Now that there is more clarity on what exactly is coming out of the Green Homes Grant, I think it is worth sitting down and looking at exactly what is on offer, how it affects housing providers and what this says about the government’s outlook on carbon reduction strategies. The scheme, announced in August, is expected to continue into late 2021/early 2022. The gist of the strategy is to stimulate the green economy by providing funding towards specific measures throughout the UK and at the same time aiding the UK in its first steps towards 2050 Net-Zero targets. For private homes, the scheme is very specific. Homeowners in England are entitled to a voucher that covers up to 2/3 of the cost (to a maximum of £5000) of the installation of energy efficiency measures: solid wall, under-floor, cavity wall or roof Insulation, Ground Source or Air Source Heat Pumps or Solar Thermal systems. Households are allowed to have more than one primary measure. Furthermore, for some low-income households, this can be increased to £10,000. Additional funding equal to the primary value can also be claimed to help with Secondary Measures: double or triple glazing/secondary glazing, when replacing single glazing, upgrading to energy-efficient doors, hot water tank/appliance tank thermostats/heating controls. This has the potential for an additional £5000.
The 2/3 rule for the primary measure means that, unless you fall into the low-income category (less than £30k per year), every participant who would like to take advantage of the scheme will still be required to have the capital to pay for the other third and this may deter those just above the £30k a year mark who might otherwise be the most relevant for this as they are in the bracket of likely fuel poverty candidates. The work must also be undertaken by a tradesman or contractor registered with TrustMark, so DIY is out of the question, and the installation must be completed by March 2021.
The first tranche of funding was organised in August
The Green Homes Grant in total is worth £2billion. £500 million was given to councils for them to allocate it across the country. For Registered Providers of Social Housing, there are 2 separate rounds of funding - the first £200 million for local authorities was organised in September 2020 with the stipulation that works must again be completed by March 2021. The second is expected to arrive in 2021. The aim of this is to help low-income households - so a requirement for household incomes less than £30,000 a year is in place. A secondary requirement is the properties EPC rating must currently sit at an E or lower. This means that many social housing units are not eligible. The installation also has some caveats - it has to be done by a TrustMark accredited installer and with a limited supply of them, the installation prices are likely to rise for those organisations that do not have a DLO that is appropriately covered. There is hope that the further £300 million that is being made available to ‘Local Energy Hubs’ in England next year will fill some gaps but the details for that scheme have not yet been released.
The £50 million Social Housing Decarbonisation Fund
This fund was set up specifically to help social landlords make improvements to their stock to improve energy efficiency applying a whole-house retrofit approach that is compliant with PAS 2035. It is part of a wider government commitment to reach the Net-Zero carbon emissions targets for 2050. The initial phase of the scheme will see circa 2,200 social homes retrofitted to improve their energy efficiency and be used in a research study to evaluate what package measures are more effective both in cost and reducing energy demand. This allows better technologies to be adopted at scale in the future. The requirements on these are similar but slightly more lenient. Housing that takes part in the scheme must have a certificate rating of D or below and buildings over 18 meters height are excluded. Innovation is also a key factor, both from identification through to validation and measuring the comfort of the household. The bid process has now been launched and is open for Local Authorities or Combined Authorities to apply. The application deadline is 17:00 Thursday 12th November 2020 and awarded projects must start by December 2020 and complete by December 2021.
What this says about the Government's commitment to Net-Zero
The positive news is that this does show a government willing to directly assign resources to carbon reduction strategies but it isn’t all great news. Whilst it is a positive first step, there are two major problems with the current way of thinking. The first is that the administrative overheads for these projects are still too high. Take ECO (the Energy Company Obligation) as an example. This should a project that is a positive step towards improving the energy efficiency of the nation's housing stock but the administrative overheads end up putting more money into the firms that do the administration than into improving housing. This ultimately means that expensive measures - such as insulation and ventilation - are the only viable options when it comes to these programmes. Whilst the Green Homes Grant isn’t as bad in terms of administration, there still comes with it an administration cost. This reduces the likelihood of smaller but more widespread measures being used in these schemes because the costs make it unsustainable.
The second area of concern is the lack of investment in alternative energy sources. Air Source or Ground source heat pumps, solar energy and a whole host of other alternative heating methods, whilst initially expensive, are immediately carbon neutral. Relying not on the national grid but instead on individual properties to generate their own heating or power. Installing insulation and more efficient boilers are great first steps, but long-term thinking is needed if the government wants housing providers to be able to hit their Net-Zero targets. Ultimately the upside is that this is still a positive step in the right direction - not only helping reduce energy consumption but also giving an additional kickstart to employment and potentially opening up a new industry for those who may have been impacted with redundancies since the Covid-19 pandemic began.