In February 2012, Ashden and 2011 Ashden Gold Award winner Radian hosted a seminar ‘Financing and delivering the retrofit revolution’ in Westminster, London. Over 140 delegates, from Government, local authorities, housing associations, not-for-profits and community organisations attended to find out how we will achieve retrofits at scale in the UK. Reducing energy demand in UK housing stock is central to achieving the UK’s legally binding carbon reduction targets. By 2050, the UK is committed to reducing its emissions by 80% from 1990 levels. With the housing sector contributing to 40% of our carbon emissions, 25 million leaky homes need to be improved. That is two per cent of our homes each year, some 400,000 houses. In addition, rising fuel costs and falling incomes mean fuel poverty is growing in the UK making this a critical issue to tackle.
Yet, with the size of the challenge comes the promise that retrofitting at scale could bring significant social and economic benefits to lives and to communities. Paul Ciniglio from Radian began the morning showcasing their ‘Retrofit South East’ project. The first to take advantage of the European Regional Development Fund in 2009, the project took 91 1950’s homes on the Cranford Road estate and gave residents a choice of how they wanted to improve them. 58 opted for their homes to be demolished and rebuilt but 33 chose advanced retrofits. The model retrofit home showed energy use was reduced by between 77% and 90%. “We’ve taken these homes from an E rating to an A rating. But it comes at a price, £46,000 per home for the measures plus all of the hidden costs” explained Paul.
If taken across the region, these measures could amount to £1billion per year in reduced bills. One Cranford Estate resident has reduced her bills by £110 a month thanks to the retrofit and behaviour changes. Residents also felt their lives had been transformed by the incorporation of energy efficiency into their homes. “I didn’t ever want to move from this house because it’s my family home, but I can’t explain what they have done to it, it’s just amazing.”
At a time when it is harder for young people to find employment, retrofit projects have proved they will deliver new jobs. Dewi Lywd Evans from Cymdeithas Tai Eryri spoke about the ARBED project in Wales where funding from the Welsh government enabled the retrofit of homes in Anglesy. 16 Companies were employed throughout the duration, 15 apprentices were taken on and four permanent apprenticeships have been maintained since.
“We developed in the Welsh housing sector a way of doing procurement with social inclusion clauses, so that when you do the procurement you can stipulate that you want training and employment, how many apprentices must be taken on, that you want local supply chains or that 15% of the workforce must be from local job centres. It is about making the system work for you”
We can’t, though, argues Dewi, ignore the financial cost of these changes: “What was shocking to us was that we got half a million to do the installations, but we had to spend a further half a million on associated works - extending the roofs, the drains and the scaffolding runs; because you are doing each house individually it was really expensive.”
However, even relatively small measures with shorter pay back periods can deliver results. Catrin Maby, Chief Executive of Ashden winner Severn Wye Energy Agency, described the impact of the Target 2050 programme which has enabled 48 homes to take out a pay-as-you-save loan over a long payback period – they have already started to see 24% reductions made on the measures installed to date.
Catrin emphasised that different people will make different choices about installations based on their life situations: “Every household is distinct. In the end people spend money on things that they want: a room they find particularly cold that they want to be warm, a prayer room, a meditation room or a room for a small child, actually people don’t do the whole house at once. I know that technically that is not great, but it is real life.”
Catrin also reminded us that working around real lives means that people may choose to take things step-by-step: “We don’t expect people to start at the top. There are an awful a lot of reasons that affect the order and the measure they choose. The reason they go for number five and number three on the list could be because next door has had it and there is good installer in town who can carry that out. Different people also need different finance options and we really think there isn’t one size that fits all.”
Paul Ciniglio echoed the need to be sensitive to the complex reality of daily life: “It is very important to work with residents. We only had an eight month lead-in time and we found it essential to have a full time community liaison officer. We had an onsite drop-in office so people could come in at any time to have a chat or discuss their concerns. It was quite emotive for residents to be moving out of their homes for up to 12 weeks and then come back in.”
What was evident from all the presentations was that alternative funding models offering the right flexibility are an important factor for the success of delivering retrofit at scale. This is why a model such as the Global Environmental Social Business’s ‘Retrofit Revolving Loan Guarantee Fund’ has been welcomed into the UK. Aniko Dobi-Rozsa argued that after its track record of success across Europe it offers something different to the Green Deal; both in the scale of finance it can offer, the potential for de-risked private sector investment and an efficient leverage of 1:20. Alternatives to the ECO and Green Deal, says Catrin Maby, are important: “We think that any one household, with any one set of measures that they need to carry out, may need a particular mix of these different finance options and we think at the moment it could be a mix of ECO, Green Deal, Revolving Loan Guarantee Fund and their own savings, and maybe even some things we haven’t heard of yet.”
“We think the Retrofit Revolving Loan Guarantee Fund is the most important financing option for us, but we think it will be complementary to other options. We know that our advice has to be customer-led – we can’t be too formulaic and we need to answer their questions. So having a range of financial options is important. The Green Deal isn’t going to be the whole story.”
David Orr, summed up the need for galvanising funds for retrofits: “The financing issue is a huge one and not enough attention is given to it, in order for people to get their heads around it. These sorts of events are critical to encourage the fact that it is not just about how Government acts but how landlords respond. I cannot think of any other issue where it is possible to do something that has a direct and profound effect on the individual household and the lives of those who live there, which can also contribute to the local economy, to creating new skills, to getting people into work through apprenticeships, contribute to the national economy and saving the planet. There is nothing else that does all these things. It seems like a no-brainer to me; if we can get the funds!”
View the slides and listen to audio interviews with delegates here.