What we learned from Retrofit and Strategic Asset Management Summit 2024

In a dynamic and competitive landscape for social landlords, this year marks a period of significant regulatory changes in England. These changes are pivotal, as they are set to enhance tenant engagement with decision-making processes. In this blog post we share some of the learnings from experts in the field, in the effort of decarbonising the housing sector in the UK by 2050.

Summit Focus

The summit was designed to delve into a broad spectrum of topics:

Risks and Opportunities: Dissecting both the challenges and prospects that come with the evolving landscape.
Expert Insights: Specialists in the field shared their knowledge on how to adeptly synchronise reputation management strategies with the imperative of building safety.
Investment Planning: Discussions centred on strategising investment plans to ensure the delivery of stable programs, particularly in light of fluctuating grant funding cycles.
Maintenance and Tenant Needs: How future reforms, maintenance demands, and tenant expectations can be balanced.
Data Utilisation: Strategies for acquiring, managing, and leveraging data to navigate the complexities of the sector were a key point of discussion.
Future-proofing Skills: Evaluating the necessary skills for the future and how to cultivate them within the industry.
Legislative Landscape: The summit also examined the impact of upcoming legislation on the sector

THE UK government’s commitment to Net-Zero

Lord Callanan, Minister for Energy Efficiency and Green Finance, outlined the UK government’s commitment to enhancing the energy efficiency of homes, aiming to align with net-zero ambitions.

Retrofit Focus

The government’s focus is to:

Target Net Zero: Retrofit programs, centred on making UK homes suitable for net zero objectives.
Increase Energy Efficiency: New energy efficiency measures are being prioritised as part of the transition to net zero.
Combat Fuel Poverty: Ensuring retrofits reach those in need, addressing fuel poverty, and the impact of damp and unhealthy homes.

Investment and Policy

Lord Callanan acknowledged that significant advancements are needed to:

Meet Carbon Budgets: A large gap exists in meeting the carbon budget, with more policies required for substantial emissions reduction.
Proposed Wall Homes Fund: The intention to implement a fund that would substantially increase the current government’s grant investment in home decarbonisation to £13.2 billion.
Long-Term Retrofit Program: A 10-year national retrofit program is proposed to scale up locally delivered investments and enhance the housing stock’s energy efficiency.

Programs and Complexity

The current situation is characterised by:

Complexity and Barriers: Existing programmes like the Energy Company Obligation (ECO) are burdened with complexity, making it difficult to determine eligibility and effective deployment.
Short-Term Funding Landscapes: The present funding approach creates friction and fails to align public, subsidy, and private investments effectively.

Moving Forward

Lord Callanan emphasised the need for:

Evolution, Not Revolution: The government does not intend to discard existing schemes but recognises the necessity for evolution rather than maintaining the status quo.
Outcome-Focused Approach: A laser focus on outcomes such as reducing bills, particularly for those in fuel poverty, and cutting emissions.
Innovative Solutions: self-generation like solar panels, storage solutions alongside heat pumps, and local area-based schemes in collaboration with local authorities.
Energy Improvement Areas: Proposing the development of energy improvement areas to undertake neighbourhood-wide retrofitting.
Leveraging Private Finance: Exploring how the retail energy market might evolve to support home decarbonisation and attract institutional investors.

Lord Callanan called upon the experts and professionals to recognise the necessity of a coordinated approach that strategically aligns all forms of investment towards a common goal of energy efficiency and emission reduction.

Policy Strategy and Investment: Retrofitting and Green Transitions

Chaitanya Kumar, Head of Environment and Green Transitions at the New Economics Foundation, discussed the practical challenges and insights related to retrofitting homes for energy efficiency.

Retrofitting Phase and Role of Stakeholders

Delivery Phase: The discussion on the necessity of retrofitting is concluded; the focus is now on the delivery of these measures.
Stakeholder Involvement: Everyone present plays a critical role in the successful implementation of retrofit programs.

Personal Experience and Community Involvement

Complexity of Energy Efficiency: Previously considered “low hanging fruit,” energy efficiency is far more complex than anticipated.
Local Engagement: Kumar has worked with a community group in his neighbourhood in Oxford to directly engage with retrofit initiatives.

Pilot Scheme Overview

Clean Heat Streets Scheme: A government and Oxford City Council-supported project involving several firms and community groups, including Samsung.
Comprehensive Retrofits: About 100 homes, with a mix including social homes, are undergoing whole-house retrofitting, including heat pumps, solar PV, and insulation.
Utilisation of Existing Schemes: The Boiler Upgrade Scheme and other programs are leveraged, ensuring eligibility criteria are met.
Post-Installation Support: A clear plan for maintenance and support is essential, covering thermostat usage and time-of-use tariffs in partnership with British Gas.

Challenges and Lessons Learned

Policy Flexibility: Policies like the Boiler Upgrade Scheme must be adaptable to various home types, including those with poor cavity wall insulation or listed status that may not qualify under rigid criteria. He alluded to the example of a terrace house with no cavity wall insulation not being eligible despite the fact it has better heat loss performance than an eligible semi-detached house with cavity wall insulation.

Local Implementation & Workforce: The importance of local engagement officers and community group involvement for homeowner education and technology adoption as well as hiring local tradespeople for installations has been crucial.

Cultural Considerations: The diverse household practices, such as cooking preferences, need to be considered, as illustrated by a homeowner’s reluctance to switch from a gas flame to an induction hob due to not being able to cook rotis, an essential food of their culture.

The Negative Impact of Misinformation

On-the-Ground Challenges: Misinformation encountered in communities hampers the progress of retrofitting initiatives.
Media Influence: News articles and myths about retrofitting and green technology, particularly during the colder months, can negatively impact public perception.

Strategies to Combat Misinformation

Kumar suggested practical approaches to dispel myths:

Beyond Policy Papers: Whilst writing policy papers is one way to address myths, they are often not read by the general public.
Demonstration and Engagement: Hosting open house days allows the community to see and feel how the technology works.
Beneficiary Testimonials: Showcasing stories of households benefiting from these technologies is crucial for building trust.

The Importance of Tangible Experiences

Tactile Trust: Seeing and touching the technology in action helps overcome scepticism.
Top-Down Information Strategy: A national program must do more to familiarise people with new technologies like heat pumps.

Conclusion

Feedback Mechanism: There is a need for a feedback loop between ground-level delivery and policy-making to improve and adapt retrofitting initiatives.
Holistic Solutions: Kumar advocates for considering cultural habits and providing suitable solutions to ensure the transition to energy-efficient homes is inclusive and successful.
Need for Increased Comfort with Green Technology: To reach the goal of installing 600,000 heat pumps annually, considerable effort is required to make people comfortable with this technology.
Information Clarity: Clear and accurate information is key to combating misinformation and aiding the transition to green solutions at the grassroots level.

Chaitanya Kumar’s talk underscored the intricate realities of retrofitting homes for energy efficiency, emphasising the necessity for flexibility in policy, the importance of local engagement, and the consideration of cultural practices in the implementation of green transitions.

Enhancing Retrofitting Through National Efforts and Local Initiatives

Sarah Edmonds, Co-Director of the National Retrofit Hub, shared insights into the organisation’s formation and initiatives. Both she and her Co-Director are relatively new to their roles, having started in the past year, but they bring a forward-thinking approach to the retrofit sector.

Role of the National Retrofit Hub: The Hub is a nonprofit collaborative entity with a mission to enable large-scale retrofitting. Edmonds expressed her delight in the shared interest for evolving existing delivery programs and discussed the Hub’s strategic partnerships with organisations like MCS Foundation.

Progress and Partnerships: The National Retrofit Hub benefits from the expertise of individuals like Cara Jenkinson from Ashden Climate Solutions and Pippa Palmer from LBSU, who have conducted extensive research on mapping the skills and qualifications necessary for retrofitting. This research now contributes to the Hub’s knowledge center.

The Hub’s Framework: The Hub operates with an advisory panel, working groups, and a growing knowledge centre. The aim is to consolidate information and resources, highlight ongoing work, and identify gaps in the sector.

Working Groups and Their Objectives

Warm, Healthy, Net-Zero Homes
- Access to data, tools and design guidance
- Digital whole house plan
- Quality assurance & monitoring uptake
Supply Chain, Products and Solutions
- Delivering a solution agnostic approach to products, technologies and services
- Overcoming barriers to supply chain and innovation
Workforce Growth & Skills Development
- Embedding baseline retrofit skills in all construction training
- Agreeing occupational standards
- Role of procurement and support for SMEs

Finance
- Financial solutions for all people, tenures and buildings
- Policy to incentivise and support
- Role of banks/building societies to engage
Delivery Approaches
- Resident journey and defining successful delivery
- Just delivery models for all buildings and tenures
- Delivery support and community advocacy
Driving Uptake
- Retrofit knowledge embedded in all home interaction
- Access to information and advice
- Incentives, engagement and trust

Local Impact and Community Engagement

Edmonds emphasised the importance of local action. She discussed projects such as:

Home Energy Action Lab in Hackney: A community benefit society focused on practical solutions for energy efficiency and engagement with retrofitting at a community level.
Retrofit Reimagined: An initiative that explores the vision of a climate transition in retrofitting, designed and governed by residents.
Power Streets: A creative project where a street was transformed into a power station, with solar panels installed on 24 properties, showcasing community-driven renewable energy efforts.

Sarah Edmonds stressed the need for both national coordination and local action to advance the retrofitting agenda. Through the National Retrofit Hub and initiatives like Retrofit Reimagined and Power Streets, there is a concerted effort to make homes more resilient, reduce bills, and improve indoor air quality.

Strategic Asset Management in Housing: A Place-Based Approach

Paul Norman, Director of Strategic Asset Management at Clarion Housing, discussed the transformative, place-based approach to asset management and retrofitting.

Place-Based Approach and Strategy

12-Month Listening: Norman emphasised that Clarion’s strategy for the next 26 years has been informed by extensive listening and collaboration within the sector.
Long-Term Planning: The strategy is structured around six pillars, which have been devised through a comprehensive understanding of the sector’s challenges and successes.

Focus Areas

Geography and Operational Efficiency: Importance is placed on understanding the right geography for retrofitting efforts and achieving operational efficiencies.
Data Utilisation: Utilising data to better understand energy sources, asset types, and customer behaviours.
Building Safety: Acknowledging the challenges around building safety and the need for an ecosystem approach, similar to the principles of PAS 2035.

Challenges in Retrofitting

Energy Performance Certificates (EPCs): Recognising that EPCs are not the end goal but part of a larger strategy towards net-zero homes.
Technical Nuances: There are various technical aspects involved in achieving net-zero targets that require careful consideration.
Place Shaping Power: The significance of a place-based approach in understanding customer needs and adding value through targeted solutions.

Local Authority and Planning

Local Authority Engagement: Working closely with local authorities to break down large-scale challenges into manageable segments.
Local Planning Challenges: Addressing diverse planning challenges faced by different local authorities.

Infrastructure and Heat Solutions

Leading Infrastructure: Clarion aims to lead in providing heat solutions and infrastructure that align with future mandates.
Cost Efficiency: Exploring ways to reduce costs through strategic connections and planning.

Financial Strategies

Private Financing: Exploring private financing options and making business cases for energy solutions to ensure long-term financial stability.
Customer Engagement: Stressing the importance of engaging with customers at a local level to make high-level strategies tangible and effective.

Long-Term Financial Planning

Sustainable Economics: A long-term approach that combines financial planning with strategic asset management can lead to financial sustainability.
Customer-Centric Programs: Prioritising customer needs and explaining how initiatives will be financed and the mechanisms for repayment.

Closing Remarks

Housing Statistics: Clarion has 45,000 homes that require upgrades to align with net-zero goals, affecting 80,000 customers transitioning away from gas.
Challenges and Solutions: Despite the challenges, there is confidence in meeting these goals through a place-based and customer-centric approach.

Paul Norman outlined Clarion Housing’s comprehensive strategy to retrofit and manage assets effectively over the next 26 years. A place-based approach, customer engagement, and innovative financial strategies form the core of their long-term planning to achieve net-zero goals and improve housing infrastructure.

Panel Session: Kickstarting the widespread adoption of affordable low carbon

This sessions covered common challenges for heat decarbonisation, specifically focused on heat pumps and heat networks, such as workforce availability, keeping costs low to avoid fuel poverty, and impactful place-based collaboration.

Context of Decarbonisation Efforts

Carbon Emissions: UK homes are responsible for a significant percentage (~16-26%) of national carbon emissions.
Net Zero Goals: The UK is working to phase out fossil fuel heating to meet net-zero targets by 2050.
Current Landscape: Approximately 250,000 heat pumps are installed in the UK, and about 500,000 customers are connected to heat networks, most of which are not yet low carbon.

Policy Environment and Future Solutions

- Open Policy Environment: There is still uncertainty regarding future solutions for home heating.
- Government Stance: The tendency is leaning towards electrification of heat networks, while hydrogen is less likely for most homes, pending policy changes.
- Regulatory Changes: Housing providers operating heat networks are set to become regulated energy suppliers, with additional regulations such as heat network zoning on the horizon.

Ofgem’s Approach to Heat Networks Regulation

Dominic Hutching from Ofgem provided an overview of the future regulatory landscape for heat networks in the UK. With a focus on consumer protection and technical standards, Ofgem is preparing to oversee the expansion and decarbonisation of heat networks as part of the nation’s journey towards net-zero emissions

The Regulatory Framework for Heat Networks

Ofgem’s Designation: Ofgem has been named the future regulator for heat networks in the UK, as per the Energy Act 2023 1.
Consumer Protection: Ofgem’s role will focus on consumer protection and advocating for consumers.

Decarbonisation and Heat Network Growth

Government’s Objective: The government and parliament are aiming for the decarbonisation of heat networks as part of the net-zero goal 1.
Expansion Predicted: Heat networks are expected to grow significantly in the coming years.

Regulation Rollout and Measures

Consumer Protection Measures: The regulation will introduce consumer protection measures and technical standards 1.
Technical Standards: New standards for the construction, design, and operation of heat networks 1.
Market Failure Protocols: Procedures for dealing with instances of market failure.

Policy Development Complexity

Sector Complexity: Recognising the complexity of the heat network sector with many organizations becoming suppliers through regulation.
Consumer Protection Focus: The areas of consumer protection are a priority and a consultation has been conducted to gather stakeholder feedback.

Regulatory Model and Authorisation Process

Authorisation Process: Each heat network will need to be authorised, with an option for a heat networks license providing similar rights to network developers.
Secondary Legislation: Preparation for regulation and implementation of secondary legislation following the Energy Act.
Transition Phase: A proposed transitional period of approximately 12 months, subject to extension by the Secretary of State 1.

Transition and Compliance for Existing and New Networks

Existing Networks: Deemed authorised under the legislation, but will need to provide Ofgem with information about their operations.
New Heat Networks: Required to be authorised before commencing service, meeting new technical standards, and undergoing a certification process.

Peabody’s Approach to Low Carbon Heat

Richard Ellis outlined Peabody’s challenges and strategies in transitioning to low carbon heating. He highlighted the need for a cost-effective approach to delivering zero-carbon energy, the importance of accurate data for planning, and the engagement with innovative heating solutions. Ellis stressed the necessity of considering resident comfort and affordability, as well as the potential benefits of collaborative transparency in the industry.

Low Carbon Heat Strategy

Heat Networks: Peabody currently operates hundreds of heat networks with several new networks developed annually.
Transition Challenge: A significant portion of Peabody’s properties rely on gas, and transitioning 80% of these to low carbon heat is recognised as a substantial challenge.

Targets and Internal Practices

EPC Goals: Aiming for an EPC rating of C by 2030 and achieving net-zero by 2050.
Alternative Approach: Exploring models that focus on the lowest cost of delivering zero-carbon energy into homes instead of higher fabric standards, due to the slow transition to net-zero.

Data and Regulation

Data Importance: Emphasis on the critical role of data in transitioning to energy service models and adapting to government changes and regulation.
ESG and Finance: Regular discussions about financial modelling, the impact of ESG, and risk assessment are part of the decarbonisation process.

Resident Considerations

Decarbonisation Challenges: Acknowledges that residents are comfortable with gas boilers and are less receptive to new systems like MVHR (Mechanical Ventilation with Heat Recovery), which can generate complaints despite education efforts.

Innovative Heat Solutions

Waste to Energy: Discusses a project with a Swedish company to use energy from waste to power homes, overcoming resident scepticism based on past experiences.
Electric Heating and Heat Pumps: Investigating various models, including off-peak heating for storage heaters and energy from waste, to provide alternative heat sources.

Development and Expansion

EPC and Energy Strategy: Peabody is looking to reach an EPC rating of C as a stepping stone and then focus on broader energy measures.
Heat Network Expansion: Considering the extension of heat networks from new developments to surrounding areas.

Internal and External Engagement

Decarbonisation Questions: Peabody is grappling with many internal and external questions regarding the decarbonisation of heat, including resident preferences and financial considerations.
Affordability: Stressing the importance of affordability for residents and for the business when implementing decarbonisation measures.

Innovation and Collaboration

Adopting Innovations: While not pioneering new solutions, Peabody aims to be a “fast follower” in adopting proven innovations.
Transparency and Collaboration: Calls for greater transparency of information on performance and solutions, suggesting that collaborative efforts could enhance the sector’s progress.

Advancing Retrofit and Decarbonisation at Innovate UK

Leveraging data, technology, and process innovation, Laura Morgan Forster at Innovate UK is spearheading efforts to facilitate the transition to a low carbon heat economy. Projects range from rapid assessments of building performance to comprehensive data models, all aimed at enabling effective decarbonisation pathways for UK buildings.

Innovate UK’s Net Zero Heat Objectives

Mainstreaming Retrofit: Addressing the barriers such as uncertainty and lack of trust that prevent the mainstream adoption of retrofitting.
Decarbonisation Goals: Transitioning buildings off gas for heating and hot water, with the understanding that necessary technologies exist but need more widespread installation.

Three Key Areas of Work

1 – Standardised Robust Data: Creating standardised data is seen as vital for determining the right measures for decarbonisation and their impacts, leading to better investments and finance options. Improved data allows for the avoidance of unintended consequences and better reporting on decarbonisation efforts.

2 – Technology Innovation: Ensuring that innovative technologies solving major problems are integrated into design and compliance models and that their roles are well understood.

3 – Process Innovation: Innovate UK focuses on examining the entire retrofit process and has recently announced projects in this area.

Notable Projects and Innovations

Rapid Assessments Projects

Kestrix Infrared Scanning: Utilises infrared thermography coupled with AI to provide robust information on the thermal performance of buildings.
Coltraco Handheld Airtightness Device: Originating from naval technology, this device used to detect leaks on ships has been adapted, first for hospitals during the pandemic and later for use in the built environment to locate air leaks.

Heat and Power Upgrades for Demand Reduction

Building and Device Data: Projects within this stream aim to use data from both buildings and devices to create decarbonisation pathways across portfolios of buildings.
Occupant Considerations: Understanding the needs of occupants, especially those vulnerable, to determine the order and nature of interventions necessary for decarbonisation.

National Stock Model

Comprehensive Data Layers: This project aims to compile various layers of data to provide a comprehensive view of the UK’s building stock, including satellite data.

Forster invited individuals to visit tinyurl.com/IUKNZHeat to learn more about the projects supported by Innovate UK’s Net Zero Heat program.

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