Zero carbon energy retrofits – the future for housing associations?

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On 12 June 2019, Welsh Ministers declared the ambition for Wales to achieve net zero emissions, no later than 2050.

Wales already has in place legislation driving this action. The Environment (Wales) Act 2016 set a target of reducing greenhouse gas emissions by at least 80% from their pre-1990 levels by 2050. This has since been overtaken by the decision to adopt a 95% reduction target, and the ambition to achieve net zero carbon.

According to the Homes in Wales Advisory Group’s report, “Better Homes, Better Wales, Better World”, Wales’ 1.4 million homes are responsible for 27% of all energy consumed and 15% of all demand-side green-house gas emissions. It also states that Wales has some of the oldest and least thermally efficient housing stocks in the UK and Europe. 32% of Welsh housing stocks were built before 1919.

Housing associations inherited housing stock from local authorities in the largescale voluntary transfer of the 1990s. They took responsibility for a portfolio of properties, ranging in age and energy efficiency standards.

Whilst housing associations can take control of the thermal and energy efficiency of new builds currently under construction, improving their existing housing stock is more problematic. These houses can be hard to heat, resulting in greater emissions.

In our opinion, to stand any chance of meeting Wales’ ambitious climate change targets, an extensive and far-reaching retrofitting programme needs to be undertaken urgently on our existing housing stock. An Energiesprong type business model could help achieve this.

What is Energiesprong?

Energiesprong is a Dutch initiative which transforms existing housing stock into net-zero energy houses. Net zero energy means that the house generates as much energy as it needs for heating, hot water, lights and household appliances. This is made possible by technology such as prefabricated facades, new smart heating and cooling installations and insulated rooftops equipped with solar panels. The retrofit can take place within one week, which means that people do not need to leave their homes.

Once retrofitted, the houses no longer suffer from moisture and draught issues – a problem which blights older housing stock.

The new facades and rooftops also give the properties a “facelift”, making houses look smarter. This makes a positive impact on the community and has the potential to help regenerate neighbourhoods.

The system has already been trialled in Nottingham, initially with 17 houses. It is now to be scaled up to 155 homes.

How do the finances work?

Energiesprong states that the renovations are paid by the money you would normally spend on your energy bills, alongside savings made by reduced repairs and maintenance costs.

In Holland, the following finance process was followed:

  • an initial group of Dutch Housing Associations joined forces to secure a first market
  • adjustments were made to government regulation, allowing social landlords to charge tenants an energy service fee in return for providing a net zero energy house
  • evaluation of the refurbishments was taken by banks to provide affordable financing to social housing associations

Conclusion

Lessons can be learnt from the Nottingham trial, and about whether it can be replicated by housing associations in Wales. Multi-housing association collaboration could help the decarbonisation of housing stock in Wales, to meet and exceed challenging climate change obligations; which housing associations must comply with as both landlords and housing providers.

The Energy and Housing Association teams at Capital Law frequently advise housing association clients; as well as upon innovative energy technology developments.  We have an in-depth, pragmatic understanding of the commercial, technical and regulatory issues that come alongside these sectors. If you are working on a project in this field, we can help.