So firstly a bit of background on Energy efficient and why we should all be pursuing the agenda. Well the reason energy efficiency is being pursued by this government and the previous government is that they see multiple returns from undertaking programmes of investment Firstly and most obviously there are reduction in CO2, so for every less Kilo Watt hour of electricity used we are saving Carbon. Secondly we can help out our own personal finances, the theory is investing in energy saving should reduce our energy bills and after a time will pay off our investment and also offer some protection against fuel price inflation. For the less well off this could be the difference in taking someone out of fuel poverty termed as anyone who spends more than 10% of their income on household fuel bills. Thirdly and this is what the government see as most importantly virtue of housing retrofit is the opportunity it has to make a real economic impact both locally and nationally.
So just putting a little context around the industry. Well firstly the vast majority of us are fuel addicts, our homes account for 27% of all carbon emissions, this is the single largest sector beating industry and transport which you may have considered to be a greater source of carbon. Now the government in its energy Bill is targeting a 50% reduction in carbon emissions by 2027, that’s only 15 years away and 80% by 2050. These targets are tough and they are expecting the residential sector to contribute to this in a big way. When we consider there are 26 million homes in the UK and 75% of those will be in existence in 2050, that means to meet the government targets on carbon reduction we will need to retrofit 10,000 homes per week for the next 38 years. What this does show though is the size of the investment that will be required if we are to meet these targets. If you consider each home could require an average of 5k to retrofit you are looking over £100Bn of investment in the sector over the next 38 years. If the cost of retrofit was 10K then this would double accordingly. These are significant figures and this is why government is keen to pursue the agenda. These figures are based on energy efficient and not energy generation. When you consider that then these figures could dramatically increase, just think of the number of roofs we could put Solar PV or thermal on top of.
Here on the next slide is some analysis of the size of the various markets for some of the energy emission technologies that will be commonly used in the housing retrofit industry. These numbers are not my estimates they have come from a leading player in the sector. So the technologies run across the top of the matrix and down the side we have various tenure types. We can see here that nationally the numbers are huge. For example the size of the market for internal wall insulation in just local authority stock could be £778M, this alone would create a huge mount of sustainable jobs over many years. The largest sector and the one that will be the make or break for housing retrofit is of course the owner occupied market. The key to engaging with this group is when fuel prices reach levels that people get hugely resentful of paying and that time is probably closer than we think. Energy prices are forecast to increase again by 10% at the end of this year. I am not sure I want to be facing that every year.
Now this slide looks at one technology and its potential economic impact – Solid Wall insluation. Much of the solid wall market will be taken up by projects and programmes related to the ECO tariff which the government is putting on the energy companies. This will be worth around £1.5bn to the industry each year. This graph shows the likely investment profile for solid wall insulation over the next few years. The government are committed to £1.5bn being invested each year so this is going to happen. The energy companies will be on our doorsteps and mail shotting trying to ensure they can meet these targets. You have been warned!
With all that in mind I now want to update you with what's been going on in the region. So in partnership with the Sustainable housing Action Partnership we have developed the community Green Deal. CGD advocates a comprehensive locally led delivery model for low carbon housing, encouraging the take up of energy efficiency measures while creating substantial economic growth . The CGD was developed prior to the Governments Green Deal so should not to be confused with it. Green Deal in effect is one of the potential tools to deliver energy efficiency on a large scale. The overall aim of CGD is about delivering retrofit activity at scale and putting local partners at the heart of projects and programmes. CGD is practical guide to how partners including Local Authorities, community groups and Registered providers can work together to deliver retrofit at scale. It provides a building block approach working from the bottom up, so looking at identifying local needs, getting local people engaged, developing plans to address the needs, establishing pilot schemes, leveraging in finance and lastly supporting the development of a supply chain to support local economic growth. Now of course carbon reduction is a clear aim for CGD, but by creating demand locally the real benefit is local jobs in manufacturing and up skilling tradesman.
So how can CGD be funded, well there are lots of potential options. There is Green Deal which as we know is about paying for energy efficiency improvements by savings made from your energy bill ECO tariff , government tariff on energy companies £1.5bn per year ERDF funding, we have a scheme in Walsall and Sandwell which will retrofit 500 homes and engage the supply chain RP and LA stock improvements, RP’s and LA’s spend vast amounts of money on upgrading their stock, this could be extended to deliver energy efficiency Solar PV and Renewable Heat incentive can cove the costs of installation and potentially help fund other energy efficiency measures. CGD is about bringing the partners together who can bring these fudning streams.
The other major strategic piece of work we have done here is to set up the WM retrofit Steering group. This has been led by Anne-Marie. As housing retrofit is a new and fast changing environment the HCA and its partners locally felt there was a need to ensure the region was pulling in the same direction and to share best practice, innovation and ideas across a wide area would be mutually beneficial On the back of the regional retrofit summit last year Anne Marie agreed with local partners and LA’s a structure to enable groups to come together to share information and also work on delivering common elements in relation to retrofit. The purpose of this steering group is to steer and direct thematic work at a regional level to ensure the greatest impact is gained. For example a strategic approach to the development of the supply chain, or to share enterprise and innovation. At its core is the retrofit steering group which is chaired by George Marsh, chairman of Sustainability West Midlands and Bullock Construction. So although groups are off working in there smaller sub area such as the Black Country, we have set a steering group that enables information to be shared and common issues to be addressed.
There are several examples of LA’s adopting the CGD approach. The most advance is Birmingham Energy Savers which is essentially a city council run initiative. Here the council are backing Green deal to the tune of an investment of £75m. The council are being very brave in putting this investment up, and the condition on the fudning being agreed is that it would all be returned in the future. This investment will deliver 15,000 green deal homes across the city. They are currently procuring a delivery partner to undertake the works from this investment. They will collect the return on investment through the energy companies. The hope is that this initial investment will demonstrate that Green deal business case works in Birmingham and eventually will lead to private finance being invested in the model.
The other area we have been working closely with is the Black Countr. It has taken a lot of effort on the HCA behalf but the LA’s do now see the clear advantages of working together to achieve more. The 4 LA’s and a number of RP’s are working together to develop a retrofit strategy for the ½ million homes in the sub area. The LA’s main driver is the economic benefits that Green deal could provide the local manufacturing base. To date they have undertaken a housing stock analysis and have procured the Energy Savings Trust and Verco to determine their collective role in the delivery of Green deal and develop a business plan for delivery. A number of business models are being explored. After determination a preferred route, they will be going to cabinet to get formal joint working approved. Depending upon this decision they will either choose to procure a delivery partner or maybe use BES procured partner.
Housing Retrofit & Economic Growth - A Community Green Deal - Anne-Marie Simpson, HCA
Housing retrofit and economicgrowth - A Community Green Deal Anne-Marie Simpson Head of Midlands Central Homes and Communities Agency 25t October 2012
The scale of opportunity. Housing energy use accounts for 27% of all UK CO2 emissions Target: reduce our carbon emissions by 50% by 2027 and 80% by 2050 26 million dwellings in the UK – 75% of which will still be in existence in 2050 Need to improve 10,000 homes per week for next 40 years nationally to meet CO2 target Identification of £106bn of easily addressable need Retrofit Sector value estimated at an additional £2-3 billion per annum nationally Regionally in West Midlands - £0.5Bn per year
National picture - total addressable need £106 billion of easily identifiable addressable need Internal External Cavity wall Boiler Double Tenure wall wall Loft top up Loft virgin Fuel switch insulation upgrade** Glazing* insulation insulation Local £778 million £2.7 billion £64 million £30 million £196 million £1.6 billion £1.4 billion £2 billion Authority Housing £872 million £2.3 billion £108 million £93 million £223 million £1.6 billion £1.4 billion £1.2 billion Association £4 £3 Private rented £7.3 billion £167 million £166 million £308 million £2.2 billion £2.3 billion billion billion Owner £1 £14.8 billion £29.9 billion £824 million £1.8 billion £14 billion £4.06 billion £3.2 billion occupier billion ECO hard to treat ECO affordable Supported by Green Deal golden rule subsidy warmth subsidy * or secondary glazing ** assumes that boilers listed as non condensing are not "A" rated Data compiled from EHCS 2007 and WLS cost data from Willenhall CESP programme
National picture – Solid Wall insulation supported by ECO 2013 2014 2015 2016 2017 2018 Social housing £700 million £800 million £800 million £750 million £700 million £550 million Private rented £200 million £400 million £500 million £600 million £600 million £550 million Owner Occupier £600 million £600 million £600 million £600 million £500 million £400 million Data extracted from DECC Green Deal and ECO impact assessment 23/11/11 DECC modelling will be based on cost efficiencies deIvering increased volumes, value of work may therefore not increase Total £1.5 billion £1.8 billion £1.9 billion £1.95 billion £1.8 billion £1.5 billion
The Community Green Deal• What is the vision? – Bringing partners, communities and finance together to deliver retrofit at scale.• What is it CGD?? – How to deliver retrofit measures – How to finance retrofit measures• What is the outcome – Maximising the Impact on jobs, skills and the economy
Building Block Approach1) Identifying the opportunities2) Developing Plans3) Working together to achieve more4) Establishing a reinvestment fund5 ) Building the supply chain
Centre of Excellence Standard terms Funding & Enterprise & for the BuiltInvestment Innovation SHAP Skills of Contract / Legals Environment REGIONAL Steering Group Retrofit/Energy Efficiency DELIVERY Sub Regional Bodies/LEP Areas Birmingham Black Country Stoke/Staffs Warks/Coventry Rural Solihull, East Coventry Local Delivery Local Delivery Local Delivery Staffs, Bodies Bodies Phoenix Bodies Bromsgrove, Tamworth, Lichfield, The regional Housing RetrofitSolihull BirminghamHomes Energy Savers Steering group Procurement – Buy For Good
Black Country Approach• Collaborative approach based upon economic growth as the main driver• Realisation that LA’s are key to its success• Bringing in partners• Maximisation of Eco Tariff a key driver• Buy in from all 4 LA’s senior management• Sharing costs and risks• Stock analysis undertaken• Determination of appropriate Green deal delivery model• Delivery under a single badge.
Considerations• It needs resource• Internal hurdles• Dealing with the cuts and funding alignment• Political buy in
Next Steps• SHAP- continued support and promotion of CGD• HCA – Enabling and light touch promotion of CGD approach• LEP’s and LA’s – Leadership and collaboration• RP’s – Collaborative asset management planning• If you would like to know morehttp://www.shap.uk.com/projects/shap10/Report