Housing Specification Blog

More funding needed to improve energy efficiency of housing stock

September 27, 2012 Alexandra Blakeman Housing Issues

Today Housing Specification are handing over the blogspot to Richard Jemmett, Head of Social Housing Energy for npower. Here he discusses how registered providers can improve a property’s energy efficiency with the latest funding opportunities available.

More than two thirds (69%) of social housing providers say a lack of funding is the primary barrier to improving the energy efficiency of their housing stock, according to research from energy company npower.

At a time when registered providers are trying to meet the Decent Homes Standard across their housing stocks, implementing energy efficiency should be a key priority.  However, our research has shown that while there is a desire to increase their investment in energy efficiency measures, many are also facing significant barriers when it comes to implementing these measures.

We recently asked senior decision-makers across a range of social housing providers what barriers they are facing.  What came through loud and clear is that lack of funding is the number one reason they do not invest in energy saving measures. It is vital that the aspiration to put in place efficiency solutions is not dampened by this challenge.

The benefits of energy efficiency are clear to both landlords and tenants. Tenants save money thanks to reduced energy bills which may in turn help reduce the instances of fuel poverty. For landlords, optimising energy efficiency reduces carbon emissions, improves their asset value, and helps them meet the obligations outlined in the Decent Homes Standard.

In a complex and ever-changing legislative landscape, what are the current funding options available for social housing providers?

For many, it is worth considering the Community Energy Saving Programme (CESP) funding which runs until December 2012. Time is therefore of the essence with less than six months left for landlords with housing stock in Lower Super Output Areas (LSOA) to claim and benefit from CESP funding. Available from energy suppliers, such as npower, CESP seeks to promote insulation measures which will enable households to make the most substantial savings on energy consumption and therefore reap the benefits of reduced energy and carbon emissions.

With such a short timeframe remaining to access this funding, we would encourage all social housing providers to consider whether they can take advantage of the scheme before it is too late.

The Green Deal is the next scheme on the horizon which will remove some of the funding barriers to improve energy efficiency across the housing stock. For tenants and landlords alike, the Green Deal presents an opportunity to increase the energy efficiency of properties in a more targeted way. However, we know there is considerable confusion as to what it can specifically provide for social housing providers.

The Green Deal’s financial mechanism eliminates the need to pay upfront for energy efficiency measures and instead payments are added to the energy bill, but, in return, the cost of the measures should be covered by savings on the electricity bill.

Suitability for the scheme will be assessed on a simple calculation, known as the “golden rule” of the Green Deal – i.e. the predicted savings from the energy efficiency improvements to the property must equal or exceed the cost of installation.

An integral part of the Green Deal is the Energy Company Obligation (ECO) which replaces CERT, CESP and Warm Zone discount at the end of this year. ECO works within the Green Deal framework to provide subsidy in three ways:

  1. Vulnerable customers – providing them with free insulation and heat measures, keeping them warm and reducing the impact of energy bills. This applies only to customers in private tenure.
  2. Deprived communities – providing households in rural areas and the 15% most deprived areas of the UK with free measures and is accessible to social landlords
  3. Installation of expensive wall insulation – many households were not able to benefit from current subsidies because the cost of installing these measures is so high. ECO targets these people. It is assumed that the customer pays through the Green Deal for only part of the cost.

For social housing providers facing continued budget pressures, it is important to fully understand the support that already exists, and could exist in the future, when it comes to improving the energy efficiency of housing stock. Both CESP and the Green Deal / ECO provide much needed help for registered providers to invest in energy efficiency measures. But the clock is ticking and those considering CESP need to act now.

By taking advantage of funding options, the quality of our social housing stock looks set to improve in the future, and both tenants and landlords will benefit.

For more information on npower’s Energy Services division, please visit www.npower.com/socialhousing

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