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Since the election of the new government, there’s been a lot of talk about green energy, but very little about housing retrofit. This is reflected in the latest wave of the Social Housing Decarbonisation Fund (SHDF) which includes no mention of fabric first, suggesting a shift in focus towards decarbonising heating.

Councils are landlords to 1.5 million households in England, a third of them in London. Their tenants are some of the least well-off people in the country. Councils also hold the freehold for many more homes (a third in some London boroughs), which are in private hands because of right to buy policies. 

At least 350,000 council flats and houses across the country are in a state of “substantial disrepair”. Recently the situation has worsened. Widespread use of inflammable cladding and poor fire safety measures have come to light post-Grenfell, and there has been a renewed focus on damp and mould after the death of toddler Awaab Ishak in Rochdale from mould-related breathing problems.

Those who oversee housing nationally are under pressure too. The Housing Ombudsman is receiving thousands more complaints from tenants and the Regulator of Social Housing is demanding higher standards. 

Rent-capping and increased building costs of up to a quarter between 2021 and 2022 mean the housing revenue account (HRA), which funds council housing repairs and major works on council blocks is running on empty. Meaning councils are struggling to keep up with demands, and struggling to prioritise retrofit projects.

What this means for retrofit

Across our membership, we are seeing these challenges emerge time and again. Most current projects have depended on government grants, such as the Social Housing Decarbonisation Fund. Additionally most retrofit has been applied to terraced houses, which are typically easier to retrofit than blocks of flats which make up the bulk of urban councils’ housing stock, with less technical, legal and financial barriers. 

Some councils have successfully completed ‘whole-house’ retrofit schemes, but these have been expensive and to date, are un-replicable. For example, Treadgold House, which is a low rise Energiesprong project in Kensington and Chelsea, has cost in the region of £200,000 per flat. With residents also having to move out for the duration of works. Even Portsmouth Council’s award winning retrofit project, Wilmcote House, cost £150,000 per home on an estate of 107 flats, the rationale being that it would be more expensive to demolish the block than do the work, especially when considering the impact of embodied carbon.

Coming off gas

Given the barriers to taking a whole-house approach to retrofit, is it time to begin exploring alternative options to accelerate the decarbonisation of homes, within the means of councils and their residents?

One approach that could achieve this is a pivot to focus on getting homes off gas, by focusing efforts and investment on replacing gas heating systems with low carbon alternatives. High temperature heat pumps can provide as much heat today as gas. The tricky part is that if tenants are to see the benefit of lower prices from decarbonised heat, electricity prices nationally would have to fall and be decoupled from gas prices as UK100 has long argued. At least some electricity costs could be off-set with a large-scale council solar panel programme, as councils such as Hackney are initiating. However, this also needs government action - Hackney’s scheme is a pilot with Ofgem because normally councils can’t generate and sell electricity in this way. Though there may be potential to grow this model through the development of GB Energy.

In the longer term, small local heat networks could help. However at present low carbon heat networks are in their infancy with many existing examples of heat networks being predominantly powered by gas. There are a few small examples of low carbon networks in London, such as some estates in Islington being warmed by heat from the tube through the Bunhill power plant and the water source heat pumps in Southwark servicing more than 2,000 older homes. But these solutions require specific local conditions such as suitable access to waste heat. They also mostly need substantial grant funding. Southwark can’t replicate its project because it was financed through the non-renewable domestic heat incentive which is now closed.

In large cities, creating local heat networks with waste heat from the likes of data centres or incinerators and joining up large institutions like universities and hospitals with housing estates (so that both share large heat pumps for example) could also accelerate heat decarbonisation and work with private finance. Many city regions are already exploring the opportunities to develop their own heat networks. To help with this process, the Department for Energy Security and Net Zero has recently published a Heat network zoning tool which provides critical insights into what areas may be suitable for heat networks. The government has also committed to delivering 6 pilot projects and is looking into how devolution can further drive local heat networks, making now a great time to consider what opportunities might exist in your area.

Retrofit is still needed

Getting off gas first doesn’t mean councils can ignore retrofit. The better insulated a block is, the less heat residents need to buy and the better the health of the building. If private sector companies like Ameresco and Vattenfall do start developing heat networks on a large scale as they’re doing as part of the private-public partnership in Bristol then good insulation gives residents (and councils) some protection against future rising costs from such heat network providers. It is worth remembering, retrofit will rarely be as profitable as heat generation and will therefore struggle to attract private funding. 

Retrofitting for net zero doesn’t have to be done with a big bang though. It could be  incorporated into other programmes of work such as basic repairs, fixing damp and mould, and cladding removal. To do this effectively, housing departments will need to understand their buildings, listen to their tenants and leaseholders, and work out what they need to live healthily. 

Looking to the future

In order to decarbonise our aged housing stock, council housing teams need to take ownership over heating and retrofit issues and adopt a more strategic approach that welcomes innovation. More specifically councils can take steps now to: 

  • Look at their governance and culture and work together to ensure all departments, including housing departments, are equipped and ready to embrace the necessary change to drive decarbonisation of the housing stock.
  • Embrace modernity and data, using building management systems, complaints logs, repairs history, resident behaviour, heating systems and existing insulation to inform programmes of work. 
  • Consider opportunities to use council assets for innovation and to generate long term sustainable income streams such as by developing large scale solar projects, that could offset investment in insulation programmes.
  • Consider place based decarbonisation opportunities such as working with large local institutions to create heat networks. 
  • Review their overall Housing Revenue Account business plans and schedules for general repairs and other works, and identify where there may be opportunities to go further in support of their net zero aspirations.

What councils shouldn’t be doing is accepting the status quo. Be it replacing gas boilers with new gas boilers, or waiting for hydrogen to come online for domestic flats. There is much to learn from the experience at Redcar

By undertaking all the above suggestions and more, councils can help put themselves in the best possible place to deliver retrofit and heat decarbonisation at scale when further support does eventually filter down. 

 

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