MEGS-KT Lecture 2 Chris Newman Parity Projects 24th October 2012

Parity Projects
Green Deal Bits and Bobs
A “Conduit” for SMEs
24th October 2012

www.parityprojects.com

Me


Who we are

• Assessment of Individual Dwellings (HEM)
• Assessment of Stocks of Dwellings (CROHM)
• Specification of Measures (Wall Scheme)
• Training Services
• Building Monitoring
• Project Management
• Consultancy


home energy m a s t e r p l a n


 Section 2 – Current Energy Use


 Section 3 – Measures Evaluated


 Section 4 – Bespoke
Combinations
No Brainer - usually set to include cheap measures with quick paybacks
„you’d be silly not to‟

Some Consideration - slightly more expensive or longer paybacks
„probably worth it for your budget but have a talk with others who will be footing
the bill too‟

Green Halo - slightly more expensive or longer paybacks
„ideally I’d like to spend £20,000 over 10 years with a overall payback of 30 years
or below‟


 Section 4 – Bespoke
Combinations


 Section 6 – Detailed Analysis


CROHM


Fuel Poverty Assessment

% in fuel
poverty

Improved Dwelling SAP

Wall Scheme
Training

Specifications

Quoting and Ordering

Discounts

ECO

Insurance


Building Monitoring


Green Deal
• Measures for homeowners/ residents/ landlords/
businesses with some of the costs paid for by finance
and a charge against the property‟s electricity meter

• Amount of finance available is determined by Golden
Rule taking into account payback, standard use, in
use factors, lifetime of measure

• ECO
• Carbon Saving Obligation (£760m pa)
• Carbon Saving Communities (£190m pa)
• Affordable Warmth obligation (£350m pa)


The Green Deal: a new approach to
financing and delivering retrofit...
Lifestyle „safety net‟

Assessment Costs
Loan Administration Costs
repayment
7% APR

Energy Bill
Reduction

Owner 1 before Owner 1 after
work work

RHI and Feed in Tariffs
Are applicable but:
• Revenues cannot be used as Green Deal savings
in calculations
• House eligibility criteria will stand


Conduit
• Lip service to SMEs being part of the Green
Deal
- the „market‟ led approach isn‟t kind to SMEs
- lots of big players expected to be involved
- a race to the bottom?
- Corporate GDP expected to want to control whole
process
- Barriers to entry are high – not least knowledge
about the barriers, complexity and bureaucracy
• SMEs could even lose current market share


• Will increase the overall size of the retrofit market

• Emphasis on “whole house” solutions

SMEs both excited and concerned by the prospect

Conduit aims to help SMEs work together to get involved
in the Green Deal and shadow Green Deal


Conduit Partners

Federation of Master Builders (FMB) National Federation of Builders (NFB)

Building and Engineering Services
Federation of Small Businesses (FSB)
(B&ES) (formerly HVCA)

The Electrical Contractors' Association
Institute for Sustainability (IfS)
(ECA)

Royal Institute of British Architects British Institute for Interior Design
(RIBA) (BIID)

Royal Institute of Chartered Surveyors
The Renewables Sector
(RICS)


SME Functions in retrofit
Energy Advice “gateway” Providing locally relevant
advice and signposting to customers
Home Assessment The Green Deal Adviser
Additional Surveys Detailed measurement, etc
Design coordination/PM An essential role in good, whole house
retrofit
Installation Services General works or specialist
installations
Check/Audit Installations Working for alongside Providers,
Building Control etc
Training and Accreditation Helping to „upskill‟ the nation‟s
workforce


How do SMEs What are the barriers Conduit?
currently fit? to entry?

• They will be at the end of • Maintaining leads will be • Needs scale - minimum
the supply chain. tricky size?
• Present at key trigger • Very complex scheme • To what degree to we
points but little motivation • What are the new skills automate the process
to mention GD required? Training? • Maintain face-to-face
• Traditional procurement • No money to mange the contact and keep cost
route. process? down.
• Could sell in leads to • Marketing costs • Got to be a good brand.
others? • Liabilities will flow • Maintain independence
• PV – D-rating downhill? in the market.
requirements • Payment terms – 90 • Trade associations as a
days? provider.
• Cash flow risk. • Needs „critical mass‟
• F.I.T. is in constant flux
• Multi-skilling is expensive


Why we need a Conduit
A strong presence for SMEs in the energy-focussed
refurbishment market is desirable for many reasons:

1. Homeowners will desire more than just a choice of high
street brands.
2. Local businesses are often preferred and trusted, and
deliver higher quality
3. SMEs key to realising trigger points for take-up
4. Will broaden the economic benefits of the scheme
5. SME must be able to protect their existing market

If there is no deliberate effort by SMEs to access the GD,
homeowners and businesses and will lose out.


Different GD Delivery Models


Where does the Conduit fit in?


Key Principles/Aims
• Offers SMEs a clear and consistent route to gaining/retaining
work, allowing them to compete with large Providers (both
bottom-up and top down)
• Offers customers (households & other organisations) a
recognisable brand
• Provides an appropriate level of support to members
• Reduces costs through economies of scale
• Maintains a high quality of workmanship and service
• Interacts in collaboration with other industry initiatives which
seek to support SMEs
• Is also relevant outside the Green Deal


Broad Model – Top Down

Customers Loan Provider

Green Deal Provider

GD SME Conduit

Assessors Installers


Broad Model – Bottom Up

Customers Loan Provider

Green Deal Provider

GD SME Conduit



Broad Model – Bottom Up (2)
Customers Loan Provider Loan Provider Loan Provider

Green Deal Green Deal Green Deal
Provider Provider Provider

GD SME Conduit



Key issues already “decided”
• It is a „Cooperative‟
• Three membership types:
• Industry Groups
• Lead-finders
• Practioners
• It will be not-for-profit : members will be for-profit
• Homeowners pay for an assessment and get a refund
• The software „machinery‟:
• Pre-pricing of works (where possible)
• Automated tendering and contract
• Simple recording of progress and completion
• Quicker payment
• Potential for interim payments to be made

Key issues to be resolved
• The financial model – the Conduit needs to pay for itself (!)
• Charge members through the process BUT
• Return surpluses (profit)
• Preferred financial model:
• Membership fee (not annual)
• Leads fed into the Conduit
• Access to quotation
• Management charge at end


Key issues to be resolved
• To what extent GDPs will want to engage
• Liabilities and quality assurance in the chain
• How to assign leads / divide work fairly / transparently
• The name!
• APPRENTICES – direct employment


Next Steps
Key milestones
1. Funding for setup
2. Public announcement (early July)
3. Completion of initial legal advice (late July)
4. Completion of initial business case (late July)
5. Funding for setup (December)

On-going
1. Dealing with enquiries from SMEs through the website
2. Discussions with potential Provider partners (inc. LAs)
3. Discussions with funders - £200,000


MEGS-KT Lecture 2 Chris Newman Parity Projects 24th October 2012

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