With £2bn of government funding set aside for domestic energy efficiency over the next year, green tech and services senior advisor Katherine Burden unpicks the opportunity for greener homes in Greater Manchester.
It’s fair to say that if we’re to hit our climate change targets – both nationally and regionally in Greater Manchester – the energy efficiency of our homes will play a crucial role.
Heating our homes accounts for around a fifth of the UK’s carbon emissions, making it the second highest emitting sector after transport. In Greater Manchester, more than 61,000 homes require ‘whole house’ retrofitting every year if the city region is to get anywhere near hitting its target of becoming carbon neutral by 2038. This includes insulation to walls, roofs, floors, windows and doors, green heating upgrades and solar PV on rooftops.
Where there’s challenge, there’s opportunity
It’s estimated that around half a million homes in Greater Manchester may still not have basic insulation measures such as loft or cavity wall insulation. The city region’s Five-Year Environment Plan commits to “initiating a fundamental shift in whole house retrofit” by 2024.
It’s a huge challenge, but where there’s challenge there’s also opportunity. As well as contributing to the fight against climate change, reducing energy demand in our homes improves resilience to rising energy prices and helps to lift people out of fuel poverty – which affects an estimated 130,000 households in Greater Manchester alone. Warmer, more comfortable homes are also proven to benefit health and wellbeing, reducing the burden on the NHS in the process.
Furthermore, a healthy market for domestic retrofit would support a thriving supply chain for green technologies and create thousands of local jobs. It’s no surprise, then, that green homes has become a key agenda in the Build Back Better movement and economic response to COVID-19.
Green Homes Grant
The government’s Plan for Jobs, announced in July, includes a new £2 billion Green Homes Grant voucher scheme launching in September. The vouchers will offer homeowners, including owner occupiers and landlords, up to £5,000 to cover the costs of a range of technologies: solid wall, under-floor, cavity wall or roof insulation; air source or ground source heat pumps; solar thermal panels; double or triple window glazing (when replacing single glazing); energy efficient doors; and some heating controls. Households on low incomes will also be eligible for vouchers covering 100 per cent of the cost of the improvements, up to a maximum of £10,000.
It is hoped the scheme will help to retrofit over 600,000 homes and create over 100,000 jobs. In the scheme of things this is just a small slice of the pie, but it’s certainly a step in the right direction. And there’s hope of more to come – the Conservative Party Manifesto promised £9.2 billion over the course of this parliament to improve energy efficiency in homes, schools and hospitals.
Financial incentives are only one part of the puzzle. There are other difficult barriers to contend with, such as the ‘hassle factor’ of invasive retrofit installations and ensuring investments are reflected in house valuations. It’s partly due to these barriers that the uptake of retrofit technologies has been historically low in owner-occupied and private rented homes. Nevertheless, the Green Homes Grant remains a significant opportunity for our green tech businesses.
Social housing leading the way
Progress on domestic retrofit has generally moved much faster in the social housing sector. While barriers to adoption still exist, on the whole social rented properties tend to be significantly more energy efficient than private rented and owner-occupied properties. Regulated social landlords are required to maintain certain standards in their properties, can make use of economies of scale and collaborative procurement frameworks, and historically have a wider range of investment models available to them. Social housing providers are also by their nature motivated to achieve positive social outcomes for residents and society, and they often have dedicated staff to carry out retrofit and low carbon programmes in their properties.
Earlier this year we commissioned a deep-dive research project into the state of play in Greater Manchester’s social housing sector and the size of the opportunity for the green tech supply chain. The resulting report shows there could be big opportunities on the horizon.
The Greater Manchester Housing Providers (GMHP) group, which has 24 members, collectively manages more than a fifth of the city region’s total housing stock. Our research found that members are increasingly interested in responding to calls to support sustainability and climate change initiatives. All members have formally made commitments to:
Plan for a post-gas economy for new and replacement heating systems
Raise the minimum energy performance rating to C for all existing homes by 2025
Build all new homes to zero carbon status in advance of the city region’s 2038 target.
Of the thirteen GMHPs who provided us details about their plans, their combined planned expenditure for green retrofit technologies over the next five years is around £500 million. Insulation (loft, cavity, external and internal wall), energy efficient windows and doors, and air source heat pumps are the technologies expected to be used the most.
Opportunities in Greater Manchester
Many housing providers access green technologies and services through the use of collaborative procurement frameworks. One of the main players in this space is Procure Plus, which is used by over 60 per cent of GMHP members.
Procure Plus has a dedicated team in place to help social landlords navigate the green technology landscape and actively supports sharing knowledge and best practice across the sector through hosting the GMHP’s Low Carbon Asset Managers Group. In 2018, the organisation secured over £5 million of European Regional Development Fund finance for the ground-breaking ‘Homes as Energy Systems’ project to install a number of carbon saving technologies across over 700 social landlord and private sector properties in Greater Manchester.
David Kemp, who leads sustainability and growth at Procure Plus, believes there are growing opportunities for green tech installers and suppliers in the social housing sector:
“The Green Homes Grant is a short-term opportunity for social landlords, but we’re hoping there’s much more on the horizon in terms of national funding and policy specifically for social housing. There is more low hanging fruit in the private rented and owner-occupied sectors, but the time it takes to access it in comparison to the social housing sector makes social landlords a more attractive option for funders and policymakers in the near-term.
“We will soon be launching a new procurement framework for low carbon technology solutions, covering air source and ground source heating, solar PV and battery installations. We’ve started the process of forecasting our landlords’ potential demand for these products and services; we’re already at £38 million for air source heat pumps and around £60 million for PV and battery installations over the next four years. There will be a regional lot for the North West, so there’s a real opportunity for Greater Manchester SMEs that provides these services to secure a position on this framework.”
Building a local pipeline
At the Greater Manchester level, discussions are underway to explore how social landlords might go again to market collectively in future for green technologies and services.
Robin Lawler, chief executive of GMHP member Northwards Housing and chair of Greater Manchester Combined Authority’s Low Carbon Buildings Challenge sub-committee, says Greater Manchester is leading the way in this space:
“If we can develop a decent-sized retrofit programme in Greater Manchester, starting in the social housing sector but then extending out, it will provide great opportunities for good quality green jobs.
“The issue is one of scale. At the moment you could go online and find any number of people who could design and install your gas wet system, but trying to find someone who will install a ground source or air source heat pump system is more difficult. Unless we can develop a pipeline of sufficient size, this will remain a problem. As social landlords we manage more properties than anybody else, so the hope is that by building a social housing retrofit programme other property owners can then build on that infrastructure.”
Will COVID-19 hold things back? Robin doesn’t think so:
“In the last year we’ve seen climate strikes, we’ve seen Extinction Rebellion, we’ve seen a whole range of things. There’s a clear expectation on us as local government, national government and not-for-profit organisations to be seen to be driving this agenda. There’s been a change in attitudes, certainly amongst young people – and they are our future tenants. I think COVID-19 will push this on, not hold it back.”
How we can help
If you operate in the green technologies and services sector, we can help you to access these emerging opportunities. Get in touch with an advisor today and join our Low Carbon Network.
This post was originally published on the GC Business Growth Hub website here.
Posted under General Interest on 26 August 2020