conventional and carry out energy saving measures)

•Must guarantee competitive energy prices (long-term?)

•UK consumers have ‘right to switch’

•Works best in ‘supported housing or communal heating

•Does not rely on rental income

Rental Income

•Split incentive between Landlord and tenant

•UK housing associations rent restructuring regime (changing)

•However new pressures on rental income:-Newbuild-Increasing pressure on housing benefit bill – could be cut further-Will all tenants see savings?

European Funding Streams

1.ERDF: up to 4% allocation worth approx £100m in EnglandSEEDA released £840,000 (full 4% allocation) (closed)EEDA released £4m (full 4% allocation open)Yorkshire Forward £7.5m (closed)up to £40m incl. partnership fundingOne North East £6mNorth West RDA £27 m (full 4% allocation open)London £7m yet to be taken up. Setting up London Revolving Fund.East Midlands Just engaging in talks

Can use JESSICA/JASPER mechanism to recycle funds2.European Investment Bank (EIB) 3.Powerhouse Europe

Federation led European initiative on spreading good practice on retrofitting through out Europe.

Standards

•Warm Homes Standard•SAP and RdSAP•Eco Homes XB•Code for Sustainable Homes

•CLG Select Committee Decent Homes response •No compulsory standard without funding

Behaviour Change

• Federation possible European bid…

• Oak Foundation – funding to employ officer

• Linked to financial savings on fuel bills • Employing specific workers to explain to tenants

•How to use equipment•Savings to be made

Further Information:

Olivia Powis : oliviap@housing.org.ukTel: 0207 067 1083

Corine Meier: Corinem@housing.org.ukTel: 0207 067 1034

Andrew Burke: Andrewb@housing.org.ukTel: 0207 067 1198