MD2080 Energy Leap Project

1.1 We currently use more energy to heat and power our buildings in London than for anything else – buildings are responsible for nearly 80 per cent of London’s total emissions and the lion’s share of final energy use. Our domestic buildings are responsible for around 36 per cent of London’s total emissions.
1.2 London’s homes have been built and developed over hundreds of years, and their energy efficiency varies significantly. London needs to overcome multiple challenges in relation to domestic energy efficiency including age, type and tenure of homes, and the lack of investment and stable government policy framework. Testing out new ways of retrofitting is therefore vital.
1.3 The Mayor is delivering successful domestic energy efficiency programmes across the capital, including RE:NEW and the recently launched Better Boilers scheme. However, a quarter of London’s homes that have been given an Energy Performance Certificate since 2009, have the worst energy ratings of E, F or G and are therefore wasting a large proportion of their energy .
1.4 We therefore need to bring forward the next generation of retrofitting, test new methods of construction and technology that will demonstrate leadership to the rest of world, so they can follow suit. If we get it right, energy efficiency will be at the heart of London’s economy. By reducing energy use and cutting down on waste in London’s homes, we can reduce energy bills, protect the most vulnerable and improve occupant health, make our energy system more sustainable, regenerate communities, create jobs and drive down greenhouse gas emissions.
1.5 The Mayor’s consultation, A City for all Londoners, therefore sets out a plan to “develop new and innovative approaches to energy efficiency, starting with an early trial of net-zero-energy retrofitting of homes”.
1.6 This commitment will be delivered through the Energy Leap Project, and is expected to make London the first capital city in the world to replicate the innovative Dutch Energiesprong retrofitting approach. Energiesprong is a transformational approach to delivering ‘whole house’ retrofits without subsidy. It uses state-of-the-art methods of construction to bring homes to net zero energy levels within a week, and is funded by guaranteed energy savings over 30 years (the retrofit contractors providing energy savings guarantees). The approach also improves the look and feel of the home and brings greater awareness to home energy use. To date, nearly two thousand Energiesprong retrofits have been delivered in the Netherlands, mostly within the social housing sector, as part of an 111,000-home volume deal between housing associations and builders.
1.7 There is significant momentum across Europe and internationally for this initiative. In July 2015, leading social housing providers, construction companies, trade bodies and expert organisations came together to form Energiesprong UK, a profit-for-purpose organisation with the intention of creating a ‘game-changing’ refurbishment sector (and the UK branch of the European programme team). In June 2016, and with help from the GLA, the European Energiesprong team secured €5.4m of EU funding through the Interreg NWE programme to help scale Energiesprong retrofitting in the UK, France and the Netherlands, and to stimulate mass uptake of zero energy refurbishments. International cities such as New York are also seeking to implement the model.
1.8 The GLA has undertaken considerable work, exploring the approach over the past two years, successfully demonstrating national and international leadership, including holding the first Energiesprong summit in the UK. Last year the GLA completed a Carbon Neutral Cities Alliance (CNCA) grant-funded independent transferability assessment undertaken by Frontier Economics, Savills and University College London. In addition, the GLA has been actively participating in Energiesprong UK, engaging with social housing providers and boroughs (including through roundtables and analytical support provided through the RE:NEW programme), and sharing learnings and plans with C40 and the CNCA.
1.9 With several social housing providers and boroughs keen to provide properties and potential part-funding for a London trial, an offer of monitoring and evaluation support from Imperial College London, and a CNCA revenue grant to the GLA of $169,200, the provision of GLA capital match funding is being sought.
1.10 If proven to work within a London context and deployed at scale, the model could help transform our approach to retrofitting homes and regeneration, and help significantly reduce fuel poverty in the capital.
Rationale for a retrofitting trial in London
1.11 There is a strong case for delivering a small scale zero energy retrofitting trial in London:
• we need a step-change in the pace and scale of retrofitting. The Dutch Energiesprong approach – which this project will seek to replicate – is focussed on creating fully integrated market-driven volume-deals
• GLA’s 2016 London Energiesprong Transferability Assessment highlighted a number of key barriers and challenges that need to be overcome, to enable zero energy retrofitting to be rolled out at scale through Energy Leap
• the Energy Saving Trust estimates that in post-1950s two and three bedroom social housing in London there is the potential for up to 270,000 zero energy retrofits to be delivered (equal to a third of London’s total social housing stock)
• a trial will act as a first step to a large scale demonstrator, to deliver several hundred or thousand retrofits and overcome other key challenges including more complex building typologies and pepper-potting of leaseholders.
Proposed next steps
1.12 We have already undertaken considerable engagement with social housing providers and boroughs and there is enthusiasm for demonstrating Energy Leap in the capital. We now plan to hold further roundtables with social housing providers to discuss the project scope and timetable at the end of February and cement interest in partnering on the trial project. In parallel, we will continue to engage with boroughs. This engagement will help us get a better sense of the potential partners for the trial. We then plan to conduct a competitive application process to identify recipients of the GLA funding (applicants being required to provide match funding), which will be evaluated using objective criteria. The highest scoring applicants will be required to enter into and execute a funding agreement on the GLA’s standard funding terms before any commitment is made to provide GLA funding.
1.13 The final ten trial homes will be selected by the social housing provider or borough, in partnership with the GLA. Trial properties are likely to include terraced houses or purpose-built low-rise blocks of flats, with high levels of disrepair, and where fuel poverty is particularly acute.
1.14 Following the selection of the ten trial homes, an outcome-based invitation to tender, will be issued by the recipients of GLA funding for the retrofitting works, with the zero energy refurbishments completed by mid-December. The specification is likely to require that each retrofit involves
• a zero energy performance level, backed by an energy performance warranty
• quick delivery (the installation of the package should not require more than two weeks and allow occupants to continue living in the house for the greater part of the works)
• a home energy performance contract (tenant ‘energy plan’), replacing an energy bill
• a refurbishment package that is attractive to and accepted by the occupant(s). Social housing providers have been undertaking considerable engagement with tenants already, including through focus groups and surveys (which have shown significant appetite), to test the acceptability of the Energy Leap proposition to residents.
1.15 Concurrently, the GLA officers will be exploring with housing specialists how this solution can be applied to new build. A retrofit pilot makes a statement that if we can deliver zero energy refurbishments successfully; there is a much stronger argument for new build.

2.1 The key purpose of the Energy Leap Project will be to deliver the first ten zero energy retrofits in London. Each retrofit will demonstrate cutting edge building techniques, renewable technologies, and smart controls. The project will also enable London to:
a. develop the first home energy performance contract for a zero energy refurbishment in London
b. design successful large scale demonstrator projects involving thousands of retrofits
c. provide a template for how London’s energy efficiency market and supply chains should be (re)organised to deliver whole house retrofit solutions
d. evaluate the impact on social, environmental and economic factors through evaluation of the refurbishments (e.g. technical and financial performance, and impact on the health and wellbeing of tenants)
e. kick-start innovation and encourage solution providers to prepare for the future
f. provide rapid evidence to inform the way we approach new build.

3.1 The GLA will take appropriate steps to ensure that there are no potential negative impacts expected on those with protected characteristics. Those with protected characteristics will gain from the positive benefits of this scheme in equal measure should their homes be selected for trial, and there will be equality of access to participate in the delivery and benefit from the project, without discrimination. A further review will be undertaken if there is a wider roll out of the scheme following the outcomes of the trial.

3.2 The trial will comprise homes with high levels of disrepair and potentially fuel poverty. It is therefore expected that this scheme will have a positive impact on lower income and fuel poor households directly through the home refurbishments and support they will receive, and by catalysing greater awareness of energy use and the opportunities to reduce their consumption.

4. Other considerations

4.1 The key risks and issues for delivery of this project are set out in the table below:

7.1 The paper is seeking approval for capital funding of £450k as match-funding, to fund a trial of zero energy refurbishments to ten homes, with average cost per home retrofit being £75k-£80k. The budget for this project will form part of the 2017/18 GLA budget which will be agreed in March 2017. The remaining match-funding (up to £350k), will be met by housing providers and boroughs. The project has also secured $169.2k USD, (circa. £135.7k; FX $1.246USD, 08/02/17,UKForex), to cover Revenue expenditure associated with the project.

8.1 The foregoing sections of this report indicate that:
8.2 the decisions requested of the Mayor concern the exercise of the GLA’s general powers, falling within the GLA’s statutory powers to do such things considered to further or which are facilitative of, conducive or incidental to the improvement of the environment in Greater London: and
8.3 in formulating the proposals in respect of which a decision is ought officers have complied with the GLA’s related statutory duties to:
(a) pay due regard to the principle that there should be equality of opportunity for all people;
(b) consider how the proposals will promote the improvement of health of persons, health inequalities between persons and to contribute towards the achievement of sustainable development in the United Kingdom; and
(c) consult with appropriate bodies.
8.4 In taking the decisions requested, the director must have due regard to the Public Sector Equality Duty; namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advance equality of opportunity between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment) and persons who do not share it and foster good relations between persons who share a relevant protected characteristic and persons who do not share it (section 149 of the Equality Act 2010). To this end, the director should have particular regard to section 3 (above) of this report.
8.5 Officers have indicated in sections 1 and 2 (above) of this report that that the proposed contribution of up to £450,000 amounts to the provision of grant funding and not payment for services. Officers must ensure that:
8.6 the funding is distributed fairly, transparently, in accordance with the GLA’s equalities and in manner which affords value for money in accordance with the Contracts and Funding Code; and
8.7 appropriate funding documentation is put in place between the GLA and recipients of such funding before any commitment to fund is made.
8.8 Officers must also ensure that:
8.9 they are content that the GLA is able to comply with any conditions of the CNCA funding and a legally binding commitment to CNCA’s provision of such funding is in place before the GLA places any reliance upon the same;
8.10 any services necessary for the delivery of the trial are procured by Transport for London who will determine the detail of the procurement strategy to be adopted in accordance with the GLA’s Contracts and Funding Code; and
8.11 that appropriate contract documentation is put in place and signed by the GLA and any such suppliers before the commencement of the provision of such services required.