Federation Regional Interest Group Meeting

SW HAMMAR Seminar

Are your tenants ready for a £3K per annum energy bill?

Can you make your homes affordable to live in?

Steve Drew

Managing Director – Alliance Ventures

Thursday 17th July 2014

Background to a problem

0 10 20 30 40

Alcohol and Tobacoo

Clothing

Food

Furnishing

Housing & Utilities

Recreation and…

Restaurant

Transport

2030

2012

1963

Source:

ONS for 1963 and 2012, PwC projections for 2030

Historic and projected share of household spending

That problem might look like this…..

• Each of us paying £3-4K per annum in energy

bills, there’s the problem

£0

£1,000

£2,000

£3,000

£4,000

£5,000

£6,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Bill Size Bill Size with Additional Cost

Source: Ernst & Young

Is anything happening to reduce

or stop this?

• In truth, it’s a global problem

• UK Government -FiT -Eco -Carbon

• German policy, green for 30 years

• US Government – 30% carbon each state sorts it out

• China – uncertain

• Japan – No more nuclear power

• Spain – Electricity product from wind

THE UK

• We use three times the worlds average per head of

population

• Government plans to produce 30% UK electricity

from renewables by 2020 (currently at 12%)

• Only country in the EU to have a carbon reduction

plan

• Between 2007-2012 UK peak electrical demand

has fallen by 5%

• Policy delivered through the Green Deal??

UK Energy Gap

• Driven by closure of coal fire power

• Magnox nuclear closed by 2015

• Leading to 20% shortage of electricity by 2015

• Ofgem statement – “UK energy sector faces unprecedented challenges”

• Good news we are turning the corner and using less electricity

61GW in 2007 57GW in 2012

• In the UK we have some of the worst energy

performing stock in Europe (and some of the

best)

Alliance Homes, Weston-super-Mare Alliance Homes, Portishead

We probably should be doing

something..

• Three reasons:

Legislation

Rising cost of energy

Corporate & social responsibility

• One is good, the three together is great

In the News • At least one in six children lives in poverty (DWP)

• The proportion of working age adults in relative poverty is about one in

six – based on income before housing costs are paid (DWP)

• The Trussell Trust handed out food to more than 350,000 between

April & September in 2013

– Some people hand back food that requires cooking because they

cannot afford the energy to cook it

• The Red Cross has started asking for food donations for the first time

since World War Two

• Home affordability becoming a key point at

many boards

• Don’t be surprised if paying the rent is not a

high priority as keeping the play station

supplied with electricity

• People starting to have to make really difficult

choices

Social Housing has a problem

with it’s product

What can/should we look at?

• Real additional support for your business plans:

- PV

- EWI

- RHI

- Green Deal

• After 2020 DECC could legislate

PV case study

• Alliance Homes OJEU framework – 75,000

systems and £500m contract capacity

• Used by 20 landlords, 20 megawatt delivery

• Alliance Homes income £1.3m p.a for 25

years

• Tenants “best thing we have done for them”

• Really helped us having a supportive board

• Cost £300K to set up

• Be prepared to be nimble and prepared to

react to changes, they will always impact (EWI

example)

• Why not enjoy the learning, enjoy the work and

offer it to other landlords

Contd….

Value of Procurement at scale

• We will be told, price, maybe quality, maybe stability and wider market interest

• Our experience has been this and perhaps more: - Ability to negotiate price reductions - 6 times in 2 years - R&D input - Brand for business

The value of SMART procurement beyond

price

• Builds business relationships

• Sector profile/confidence

• Lets you do more, take a few more risks

• Helps you with your HCA submission

Next steps…

• Why not an energy supply company to tenants at

say 10p per KWH?

• Keep up to speed with technology developments

• What's current Government thinking? – stay

close to DECC

• Don’t ever forget why we are all doing this

- People, Planet & Law!

• Do you have a plan and what's’ your driver?

Technology

• We are drilling up to 8 miles into the earth now to extract oil.

• There are trillions of barrels left under the planets crust, we are not running out of oil……!

• UK producing 12% electricity from renewables' currently

A few thoughts to leave you with..

Intergovernmental panel or climate change?

• Climate change will persist for many centuries even if emissions of CO2 are stopped now.

• Each of the last 3 decades has been successively warmer at the earth surface than any proceeding decade. 1983-2012 likely the warmest 30 year period for 1400 years.

• Sea level rise 1901-2010 by 200mm

• Concentrations of CO2, methane & nitrous oxide have increased to levels unprecedented in the last 800,000 years

• Oceans have absorbed 30% of the emitted CO2 = Acidification

• Western lifestyles produce 12 tonnes, planet can cope with 3 tonnes

We have a choice