Transparency data

Minutes of CFP meeting, March 2024

Updated 8 July 2024

Committee on Fuel Poverty (CFP) Meeting Minutes – 25th March, 2024

Members Present:

• Caroline Flint (Chair)
• Anu Singh
• Liz Bisset
• Anthony Pygram
• Gordon McGregor (online)
• Belinda Littleton

Invited guests in attendance:

• representatives from the Greater South East England Net Zero Hub
• representatives from the Midlands Net Zero Hub
• representatives from Nesta
• officials from the Department for Energy Security and Net Zero (DESNZ)

Agenda Item 1: Chair’s Welcome, Members Interests and Minutes of Last Meeting

The Chair welcomed members. No new member interests declared. Members cleared minutes from January 2024.

Agenda Item 2: Stakeholder Engagement

Caroline has agreed to join the Energy UK Vulnerability Commitment Advisory Board following clearance from DESNZ.

Agenda Item 3: Action Log

Members noted additions to the Action Log.

Agenda Item 4: Local Net Zero Hubs

Greater South East Net Zero Hub (GSENZ Hub)

Representatives from the GSENZ Hub provided an overview of the structure of the Hub, their remit and experience of working on energy efficiency schemes.

The GSENZ Hub sits within the Cambridgeshire and Peterborough combined authority and provides services such as funding and procurement on behalf of local authorities (LAs). In support of their retrofit delivery, the GSENZ Hub offers training, data analytics, and small funding for community events for LAs in their consortia. The hub has two delivery models for the current scheme, 1) turnkey provider and 2) managing agent delivery models.

GSENZ representatives described the challenges faced in delivering energy efficiency schemes. One challenge identified is that it was sometimes less profitable for suppliers to deliver under a government scheme, such as LAD2, compared to other contracts in part due to the level and cost of accreditation and also the procurement paperwork required. This has previously led to scheme suppliers dropping out which impacts delivery models.

LAs are keen to explore ‘place-based’ targeting approaches. U:Zero, for instance, is used to identify areas at high risk of fuel poverty using Artificial Intelligence (AI) and prepayment meter data. U:Zero is currently targetable at a lower layer super output area (around 300 homes) and is being used to identify areas for support under the Home Upgrade Grant 2 (HUG2) scheme.

Representatives provided an overview of GSENZ Hub’s Dynamic Purchasing System (DPS). The DPS had a slow uptake initially yet gradually gained more scheme suppliers. Supplier accreditation, and the ability to build local capacity has been key to LAD and subsequent retrofit scheme supply chain development. GSENZ Hub’s supply chain for LAD now has more suppliers than required for the HUG2 scheme, which is a turnaround from the low number experienced previously.

Targeting fuel poor homes remains a significant challenge with high associated costs. Representatives noted that they have found particular issues with the accuracy of off-gas EPC data.

Representatives noted that the cost cap of schemes sometimes prevented an effective ‘fabric first’ approach from being implemented. When a cost cap is too low it incentivises cheaper measures despite them not always being the appropriate measure for the household. Solar PV for instance is sometimes chosen above insulation measures.

Representatives introduced the Greater South East Training Network which is due to address skills gaps across the supply chain by collaborating with service commissioners and policy makers, engaging with employers and driving up awareness with careers professionals supporting the next generation of retrofit professionals.

Midlands Net Zero Hub

Representatives from the Midlands Net Zero (MNZ) Hub said all the Net Zero Hubs chose their own delivery models for LAD2. MNZ Hub asked their LAs what they needed and for examples of existing barriers. Key barriers identified included time to plan, procurement and customer journey support to successfully deliver schemes. MNZ Hub set up support functions to enable regional delivery for LAD 2 and then decided for future funding to submit regional funding bids and deliver schemes on behalf of their LAs. MNZ Hub provided a ‘critical friend’ approach asking constructive questions, supporting, and scrutinising LA project delivery plans to facilitate best practice.

The Committee asked if there was a budget available for ‘making good’ (restoring the condition of a property following measure installation). MNZ HUB representatives said there is a very limited budget available.

A further challenge noted by MNZ Hub is the capacity to support scheme suppliers to gaining PAS 2035 accreditation. MNZ Hub addressed this by establishing a Dynamic Purchasing System (DPS) for LAs to compliantly procure which continues to allow new entries. Improved LA comprehension of PAS2035 via a toolkit in collaboration with retrofit academy and providing resources for compliance.

MNZ Hub are delivering the Social Housing Decarbonisation Fund (SHDF) which allows SHDF suppliers to access their DPS. MNZ Hub have spent over 90% of the funding from wave 1 of SHDF demonstrating successful delivery, which has led to an increase in the number of consortium members in wave 2.1.

The Committee asked what demand horizon would be required to provide long-term, predictable demand for the supply chain.  MNZ Hub and GSENZ Hub representatives agreed that the longer the better, with about 10 years being the optimum.

MNZ Hub representatives noted the success of the Local Energy Advice Demonstrator in providing energy advice to ‘hard to reach’ households, stating the grassroots approach of the programme contributed to this.

The Committee asked if MNZ Hub are relying on legislation to enforce MEES regulations.  MNZ Hub said they provided grant funding to LAs to support LAs enforcement of Minimum Energy Efficiency Standards (MEES) regulations.

The CFP thanked the Hubs for their presentations.

Agenda Item 5: Nesta

Nesta representatives provided an overview of the Insulation Impact report.

The report claimed that switching heat sources is the most important action for domestic carbon reduction, and that because of their high efficiency, heat pumps are the most important technology for decarbonising homes.

Nesta representatives explained that currently electricity unit costs are approximately four times the price of gas, which means that heat pumps that have a high quality of installation are cheaper to run than gas boilers. Further reducing the gap between electricity and gas prices would enable average heat pump installations to be cheaper to run than boilers.

Nesta representatives said that heat pumps would ideally be installed before or at the same time as insulation, but that if householders install a heat pump first and upgrade their insulation later, this is not necessarily problematic. For example, upgrading insulation after installing a heat pump may mean that the heat pump is larger than it needs to be.

Nesta representatives said that ‘under-heating’ is a knock-on problem for fuel poor households which might be exacerbated by heat pumps.  Representatives said that estimates vary as to the cost of funding all homes in England to reach EPC C. For example, UK Finance estimates it will cost £271 billion.

Nesta representatives explained that external and internal wall insulation, and double glazing are prime examples of measures that are costlier per unit of carbon saved than heat pumps. Nesta representatives explained that they believe those who are not in fuel poverty should generally prioritise low-cost insulation measures. Nevertheless, there is a strong policy case for public funding to support the installation of higher cost measures, such as solid wall insulation, for those in fuel poverty.

Nesta representatives noted that increased data is required to better understand the performance of heat pumps. Nesta representatives noted that the carbon saving is directly proportional to the energy saving.

The Committee noted bill savings are not directly proportional to energy saving. Nesta representatives agreed that insulation should be prioritised for fuel poor homes. Nesta’s view is that both delivering insulation and heat pumps is required to reach net zero and support those in fuel poverty.

CF thanked Nesta for outlining their report findings.

Agenda Item 6: Fuel Poverty Strategy Review

DESNZ presented an update on the Fuel Poverty Strategy Review and stakeholder engagement.

Agenda Item 7: DESNZ Update

DESNZ gave an update of current fuel poverty schemes and priorities.

AOB

The next meeting will be held on 20 May 2024.