A Pay As You Save scheme for domestic retrofits could grow into a multi-billion pound market. Stephen Cousins looks at the pilot projects testing contractors’ technical and customer-handling skills.
In the depths of an economic slump it’s encouraging to think that, if the coalition government sticks to UK carbon reduction commitments, a potential £5bn-a-year market for sustainable housing retrofits could be on the horizon. The coalition’s Programme for Government promises a “Green Deal”, likely to be a Pay As You Save (PAYS) scheme under which home energy improvements will be paid for by savings from energy bills.
With more than 25 million UK homes likely to need some level of energy improvement by 2050, PAYS has the potential to provide the industry with a much-needed shot in the arm.
According to the UK Green Building Council, whose work on the PAYS concept influenced the policies of all three parties, homeowners could invest in energy efficient products and renewable technologies at a reduced upfront cost by taking out a loan, possibly via their local authority. Repayments would be spread over a long enough period so that the money to be repaid is lower than savings made on energy bills.
Although we are waiting for the coalition to provide the details of the Green Deal, the UK GBC says the industry should prepare today for tomorrow’s opportunities. “You talk to most contractors and they don’t believe there’s a retrofit market out there right now,” says John Alker, director of policy. “To a certain extent that’s correct, but they need to be on the front line to understand the opportunities that will arise further down the line and be properly trained and accredited to take advantage of them.”
Some contractors are already getting a taste of how this fledgling sector might operate. The previous government launched a number of small-scale pilots that are currently testing their ability to manage the technical challenges – as well as the diplomatic challenge of dealing with homeowners and tenants. Lessons are being learnt on the most cost-effective and efficient technologies,
the suitability of micro-generation technologies, customer attitudes to sustainability and building work and how best to manage costs.
The Energy Saving Trust (EST) has been allocated £4m from the Department of Energy and Climate Change to road test five different methods of delivering PAYS projects on 500 homes in six different areas: Birmingham, the London Borough of Sutton, Sunderland, Stroud, Surrey and Sussex. Rok is project managing installation of components and materials from B&Q at the Sutton pilot, while Birmingham City Council is project managing the retrofits itself and liaising directly with systems suppliers.
Retrofit for the Future
Alongside this PAYS pilot, several contractors are working on the Technology Strategy Board scheme called Retrofit for the Future, which will see 87 projects receive £13.5m in funding to upgrade existing properties to make deep cuts in carbon emissions.
Lessons are also being drawn from the first projects funded under the £300m Community Energy Savings Programme. This new fund is part of utility companies’ legal obligations to reduce carbon emissions and will be directed at social housing in local authorities with high levels of fuel poverty (see box opposite).
Meanwhile, builders such as Kier are using their work on social housing retrofits as a training ground for future work on private domestic properties through PAYS. “We’re definitely interested in PAYS and social housing is going to be our route into it because the money’s already available and it’s a lot easier at present doing bulk retrofits rather than private individual households,” says Paul Slater, sustainability manager at Kier. “We’re treating it as a learning exercise
as we are very mindful that there are 25 million households that will need some form of energy saving installation over the next 30 years or so.”
In Sutton, south-west London, Rok is working with B&Q to improve an initial 32 homes, which range from two and three-storey 1920s and 1930s period properties to post-war terraced, detached and semi-detached houses. Homeowners, advised by third party eco-auditors, can sign up for a range of “minor” measures, such as loft and cavity wall insulation, draught proofing, hot water tank insulation and heating controls for boilers; and at least one “major” alteration, such as internal and solid wall insulation, secondary glazing, a boiler upgrade to “A” level efficiency, underfloor heating, air source heat pumps or solar panels.
Based on a £10,000 upgrade, the EST provides a £4,000 subsidy, with the balance funded by a government-backed interest free loan, to be paid back to the council via council tax over 15-25 years.
The most popular products in the Sutton pilot have been replacement boilers, swapping hot water tank systems for combi-boilers, replacing period sash windows with double glazing, and internal solid wall insulation. Graham Shord, regional maintenance leader at Rok, says it’s the impact of small, affordable measures which are encouraging homeowners to spend more on properties. “The £200-£300 measures like draught proofing and loft insulation make a big difference to energy efficiency and it’s these that will encourage people to save up and go for major measures,” says Shord. “From a U-value point of view internal solid wall insulation is the most effective measure, but it’s expensive.”
For builders new to domestic work, managing consumer expectations and ensuring the public understand the relative costs and impacts of different technologies will prove a major challenge. Retrofitting is far more invasive than typical refurbishment work and many properties will be occupied by owners, which will mean improving customer communication channels, or setting up resident consultation teams.
At its Sunderland PAYS pilot, Gentoo has found the process of upgrading 46 homes, 19 of which are void and awaiting new tenants, ”more resource-intensive in terms of customer education than anticipated”, according to a spokesperson.
In Sutton, Rok found that customers often failed to realise the impact and inconvenience of work, which meant carefully guiding them through the process and trying to provide an early expectation of how long it would be likely to take. “It’s critical to have a robust communication channel, either picking up the phone, or having a local rep who visits the site every day to gauge how the customer is feeling,” says Shord.
The viability of renewable power generation technologies, such as wind turbines and solar photovoltaics, on domestic properties is still uncertain and so far none have been installed in Sutton or Sunderland. However, interest could increase as homeowners wake up to the advantages of the feed-in tariff scheme.
Adrian Marshman, area leader at Rok, who is carrying out CESP social housing renovations for Bristol City Council, said: “PV might cost Joe Public £10,000 to buy and install, but if they get free electricity for 25 years and receive a feed-in payment of £500 a year from energy companies it would more than pay for itself. The feed-in is also very attractive to residential and social landlords and we’re in discussions with a number of them about it.”
Kier is planning a trial to install around 1,000 standalone PV arrays on local authority homes with a view to rolling it out to the 300,000 properties it manages. “The local authority gets the benefit of reduced emissions, tenants get free electricity and are helped out of fuel poverty, and the funder, be that the council or a third party, will make a profit on the feed-in tariff,’ says Slater.
Future take-up of PAYS will depend on ensuring that customers understand what they need to have installed, how much it will cost, how repayments will be made and the potential savings. Energy Performance Certificates are also expected to be overhauled to give homeowners information on how to make their homes more energy efficient.
Delivering PAYS at zero or reduced upfront cost to the consumer will mean tapping into private sector finance, but exactly who will provide the loans and how they are to be repaid remains uncertain. But it seems likely that homeowners will make repayments to their local authority or a high street retailer, such as Tesco or B&Q, rather than the contractor. “A high street retailer could soon be offering low-carbon refurbishments to people in the same way they offer holidays or house insurance,” says the UK-GBC’s John Alker.
Even if contractors avoid the responsibility of loans, repayments and call centres, they would still need to take on single-point project management responsibility, says Andrew Mellor, head of sustainability at consultant PRP Environmental: “We certainly need a single firm organising things on site and project managing everything, which would obviously suit a main contractor.”
There’s no magic pill to enhance energy efficiency in UK homes, but the PAYS pilots are getting the industry closer to understanding what works and what doesn’t. For contractors PAYS will likely require retraining in new skills as sustainable retrofitting requires a quality of work some will not be used to. As PRP’s Mellor succinctly puts it: “Working on up to 25 million homes, we can’t afford to see any cowboy builders out there.”
Community energy fund arrives in Bristol
A 1960s tower block in Bristol is getting an eco-upgrade thanks to an innovative brick slip insulated cladding system that’s helping to cut carbon emissions by 80%.
The project to update Rawnsley House – a 17-storey social housing block of 131 flats in the Easton area of Bristol – is the first in the UK
to receive a grant from the government’s Community Energy Saving Programme (CESP), which channels funding from energy companies to improve energy efficiency in areas of low income.
Contractor Rok is working with Bristol City Council to overhaul the block’s dated design. Enhancing the building’s envelope was seen as the best means of achieving the highest carbon impact for the lowest cost, says Adrian Marshman, area leader at Rok: “We wanted to insulate the fabric as much as possible to prevent heat from escaping, so all the existing balconies were removed and in-filled with part-insulated panelling and new uPVC windows.”
The decision to overclad the block with around 3,900m2 of Alumasc’s insulated Traditional Brick Slip system was made to preserve the appearance of the 1960s building without adding too much weight to the structure. The technique has been widely used elsewhere in Europe, but there has been little uptake in the UK as yet.
The system is applied in four layers. Rows of metal channels are first fixed into the solid brickwork substrate; a layer of adhesive is then
laid over the brickwork, followed by a 150mm-thick layer of phenolic insulation. The next step is a larger layer of scrim adhesive and alkali resistant glass fibre scrim, and finally a layer of 5mm-wide brick slips set in mortar.
To apply the system, a full scaffold was required around the entire block, which also facilitated other repairs to the structure and a roof replacement. “The Alumasc overcladding is one of the most cost-efficient systems out there. On this scheme we estimate it is responsible for about 80% of carbon reductions,” adds Marshman. “It’s not difficult to install, but it is tricky to get a good finish.”
PV-T panels aim to reduce energy use in Kent
An innovative combined solar photovoltaic and solar thermal panel installed on an exemplar retrofit project in Dartford, Kent, will help slash £343 a year from the resident’s utility bills.
The technology is part of a demonstration project funded from the Technology Strategy Board’s Retrofit for the Future initiative, which aims to show how social housing stock can be improved to meet future CO2 reduction targets.
The suburban two-bed property is located in the centre of a block of four properties and is typical of many post-war cavity wall homes. Contractor Connaught, in collaboration with Dartford Borough Council and PRP Architects, has installed a range of high-end technologies in the property designed to lower energy consumption by 77% and reduce carbon emissions by 82%.
The photovoltaic and solar thermal panel (PV-T) from Newform Energy increases solar PV efficiency by water cooling the PV panels and adding waste heat to the solar thermal circuit. The 3m2 flat panels are designed for ease of installation and a low impact on the appearance of the house, as well as being suited to the small pitched roof area on a typical social housing property.
The hot water heated by the panels is fed into a heat store cylinder fitted inside the property, which helps increase the water’s ambient temperature.
Although currently expensive to install, PV-T should become more viable in future, says Myles Monaghan, energy director at Connaught: “The TSB wanted technologically-advanced designs using leading edge technologies.
“With systems such as PV-T the supply chain is a bit immature and the market is not quite there for it yet, but we’re expecting that a two-year monitoring of the house will show it performs to expectations and is suitable to roll out and generate economies of scale.”
Newform’s combined solar photovoltaic and solar thermal panel is ideal for small pitched roofs