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A brighter future without ECO?

Over the last few months, we have seen wide-ranging reports of energy companies and contractors pulling out of planned retrofit projects. In response, there have been numerous quotes from registered providers of social housing across the UK casting doubts as to whether they can now afford to implement energy efficiency programmes.

It’s an understandable reaction to some significant and unfortunate changes to the Energy Company Obligation – but these changes shouldn’t necessarily herald the end of large-scale retrofit programmes. Instead, they can drive a change in emphasis and mindset that could set the industry on a more stable long-term footing.

The main reason for that view is that the fundamental drivers for energy efficiency remain unchanged. Registered Providers up and down the country still have commitments to improve the energy efficiency of their stock, and those commitments are generally based on a rational view that energy-efficient homes are good for tenants, protect long-term asset value and, crucially, reduce the risk that residents will not pay their rent as a result of spiralling energy prices.

The need for retrofit
Retrofit should never have just been a ‘nice to have’ option, dependent solely on the availability of grants and subsidies. Sure, free money is always going to help and may speed up the rate at which works can be done, but all this retrofit has to happen eventually, one way or another.

What that means is that there now has to be a something of a cultural shift in large parts of the sector. Rather than being reactive to the latest government scheme – which, let’s face it, are never very reliable as a way to plan and fund business activities, as the recent changes demonstrate – all providers, not just the leading edge, need to start taking a longer-term, asset management-based view of retrofit. Retrofit should stop being something peripheral and instead become an integral part of organisations’ strategies.

At Parity, one of our core services is our Carbon Reduction Options for Housing Managers (CROHM) stock assessment offering for social housing. One of the most interesting things about our CROHM clients over the years is that relatively few of them have asked us to analyse the funding and measures available under schemes such as ECO (and its predecessors CERT and CESP) or the Feed-in Tariff as a primary focus of the project.

Instead, the vast majority have come to us with an organisational target – be it SAP improvement, carbon reduction, or fuel poverty elimination – and have asked us to help them work out how retrofit can help deliver against them as cost-effectively as possible, irrespective of the source of funding. To most of them, grants and subsidies tend to represent a bonus, something that helps them get where they want to be anyway, and are not an end in themselves.

One of the key observations from years working on these projects is that actually the most cost-effective and sensible things to do aren’t necessarily the same as the things for which grants are available. In fact, focusing on subsidised measures can often lead organisations to overlook the things that are likely to make a real difference to their homes and tenants. It can also encourage organisations to think about retrofit projects in isolation, which then wastes opportunities for combining work programmes and delivering cost savings (for example, making use of scaffolding to deliver roof repairs, external decoration and external wall insulation programmes).

A holistic approach
Taken in that light – and being optimistic – perhaps the cuts to ECO could be a useful wake-up call and could drive a much better, more holistic approach to retrofit. Instead of focusing valuable time and resources chasing increasingly scarce offers of funding from energy companies, providers will be encouraged to look more closely for opportunities to integrate retrofit with asset management programmes, repairs and maintenance activities and so on. If well planned and coordinated, there is every chance that, as a result, these organisations will be able to deliver savings across these combined programmes that will eat significantly into the ‘lost’ value of subsidies.

And thinking in that way is ultimately where we need to get to. While retrofit is seen solely through the green lens of sustainability, or as something to do reactively when there are grants flying around, it will forever remain marginal. If instead it can become something that is simply good business, based on long-term and integrated planning, then we – the social housing sector, its tenants, the retrofit industry, and UK-plc – will all be better off for it.

This article first appeared in Housing Association Building and Maintenance magazine.