Energy retrofits in community housing are tough, but there is a way
Poppy Johnston | 19 May 2020
There are many barriers to energy retrofits in the community housing sector – which needs them most – but here’s a thought: what about combining government funding with private impact-linked private capital to kickstart the economy post-Covid at the same time?
If we continue to rely on government grants to fund energy performance retrofits in community housing dwellings, it will take 36 years to kit out these homes with the basics such as rooftop solar and insulation.
BOOMPower director and co-founder Alex Houlston says that this is unacceptable when the most vulnerable people in our communities disproportionately feel the impacts of sky-high energy prices.
悦博体育赌场Houlston’s business, which provides a comprehensive software-as-a-service platform for managing solar, storage and energy efficiency projects, has produced a whitepaper alongside Community Housing Industry Association Victoria (CHIA Vic) and other partners, with support from the Lord Mayor’s Charitable foundation, to come up with ways to stimulate energy retrofits in the community housing sector.
A critical discovery, as compiled in the whitepaper provided exclusively to The Fifth Estate, has been that government can’t fund the $22,500 needed to retrofit each community housing dwelling in the country.
Instead of relying on “unreliable” government grants, subsidies and rebates that tend to fall victim to a change of government, Houlston says the sector needs to tap into private sector capital from impact investors and philanthropic organisations.
悦博体育赌场In the new whitepaper, a “blended” financing model is suggested, where private sector capital is combined with government funding.
“We needed to bring the cost of capital down, so, what if the government committed to no or low interest loans that was matched by philanthropic and impact funding?”
悦博体育赌场The trick to ensuring taxpayer’s money is used efficiently is linking this funding to “tangible and verifiable outcomes” that are is integral to the impact investment model.
This is where technologies such as low-cost metering technologies and energy project management software and come in.
悦博体育赌场A lot of work has gone into BOOMPower (which was initially funded by the , in collaboration with the Community Housing Industry Association Vic) that is essentially an end-to-end software platform for getting an energy project done from start to finish.
It integrates on-site energy assessments, automated business case reporting, competitive procurement, portfolio-wide analytics, and reporting and verification of the costs and benefits of energy solutions onto one platform. The idea is that using the platform is typically cheaper than engaging several parties for each of these different jobs.
悦博体育赌场According to Houlston, using a platform like this makes it easy to link finance with outcomes because performance is continuously measured.
But wait, what about the split-incentive problem?
悦博体育赌场The final piece of the puzzle is solving the split-incentive issue, which sees disproportionate financial benefits flow to the tenant rather than the owner though lower bills, leaving no incentive for the community housing operator to undertake retrofit work.
The split incentive issue blocks energy upgrades in any sector where there’s a tenant-landlord relationship but in the community sector this is exacerbated because community housing providers cannot legally charge more rent to recoup some of the savings.
Through much consultation with stakeholders, the whitepaper recommends establishing a third-party vehicle to implement and manage the energy projects.
The idea would be to have some kind of independent organisation charging tenants for some of the benefits outside of the usual rental structures.
Houlston imagines such an organisation to be self-sufficient and appoint an independent board that’s not reliant on budget bids or political support, with tenants likely represented as board members.
A post-Covid recovery lying in wait
The whitepaper also argues that residential energy retrofits, starting with the community housing sector where energy performance upgraded are needed most, make for ideal stimulus spending to “kick-start” the economy after the coronavirus shutdowns.
Not only does the help tackle big-ticket issues social inequity and climate change, this spending also creates a variety of jobs.
According to the whitepaper, the $2.7 million of solar, battery storage and airconditioning installed on Victorian community housing in 2019 underwrote almost 70 jobs, including project engineers, apprentices, HR professionals, marketers and more.
Appetite for change in community housing sector
It’s no secret that the most vulnerable among us disproportionately bear the brunt of high energy prices.
悦博体育赌场Not only do these people, who are more likely to be the unemployed or underemployed, spend more time at home with inefficient heating and cooling systems running, but they are disproportionately renters who don’t have the same access to energy performance improving upgrades such as rooftop solar or energy efficient appliances that home-owners do.
悦博体育赌场Houlston says that the energy retrofit revolution has “been a long time coming” in the community housing sector, with the most movement happening in Victoria and Western Australia at this point. However, the relevant parties have been in discussion with all state governments.
悦博体育赌场He also says the appetite is promising in philanthropic organisations and in impact investment.
Tags: community housing