Where next for energy and social housing? November 2015

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Social Power Partnerships offer

Looking for partnerships with HA’s, charities and community groups

Experienced management team: • energy markets• technical and operational• funding • links with leading manufacturing and

technology suppliers Project solutions, from conceptualisation, to funding, through to delivery and a long-term business relationship

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The climate is changing….not half!

FiTs 87%

Green Deal

ROC’s

Contracts for

difference

onshore wind

5MW+ grnd mount solar

Pre-accrediatation

DITCHED

SUSPENDEDDITCHED

SCRAPPEDSCRAPPED

SCRAPPED

SLASHED

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So what next?

Sustainable energy

programmes

Subsidy cuts will drive down the

price of equipment

Funders will have to accept a lower

return

Tenants will have to pay towards

the benefit HA’s will need to buffer credit to

funders

Multiple technologies will

improve the return and benefit the household

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Starting point – the ‘mountain of power’

Developer approached V2C as community interlocutor to manage the ‘community benefit’

Not the usual ‘chuck the community a few quid each year‘

A social enterprise suggested SPP as source of expertise

15MW Solar farm Planning

application

PPA – a what?

Referral froma charity

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Whole-stock PV scheme

DNO Connections

Ofgem meeting

Things looked bright

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How can we test new ideas? various technologies available can complement each other in order to drive down customer’s energy bills

Electricity supply – commercial basket

Gas supply – commercial basket

Lobils PV – maximises PV generation

LED Lighting – reduced energy demand

Heat pump / Thermal store

PV system

NEA funding a pilot

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Do the economics stack up? (with tenant contribution = Y)

• As the table below shows, by getting tenants to give back 50% of the benefit and by installing 3 technologies rather than one, an investment case can be made.

• Without these steps solar PV would be uneconomic for third party investors.

Profile Customer Savings Customer contribution IRR

Solar no contribution Negative

Solar + contribution £75.60 £75.60 2.2%

Solar+ LED+ Lobils PV + contribution £157 £157 4.75%

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How can I charge my tenant? Through SAP improved rent adjustments• Increase rents through SAP uplift.

Welsh Government allows HA’s to increase rents by 0.5% on improvements up to SAP-65 and 0.3% thereafter.

• Assuming home is installed with a 3kwp solar system, Lobills PV and LED lights. Potential 13 point uplift in SAP rating.

• On rent of £85 per week on a 65+ rated property, equates to 3.9% rent increase, £3.32 /wk, £172/yr.

• If recycled into a funding option, this is enough to generate a 5.4% IRR.

Solution SAP Rating Uplift

Solar PV 5-19

LED 2

Solar water heating

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What are our funding options? The market is evolving.

• SELL LEGACY PORTFOLIO & recycle money into the next phase of a programme

• PENSION FUNDS still attracted as these investments give higher returns than bond market• The HA market credit-rating is added attraction

• GREEN ISA’S will allow tax-free funding into vehicles that offer financial, environmental and social returns

• 23m people invest £443bn into ISA’s - potential is huge

• COMMUNITY ENERGY GROUPS have unique access to a number of funds• The Urban and Rural Community Energy Funds have a combined £25m backing• Pure Leapfrog has launched Leapfrog Finance - bridging facility to allow CEG’s time to

raise funds while project is built

• SOCIAL IMPACT FUNDS and SOCIAL LENDING - both increasing access to cheap capital• Many banks run their own social funding schemes• Others lend margin-free through Community Development Finance Institutions (CDFI’S)

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The future? Just around the next corner

• STORAGE - a game-changer, allowing homes to capture and consume what’s generated. Recent research by the Australian government suggests that battery prices could halve in the next two years.

• DEMAND SIDE RESPONSE - Capacity Payment system under legal challenge - may have to offer better deals to DSR advocates. Supply-side measures pay suppliers to £20k/MW insurance for availability. On a 2kWp DSR system = £40 income per year

• SMART METERING - ultimately half-hourly pricing & ability to buy and sell back to grid Companies who can avoid the three TRIAD periods of the year can save 15% off electricity bills

• SOLO GAS CHP will offer individual homes the ability to generate electricity and heat through their gas supply at 95% efficiency

• SMART GRID and VIRTUAL NETWORKS are the ultimate goal for HA’S and CEG’s. Members sharing and consuming the electricity that they generate

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• Installation of heat pumps with thermal stores to 20-34 off-gas grid properties• Technology developed by Gledhill ‘lobils’ • Heat pumps & thermal stores outside - system works with existing Combi-boiler• Thermal stores allow ‘demand-shifting’ - occupier uses OP electricity to re-charge -

energy released throughout the day• Charging 12 to 6am supplies energy to meet next day’s heating & hot water needs• Demand shift also benefits DNO• If home has PV, system allows 2-cycle charging: once from PV & at night from the

O/P tariff• System max’s PV by converting excess feed into stored heat• Self-administering system - tenants can leave it run - ‘Boost’ button for extra heat• Primary benefit - reduced heating costs from 5p to perhaps 2p per kWh• Secondary benefit - ability to balance-out grid by shifting demand

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• ETI’s Smart Systems and Heat Programme

• SSH programme aims to create future-proof & economic local heating solutions by connecting together understanding of consumer needs & behaviour with development & integration of technologies & new business models

• Phase One - three local authorities (Bridgend, Greater Manchester & Newcastle) deliver local area energy plans specific to their communities

• Phase Two - demonstrate local smart energy systems can work nationally

• Decarbonisation of heat is one of key technology challenges facing UK. To do it effectively & economically we need to develop solutions that work at individual & location level

Fuel Poverty focus

We can be distracted: RE generation targets, zero carbon homes, income generation aims – the focus has to be customers!

Anyone on even partial HB is fuel poorThrough co-investment (e.g. Arbed v1) we know we can do it

We can bring additional £££ & benefit whole communitiesBut what else must we do to address this problem?

Cost of retail energy? PPM’s!

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• Our Power (Energy) Licensed energy supply company (Scotland)

• Prioritising PPM tariffs

• Smart meters

• Focus on excellent customer service

• Delivering clear advice and support to maximise value

• Controlled market entry based on voids

• Service available to member’s communities