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Director’s Opinion – Opportunities arising from the government’s clean growth strategy

In this blog post, Toby Costin, CEO of Social Power Partnerships (SPP) gives a brief summary of the recent government white paper about the UK’s clean growth strategy and highlights how the policies outlined might impact his company.

SPP works with Social Housing, Charities and Community Energy Groups to find sustainable energy solutions.  350 PPM are currently raising money for SPP, helping them in their pioneering work with the use of prepay solar PV and nanotechnology insulation.    Please contact us if you would like further information.

The Clean Growth Strategy White Paper

In October 2017 the Government published its latest plan for the UK’s pathway to a low carbon Future. The paper was called The Clean Growth Strategy. It highlighted fours areas where its believes policy can help improve efficiency.

  • Accelerating clean growth
  • Improving business and industry efficiency
  • Improve UK homes
  • Accelerating the shift to low carbon transport

Business and Industry, Homes and Transport account for 62% of UK emissions. Chart 1 shows the breakdown of UK emissions by sectors as of 2015.

Accelerating growth

  • Setting up a green finance task force to provide recommendations for delivery of public and private investment.
  • Developing a set of voluntary green and sustainable finance management standards.
  • Providing £20m to support a new clean technology early state investment fund.
  • Working with mortgage lenders to develop green mortgage products.

Improving the business and industry efficiency

  • Target to improve business energy productivity at least 20% by 2030.
  • Improve the energy-efficiency for new and existing commercial buildings.
  • Raise the minimum standards of energy efficiency for rented commercial buildings.
  • Simplify the requirement for business to measure reporting on energy use, to help them to identify where they can cut bills.
  • Establish an industrial energy efficiency scheme.
  • Demonstrate international leadership in carbon capture usage and storage.
  • Phase-out the use of high carbon forms of heating on new and existing off gas grid buildings.
  • Support the recycling of heat produced in industrial processes.
  • Innovation: Invest £162 million in research in innovation in energy, resource and process efficiency.

Improving UK homes

Energy Efficiency

  • £3.6 billion of investment to upgrade around 1 million homes through the Energy Company Obligation (ECO).
  • Fuel poor homes to have an Energy Performance Certificate (EPC) band C by 2030 and all other homes to achieve band C by 2035.
  • Target to improve the EPC of privately rented homes to band C by 2030.
  • Offer all homes a smart meter by 2020.

Low carbon heating

  • Extend heat networks across the country, underpinned with public funding out to 2021.
  • Phase-out high carbon fossil fuel heating of off gas grid properties during the 2020s.
  • Improve standards of the 1.2 million boilers installed every year.
  • Invest in low carbon heating, spending £4.5bn to support innovative low carbon heat technologies in homes and businesses between 2016 and 2021.
  • Innovation: invest £184 million of public funds into innovation program to develop new energy heating technology is unable lower cost carbon homes.

Accelerating the shift to low carbon transport

  • End the sale of petrol and diesel cars by 2040.
  • Spend £1 billion supporting the take up of ultra low emissions vehicles.
  • Invest £80 million in charging infrastructure deployment.
  • New powers allowing the Government to set requirements for the provision of charging points.
  • Provide £50m to finance plug-in taxi programs
  • Provide £100m to support retrofitting and new low emission buses.
  • Work with industry to accelerate the transition to zero emission vehicles.
  • Invest £1.2 billion to make cycling and walking the natural choice for shorter journeys.

Further measures

  • Policy around future agricultural support, new network of forests, work towards an ambition for zero avoidable waste and a new resource and waste strategy.
  • Introduce public sector targets of 30% reduction in carbon emissions by 2021.
  • Introduce Green Great Britain week to promote clean growth.
  • Report annually on UK performance in delivering GDP growth and reduced emissions through an “Emissions Intensity Ratio”.

Opportunities for SPP

Grants

The government is investing £340 million in innovations funds focusing on energy efficiency and heat technologies.

SPP has agreed to partner with Wolverhampton University to apply for funding of trials and testing of Eco1 resin. Our objectives would be to have the product approved by the BBA and accepted by the BRE for EPC upgrades. We would also use funding to support application for Ofgem to approve the product for ECO budgets (£3.6bn to improve 1 million homes) and Capital Allowance Tax Relief (which allows businesses to offset energy efficiency investment against tax bills).

Business and Industry (B&I)

The Government will ramp up energy auditing in this sector to enlighten businesses in what can be achieved with these new technologies. It will also start to set building energy efficiency standards similar to what we already see in the domestic rented sector.

SPP is well placed to profit from these carrot and stick policies. Eco1 resin is a cost effective and adaptable product that can be used on hard to treat buildings.

Eco1 resin can also have an impact on improving industrial process efficiency, where processes need to be cooled or heated. Our up and coming trial with Wales and West is indication of what can be achieved in this sector.

Hydromx will also play a part in improving industrial efficiency, again in sectors where heating or cooling is core to the process.

Solar PV prepay will help businesses improve their EPC ratings and reduce their cost of energy, while mitigating credit risks.

SPP expects to sign a working agreement with Good Energy by mid November. We will develop electricity and gas tariffs together around solar prepay and Hydromx to the B&I sector.

UK Homes

The Government offered perhaps the most clarity in this sector.

It plans to press forward with the acceleration of raising EPC standards for rented homes. Its ambition is that all rented property will have to have a C rated EPC by 2030.

It has also started to float the idea of reduced stamp duty for homes that maximise their EPC potential. This would accelerate the link between property prices and homes’ energy performance. It would be no surprise if it penalised the worst performing homes with increased stamp duty.

The government remains behind its 2030 targets for renewable heat. This is reflected in its generosity to this sector in the white paper. Renewable heat incentive budgets have been increased and there is a large pot of money for innovation funding.

SPP is well positioned to take advantage of the spending that will be needed to improve the U.K.’s housing stock. Solar Prepay, Eco1 and Hydromx will have significant parts to play in achieving these targets. We see private landlords, as well as social landlords, as fertile sectors for us to target. We have already reached out to the Residential Landlords Association and the National Landlords Association about potential partnerships.

The Government’s stick and carrot approach to stamp duty and its promotion of green mortgages will start to correlate property prices of homes with their EPC ratings. This will make homeowners think differently about investing in technologies such as renewable generation and insulation. SPP has just made its first entry into the B2C market, with a collective solar PV scheme in Wandsworth. After the white paper we see this as an increasing sector for us.

Low carbon transport

The UK lags furthest behind its 2030 targets in transport. The Government’s bold statement on the abolition of petrol and diesel cars by 2040 is an indication that it means business. It is backing this up with a commitment to spend £1 billion in this sector.

Currently SPP does not have footing in this sector. What we do have is a customer base that will be a target for many of the Government’s policies.

Enforced provision of charge points and pressure for businesses to move to zero emissions transport will be aimed squarely at local authorities and residential social landlords. SPP will be well placed to broker deals between these groups and EV charging businesses.

Other Measures

The introduction of Green Great Britain week and an Emissions Intensity Ration, will raise the Country’s consciousness to renewable energy and energy efficiency.

This can only be good for Social Power and the rest of our sector.

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