A raft of energy efficiency and green financing pilots have won funding in a bid to upgrade the UK’s housing stock.
Schemes backed include Perenna Bank’s pilot which will reward homeowners who upgrade their houses with mortgage rate cuts. The bank has received £193,000 in government funding to help develop their long-term, fixed-rate mortgage that will incentivise customers to make their homes more energy efficient by offering to reduce their mortgage rate.
Another trial, led by Ashman Bank, will see buy-to-let landlords add the cost of making properties more energy efficient onto their mortgage – enabling them to borrow the money for the improvements and include it in their monthly repayments. The need to upgrade the UK’s large number of rented properties has become a thorny issue, with the UK government repeatedly delaying publication of its plans for Private Rented Sector Minimum Energy Efficiency Standards.
Meanwhile, an Eon-lead consortium has won £196,921 to develop and pilot two innovative green finance products that enable home energy efficiency and low-carbon heating.
The first product offers customers Heat as a Service (Haas) and removes the upfront costs associated with installing, operating, and repairing low carbon heating solutions such as heat pumps. Initial costs would be covered by a financial provider and paid back by the consumer over an agreed long-term period.
The second product being developed by the consortium – which also includes Energy Systems Catapult and Heatio – will examine how the pairing of power purchasing agreements (PPAs) and innovative grid services can remove the upfront costs faced by consumers when considering a heat pump, solar PV, or battery storage, while simultaneously lowering the household’s energy costs by integrating preferential energy tariffs.
Both the HaaS product and the Energy as a Service (EaaS) offering aim to spread the cost of low carbon energy and heating solutions over a significant contract period to deliver savings for consumers.
Energy Systems Catapult business Leader – homes Becky Sweeney said: “Our work with E.ON and Heatio has the potential to reshape the UK’s approach to green finance. We need to convince consumers that decarbonisation can work for them, rather than being imposed on them. If we don’t get this right, we won’t get their buy-in.
“The rollout and adoption of HaaS and EaaS models can help change this view, by deferring the up-front capital costs associated with low carbon heat and energy solutions – barriers which often convince consumers that decarbonisation is out of reach for them. Innovative services can also help to streamline the process for consumers. This will go a long way in convincing homeowners to make the switch to alternative heat and energy sources.”
Michael Lewis, Eon chief executive, added: “Energy efficiency makes people’s homes more comfortable, it cuts energy costs, grows the economy, reduces our reliance on imported fossil fuels and it contributes to net-zero on a sustainable basis.
“When it comes to more efficient heating the task we’ve been set is a 20-fold increase in heat pump installations to 600,000 a year by 2028. To achieve that we need to inspire significant consumer demand through stronger, simpler and more specific policies: greater guidance to homeowners, longer term access to grants, and new building regulations so all new properties are built to net zero standards.”
Concerns about achieving the 600,000 installations target were raised by senior industry figures at Utility Week Live earlier this week, with a Department for Energy Security & Net Zero (DESNZ) official admitting that the current “numbers are not good”.
The projects have been supported by the through DESNZ’s Net Zero Innovation Portfolio, as part of the department’s Green Home Finance Accelerator.
In total, £4.1 million of government funding has been released to 26 projects (see full list below).
Minister for energy efficiency and green finance Lord Callanan said: “The government has put in place long-term commitments to ensure homes across the country have greater energy efficiency to reduce bills, drive down energy use and lower emissions.
“We are supporting these organisations to develop fresh and innovative ways of helping more people get better access to energy efficiency measures, such as loft insulation, double glazing and heat pumps.”
Winners in full:
- Aceleron will receive £199,697 to trial an Energy Storage as a Service subscription model for the provision and maintenance of lithium-ion batteries.
- Arctica Partners will receive £169,210 to investigate a carbon credits financial product which will support home retrofit.
- Arniston will receive £170,870 to develop a prototype version of the Green Home Hub to guide customers on the journey from initial enquiry, to developing a retrofit plan, funding the work, engaging with installers and monitoring the results.
- Ashman Bank will receive £200,000 to design and develop a new variant of buy-to-let to be known as Impact Buy to Let (IBTL), which will be underpinned by an assessment of the retrofit works needed to enhance the energy efficiency of a property.
- Aviva Equity Release UK will receive £87,612 to design an equity release proposition, targeted as a cost-effective way of funding home improvements to improve the energy efficiency and the EPC rating of customers’ homes.
- Bankers without Boundaries will receive £99,241 to explore the design of a service which will display homes on a geographic heatmap, highlighting where energy saving returns from retrofits are economically sufficient to support individual consumer investment or how whole areas could be aggregated for a blended return.
- Chameleon Technology (UK) will receive £155,692 to develop a complete solution which enables homeowners to accurately assess their home energy efficiency and offers a tailored loan product to meet their retrofit needs.
- City Science Corporation will receive £199,916 to explore ways to provide buy-to-let landlords with a comprehensive solution for upgrading their properties. They have also secured £199,330 to provide, through research and analysis, a clear understanding of the legal and commercial challenges facing the Heat as a Service (HaaS) industry and offer practical solutions to enable the delivery of HaaS in the UK.
- Clydesdale Bank (trading as Virgin Money) will receive £171,000 to remove the upfront cost barrier to installing retrofit measures facing the ‘able to pay’ market, as well as providing robust technical guidance on appropriate energy efficiency improvement measures to consumers.
- Cybermoor Services will receive £56,344 to develop an integrated solution targeting the barriers impacting the uptake of low-carbon heating within the harder-to-reach rural domestic market.
- Eon Energy Solutions will receive £196,921 to develop and pilot innovative green finance products that enable home energy efficiency, low-carbon heating and potentially micro-generation improvements.
- ELPS Energy will receive £199,597 to develop an integrated one-stop-shop solution for residential retrofit financing.
- Energy Saving Trust Enterprises will receive £193,674 to explore a Pathways to Green Finance service aimed at the private rented sector (PRS) looking to retrofit homes.
- Escrow-Tech will receive £159,040 to create an innovative approach to green home financing as it utilises the potential (or projected) offset carbon from retrofitting activities in adjusting loan rate settings for homeowners thus reducing the cost of home retrofitting.
- Heat Scheme will receive £116,238 to develop a UK-wide green home finance loan product, for use in bridging the gap between the upfront cost of a gas boiler replacement and the net cost of a heat pump installation after applying a £5,000 Boiler Upgrade Scheme grant.
- Kamma will receive £200,000 to drive energy efficiency retrofit upgrades in UK properties by developing an online, end-to-end retrofit marketplace connecting homeowners, green finance providers and retrofit installers.
- Landslide Energy will receive £126,110 to shorten retrofit payback periods for homeowners who are looking to remortgage and living in properties with an Energy Performance Certificate (EPC) rating of D or lower.
- Leeds City Council will receive £194,780 to develop a one-stop-shop (OSS) delivery vehicle to create and test green finance retrofit offers.
- Parity Projects will receive £165,589 to investigate the potential for a sustainable retrofit one-stop-shop that meets homeowner needs and overcomes barriers in the current retrofit journey.
- People Powered Retrofit will receive £120,911 to develop a mutual, local and trusted one-stop-shop approach to retrofit, combining quality assurance, financing and verification, and setting out replication plans to take advantage of the extensive network of UK Credit Unions.
- Perenna Bank will receive £193,350 to bring to market a long-term, fixed-rate green mortgage that incentivises homeowners to retrofit by offering to reduce their mortgage rate.
- Phoenix Group Management Services will receive £102,249 to explore a solution to enable older, less-affluent, homeowners make decarbonising home improvements through using lifetime mortgages.
- Scroll Finance will receive £136,572 to develop a point-of-sale financing technology solution to be deployed for retrofit decarbonisation projects. They have also been awarded £158,608 to scope, design and test an end-to-end retrofit journey embedded with an innovative and flexible financial product in three pilot areas.
- Sunsave Group will receive £196,395 to research the roadblocks that remain for subscription solar PV and to develop a proposition that can be brought to market and rapidly scaled.