Wigan and Leigh Homes (WALH) came to Parity through our partnership with Sustainable Homes Their retrofit plans form a part of a wider asset management plan agreed with Wigan Council that stretches out 30 years into the future. While this close relationship with the local authority provides them with an enviable level of consistency and security of funding compared to many of their peers, it also brings with it a high level of scrutiny, and a requirement to ensure that investments offer value for money.
The CROHM Project
For WALH, the overwhelming driver for retrofit is to help address the problem of fuel poverty, especially in the light of recent benefit reforms. These changes have put significant pressure on tenants’ ability to pay their energy bills, and therefore to live in warm and comfortable homes. This social goal also has business implications, with lower energy costs also helping to ensure that households can afford their rent.
Accordingly, WALH have a corporate target to increase their average SAP by one point per year over the next five years. CROHM analysis was commissioned to investigate the potential costs of achieving this target, as well as to investigate how the poorest performing properties could most effectively be improved, and the role that various grant funding schemes (ECO and the Feed in Tariff) could play in supporting their plans. While funding schemes are not factored into WALH’s current retrofit plans, the money they provide is recycled into Council funds and helps support the business case for future energy efficiency programmes.
The Results of the Analysis
Achieving the corporate target of a SAP point a year for the next five years will be no mean feat. The total cost was estimated to be [£30-40 million]. However, averaged across all properties, this work out at a much more reasonable sounding £1,300-1,800. Turning to the minimum SAP analysis, it was found that the average SAP targets hid a significant level of detail.
The WALH team suggested focussing on the poorest performing 30% of properties, which suggested a minimum SAP target of 69. Achieving this target requires measures to be installed in just over 7,000 properties. Of these, it was discovered that only 11 could not cost-effectively achieve the target. These properties present a case of further detailed investigation and, possibly, disposal in the longer-term if ways cannot be found to improve things for their tenants at reasonable cost. The total cost of achieving a minimum SAP of 69 was found to be £21million, at an average of just under £3,000 per property, with the a resulting average SAP of 72.7.
Funding schemes were found to have potentially significant implications for WALH budgets, albeit with the proviso that considerable uncertainties still exist around ECO, and with no guarantees that such funding could be secured given the high level of competition for grants. Taken in total, the various ECO funding streams could be expected to deliver up to £26million towards the cost of energy efficiency programmes across WALH’s stock. This represents are very significant contribution towards the expected £40million budget for achieving WALH’s corporate average SAP target.
Solar PV was found to be widely applicable to WALH’s stock, with larger installations unsurprisingly representing the best value for money in terms of payback. However, even these systems typically only return the initial investment after around 21 years (based on the Feed in Tariff income alone, since the bill savings accrue to the tenant). In the context of WALH’s 30 year asset management plan, such long-term investments may be justified, particularly in the light of the relatively conservative assumptions made in the analysis (e.g. on the costs of the systems, which could fall naturally or be negotiated down).
WALH’s Experience of Retrofit: Matt Roberts, Director of Asset Management and Development
Has retrofit become a bigger priority for WALH in recent years?
M: In years gone by, we were at the forefront of the agenda, but competing demands for investment have made it more difficult to target retrofit. That said, we’ve done most of our lofts and cavities, and have made good progress on our “non-traditional” homes.
How much progress have you made up to now?
M: As I said, we’ve done a lot of the easy stuff, and have started to move on to the harder measures. We’ve installed quite a lot of PV, which is now producing a good income stream for the council.
What have been the barriers in the past?
M: Procurement is always an issue as there are always a lot of hoops to jump through – which means things can take a long time. It can also be hard to explain what we are doing to tenants, especially when it involves complex measures. At the moment, we’re having to get buy-in to a remotely controlled heat pump programme, which is tricky. And of course tenants are always wary of anything that might cause disruption.
Are tenants less resistant now energy bills are such a big issue?
M: In 2012 we did a study of our tenants that highlighted energy efficiency as a top 3 priority for tenants. We have more pro-active enquiries these days, especially for PV and insulation.
How has your CROHM assessment helped you future planning?
M: We had a long-term plan in place already, but it has helped us develop it further and access the numbers to back it up. It focussed our minds on getting the best bang for our buck. [With our target] it’s important to know how much each SAP point costs, and therefore where to set the bar without breaking the bank.
Tenants’ Views: Jane and Tina
Jane (J) lives in a rural property with a recently installed air source heat pump. Tina’s (T) home has been externally insulated, with loft insulation, new windows and door and a new boiler also added. The measures are expected to deliver savings of £160 and £400 per year respectively.
Are energy bills a concern for you?
T: They always used to be a big cost, especially when my husband was unemployed. They’re something you just have to pay.
Have the new measures made a difference to your bills?
T: Yes, this used to be such a cold house. We were paying about £50 a week on bills, now it’s more like £25-30.
Aside from the money, have you noticed other improvements?
J: Compared to my old house, which was similar, I’m saving about £50 a month, but it’s also helped with my health. I have various conditions that are affected by the cold, and since I’ve been in this place they’ve been much better.
Would you recommend the improvements to your friends and neighbours?
T: I already have! I’ve been in the papers telling people how happy I am about the things they did to the house! J: Yes, I would. I feel very fortunate to be in a house with such low bills. Generally people around here are feeling the pinch [due to high bills] and I’ve recommended this system to them