Twelve months of progress on Transition Zero

Coordination Meeting – Tuesday 14 February 2017

The Transition Zero team met for an international workshop in Paris. The workshop focussed on the roadmaps for the Market Development Teams, finance strategies for social housing associations and plans for securing the volume deals.

Roadmaps

The workshop kicked off with an overview of the growing interest in Energiesprong across the globe. While Transition Zero primarily focuses on developing markets for Energiesprong in France and the UK, the project also aims to extend the approach to other markets to enhance the long-term impact of the project. The government in Germany has now committed funds to support the uptake of Energiesprong refurbishments, and there is also interest from Luxembourg and Italy.

The French Market Development Team now has eight housing associations actively involved in the project and are currently analysing the housing types within their stock to identify suitable properties for Energiesprong refurbishments. The first pilots will be ready by December 2017.

In the UK, the priority for 2017 is to deliver the first 30-50 demonstrators and to secure an additional 250 demonstrators in the pipeline, as well as making progress towards a volume deal and the necessary regulatory change. 80-100 demonstrators are expected to be delivered in 2017-18, with the first demonstrators currently coming on to market in Nottingham.

Finance

In the afternoon, Dutch partner, Finance Ideas, led a workshop on finance strategies and creating a “total cost of ownership” culture. Developing a culture among social housing associations to consider the “total cost of ownership” of their stock supports the business case for investing in Energiesprong refurbishments. Energiesprong refurbishments not only increase the value of the stock, but also lead to lower refurbishment costs on average over a 40 year period.

The suggested approach was to begin with lower tech solutions underpinned by a guarantee, developing the pipeline with grant funding and building up delivery from there. Energiesprong new build projects are also likely to be a significant part of the picture.

Volume Deals

The day ended with a session on the volume deals. The Dutch team set out their approach and how an initial agreement was secured for 11,000 Energiesprong refurbishments (split equally between four social housing associations), with a soft agreement for a further 100,000 if the first refurbishments went to plan.

In the UK, the problem has been gamified to tap into the needs and desires of different stakeholders and to map out the demand and supply curves for refurbishments. The ‘game’ also helps to indicate targets for price points to be reached upon completion of a particular volume of refurbishments. Pledges will be invited from social housing providers, guaranteeing a certain number of homes at a particular price point, with competition between providers to pledge high numbers, before contracts are put in place between housing providers and industry, and between housing providers and their tenants.

The French team are focusing on formalising stakeholders’ commitments to engage through written conditional agreements, using a co-construction process through a series of workshops to define the necessary conditions. The conditions identified will highlight barriers that should be removed to enable market development, enabling prioritisation of the regulation changes to pursue from government. The aim is to secure signatures for the first conditional agreements during the 2017 HLM Congress in Strasbourg in September 2017.

Key Learnings

The key learning points from the day were that appropriate valuation and access to cheaper finance will be important enablers.

Actions

All involved found the workshop to be a very useful opportunity to share different ideas, approaches and experiences and to inform the action plans for the Market Development Teams. The learnings from the workshop will be used to feed into upcoming deliverables for the project.