Unlocking the retrofit revolution

by Blog

Our new PowerShaper Tracker tool, developed for the Innovate UK funded OpenEnEffs (Open Energy Efficiency Savings) project, hopes to assist financial institutions and other stakeholders including DNOs, retrofit providers and Government programmes to invest in the decarbonisation of our housing stock.

Retrofit will be a vital tool in alleviating the cost of living crisis and meeting our climate targets. But with 27 million UK homes to retrofit by 2050 – equating to 1.8 homes every minute – we will need to upscale our efforts.

One of the biggest barriers to this is consumer access to upfront capital. Conducting a ‘deep’ retrofit on the average home can cost in the region of £45,000 and £50,000, far outside the budget of the majority of households. But upfront capital costs lead to long term savings over time, in terms of avoided fuel bills, as well as other non-financial benefits like improved health and more green jobs. 

Worker drilling wood

We will therefore need billions in investment, and lenders need to assess risk when stumping up that capital.

At the moment, the results of the billions of pounds of investment that is going into retrofit, for example in public schemes like the Social Housing Decarbonisation Programme, are more or less guessed. Retrofit providers use a mix of models, assumptions and idealised past data to provide a ‘best guess’ as to how well the schemes have performed. They rarely if ever use real data from smart meters or from energy bills.

These schemes benefit from public funding, so there is a degree of tolerance to a lack of accuracy in understanding their impact. But when it comes to the private investors that lend to owner occupiers and landlords, that level of guessing means that lenders don’t know how to accurately price the risk associated with the loan (i.e. the interest rate) and ultimately lending does not take place.

Giving financial institutions confidence to invest

Open Energy Efficiency Savings (PowerShaper Tracker) is a project we’re running which adapts the existing US open source CalTRACK methodology for quantifying avoided energy use, by combining smart meter data, weather feeds and information on energy efficiency interventions.

Two people analyse possible home energy efficiency measures

The PowerShaper Tracker software will be used to track the impact of retrofit measures over time, drawing in additional data inputs from other Carbon Coop services in order to tackle some perennial issues, such as accurately quantifying and removing non-heating loads (such as electric vehicles) from the core data set.

This approach benefits from using actual performance data from smart meters rather than idealised models and guess work. The increasing prevalence of smart meter data means this approach is robust, cheap to roll out and transparent. 

Two children gaze at the City of London on the horizon

The second benefit is that PowerShaper Tracker uses an open standard, meaning anyone can interrogate and inspect the methodology that lies behind it and even suggest improvements and augmentations.

We believe open standards, adopted and mandated by government and regulators, will unlock new business models, providing financial institutions with the confidence to invest based on measurable long-term savings and the opening up additional revenue streams.

Empowering DNOs

As well as assisting financial institutions, this impact tracking will have implications for the broader retrofit sector. Most notably, we believe the tool will be incredibly useful for distribution network operators (DNOs) like Electricity North West.

DNOs ensure the safety and stability of electricity supply. It’s their job to ensure that customers are connected promptly to the grid, receive a high standard of customer service and contribute to the reduction of carbon emissions associated with electricity network supply and demand.

A substation

However their job is made more challenging by significant fluctuations in domestic demand. One way DNOs manage these spikes is to buy electricity demand reduction (i.e. retrofit measures) and/or demand side flexibility (‘flex’) shifting when energy is used from high demand periods to low. This means they can meet distribution needs without needing to reinforce the network, which can be a costly exercise, or without risking blackouts! 

If DNOs are buying this flexibility, they need intermediaries, known as aggregators (aggregating the demand of many householders), to be selling ‘flexibility’ and/or demand reduction and this sale needs to be fairly and independently verified so that everyone agrees on the value of what has been supplied.

That’s where OpenEffs comes in! A simple, cost effective and importantly open means of verifying the flexibility and demand reduction purchased by DNOs and something quite different to anything available at the moment. 

A vital tool for Retrofit Evaluators

We also think this tool will be incredinly helpful for Retrofit Evaluators. A Retrofit Evaluator, as set out in retrofit standard PAS2035, assesses whether intended outcomes defined at the start of a retrofit project have been fulfilled by completion. 

A Home Retrofit Assessor carrying out a home assessment

They are ultimately selling a service to clients, demonstrating the degree to which these intended outcomes have been achieved. 

A Retrofit Evaluator’s customers range from retrofit funders, i.e. government programmes; to retrofit clients such as housing associations and local authorities; to retrofit providers such as managing agents, contractors and intermediaries such as One Stop Shops. These are all intermediaries who in some shape or form deliver retrofit.  

From the work we’ve done, we know clients and funders are willing to pay for a service like PowerShaper Tracker, as it demonstrates how effective their investment in retrofit will have been. On that basis we believe PowerShaper Tracker methodology and PowerShaper Tracker will prove a vital tool for Retrofit Evaluators in demonstrating the investability of retrofit.

Helping householders

Last but not least, the tool PowerShaper Tracker will be hugely useful for householders who have engaged in a retrofit via a contractor or intermediary, or done it themselves, and are curious about the impact. Has it saved them money on bills? Was it a good investment? Has the work helped tackle climate change, and if so by how much? 

Two people stood outside a home

What’s next for PowerShaper Tracker?

While we’re laying the foundations for further development and adoption of such a tool, we’re also identifying some of the obstacles we’ll need to overcome. These include: 

  • How these methodologies and tools fit or challenge existing evaluation frameworks and approaches (such as the use of deemed savings), particularly in large scale scheme delivery – how might processes and working practices need to change?
  • The skills and expertise needed to interpret outputs and communicate results to end users, avoiding misinterpretation and giving confidence in savings delivered.
  • Understanding the level of accuracy in estimating savings over different timescales, and the suitability of these when looking at individual homes. 
  • Emerging frameworks for delivering and verifying flexibility, including the role of network operators, the market, policy and regulatory landscape. 

We’ll be coming back to this subject as our work progresses so look out for further updates.