Harnessing the power of the energy agency to address energy poverty in a ‘net zero’ world

By Dr Simone LOWTHE-THOMAS at Severn Wye Energy Agency, Chair of the National Lottery Community Fund in Wales and FEDARENE Vice-President for Citizen Energy Communities

When Severn Wye was established in 1999 as a SAVE energy agency, it was – at least in part – with the aim of bringing into reality a future free from energy poverty in our corner of the United Kingdom. Twenty-two years on, our commitment to this goal remains steadfast – but rather than being consigned to history, energy poverty stubbornly remains a very real problem that just changes in nature as the years roll on.

The last twenty years have seen steady ‘progress’ – with slightly reduced energy poverty in the South West of England, where Severn Wye work. But the modest progress we see in the region always feels under threat. We’re only ever one cold winter, pandemic or gas-price rise away from reversing the progress of the last couple of decades and seeing energy poverty numbers rise once again.

For this reason, integrating specialist energy poverty support with local services, communities and supply chains remains absolutely crucial to meet needs urgently and skilfully. A decade following the end of the SAVE programme, here’s why I’m convinced that the energy agency model remains as relevant as ever in tackling energy poverty,

Energy poverty in England, and how the landscape has changed over the last year

In February 2021, the UK Government released a new strategy for addressing energy poverty in the England, the Sustainable Warmth Strategy. Born out of a 2019 government consultation, the strategy features considerable changes to its predecessor that will have a significant impact on the landscape of energy poverty in the UK, not least how energy poverty itself is measured.

The Fuel Poverty metric for England (the method through which energy poverty is calculated) has been updated to place a greater focus on the energy efficiency rating of the house itself, meaning that to be classified as living in energy poverty, the building must have an EPC of Band C or below. This is a significant shift from the previous metric which used a Low Income/High-Cost calculation.

Other highlights from the Sustainable Warmth Strategy include the removal of various state-provided benefits from the understanding of residual income that’s used in calculating household circumstances and a move away from using first-time fossil fuel central heating as a way of addressing energy poverty, acknowledging that it can no longer be considered a sustainable option against the backdrop of net zero. Beyond this, there’s also a commitment for grant schemes to be provided on a ‘worst-first’ basis, whereby the improvement of England’s least efficient homes is tackled first. These grants can be used in a ‘mix and match’ fashion, expanding the support available and improving the timeliness of this support too.

So, what do all these changes mean for consumers who may be experiencing energy poverty? On the one hand there are some positives that will offer greater support to some of the most vulnerable in society. Health-related welfare benefits for example, often artificially inflate a vulnerable person’s income and so prevent them from accessing energy poverty support – when they are exactly the residents who require this support the most.

In terms of the approach to grants outlined in the strategy, the ‘mix and match’ approach is promising and has always been one of the strongest contributions our home energy advice teams has been able to make in addressing energy poverty. Navigating a complex range of schemes with varying eligibility criteria that change across county borders can be a minefield however, which is where local energy agencies like Severn Wye come in to support consumers to make the most of the schemes available. We’ve been doing it successfully for twenty years, after all.

Despite some of the positives however, the Sustainable Warmth Strategy does raise some issues that could be cause for concern. In particular, the changes to the fuel poverty metric (the shift from Low Income/High-Cost to Low Income/Low Energy Efficiency) signals the policy shift that will have the biggest impact on consumers and the work that we do. Under the new metric, a household will be considered energy poor if their income (after fuel costs) is below the poverty line and they live in a property with an EPC rating of C or below. At first glance this may appear a reasonable way of linking energy poverty to energy efficiency, championing retrofit and an understanding of how the buildings in which people live contribute to energy poverty. But this isn’t the full story.

Firstly, there are large gaps in EPC data which means that many households may not have a rating to base an assessment of energy poverty on, particularly for long-term homeowners or tenants of the same property. But perhaps more alarmingly – especially given recent events – by shifting the metric from cost to energy efficiency, the focus has been taken away from energy prices. As the rapid increase of wholesale gas prices continues this winter, it’s easy to see how more consumers than ever could soon find their energy bills become unaffordable. But as these price increases and market fluctuations don’t impact on the new metric, we may find it difficult to use it to identify those in energy poverty and address their needs.

We have always delivered a home energy advice service at Severn Wye, staffed by experienced and knowledgeable telephone advisors who are able to instruct and educate householders about how to use energy more efficiently, signposting to grant support where available. But in recent years we have strengthened this further by developing a unique and innovative ‘energy advocacy’ service that has proven extremely timely.

Energy Advocates work as ‘case workers’ with energy poor households, taking time to understand their personal circumstances, the challenges they face that lead to their energy poverty and the obstacles they need to address to overcome it. Advocates have negotiated with energy providers on the behalf of residents, agreed debt reductions and repayment plans, and spent long hours helping householders restore confidence in their home energy and overcome energy poverty despite chaotic circumstances. The Energy Advocate programme has reminded us time and again that energy poverty is a lived human experience. Often a lonely, isolating one. And it requires a human approach and a willingness to work closely with a person to advocate for them, stand with them and put the time and effort in to help them out of it.

The Committee on Fuel Poverty (an advisory Non-Departmental Public Body) released their annual report in October 2021, which highlights further challenges that lie at the point where the rising cost of living, the removal of COVID-related financial support and the demands of climate change commitments meet. The report identifies that one of the fundamental issues in addressing the energy poverty that is compounded by these challenges is identifying where support is needed and directing it towards energy poor households effectively. I can’t help but feel that the local energy agency model which Severn Wye is built on is (and has proven to be) the perfect way of addressing that issue.

The impact of net zero ambitions on energy poverty

Amongst the other shifting sands of the energy agency landscape is the growing focus on addressing climate change and reducing our household carbon footprints. In England and Wales, we have some of the most inefficient housing stock in Europe – so improving domestic energy efficiency and reducing environmental impacts is a serious challenge.

In October, the UK Government released its Net Zero Strategy ahead of the COP26 Climate Change Conference. It promises huge changes across almost every industry, and outlines the importance of delivering widespread retrofit to address inefficient housing stock.

Alongside these net zero ambitions, recent years have seen something of a revolution in the retrofit sector. New retrofit standards have been established that have introduced significant changes to the way domestic retrofit is approached in the UK. After decades of funding piecemeal, single-measure retrofit projects – the ‘PAS’ (Publicly Accessible Standards) introduce a medium-to-long term plan, a whole-house approach and net-zero-by-2050 requirements to all compliant retrofit projects.

This is a gamechanger. It raises the standards expected of energy retrofit projects and requires high quality work is delivered throughout the process. Crucially, publicly-funded retrofit projects will now require this certification, ensuring that public money is spent only on the highest quality work. This ‘PAS 2035’ standard goes beyond existing domestic energy assessments such as EPCs, building in elements such as ventilation, building use, occupancy, condition, maintenance needs and – crucially for serving those in energy poverty – a pre- and post-install householder engagement process that educates the occupant on all the changes occurring as part of the retrofit, ensuring that the resident can manage their new home energy system confidently and efficiently.

This is where Severn Wye – and local energy agencies in general – are perfectly positioned. Householder engagement needs local knowledge, an understanding of the local supply chains, local support services and local energy poverty landscape. It requires a personal touch, and an accessibility that only a local organisation can provide. If you are making comprehensive, holistic plans for the future of somebody’s home – you cannot outsource that to a central, faceless corporate giant. You need to raise up local delivery partners.

But admittedly that has led to a faltering start here in the UK. Upskilling contractors to comply with the more stringent PAS 2035 requirements is expensive and slow, and PAS feels out-of-reach to many smaller local companies. At the same time, the UK Government has been keen to make progress on establishing the standards and showing investment in home energy retrofit; last year rolling out several large, hasty, high-profile funding projects in England, to encourage households to begin their retrofit journey. Unfortunately, the retrofit industry wasn’t yet ready to respond – not enough installers were accredited to meet the new retrofit standards. This led to the high-profile failure of the flagship national retrofit scheme, reducing public confidence in retrofit, and forcing the Government to change their strategy.

Instead, they are now distributing retrofit funding via local authorities and administering funds regionally in a more targeted manner. Of course, local authorities don’t have the capacity or technical expertise to deliver retrofit funding themselves. So yet again, I find that our energy agency model is meeting these needs better than any other. Our twenty-year track record of delivering energy poverty alleviation and domestic energy retrofit on behalf of our local authority partners led to Severn Wye being the natural delivery agent to ensure that this funding was targeted at the households most at risk of energy poverty and its health impacts. We have been able to use this sudden appetite for energy efficiency retrofit to address those in energy poverty first. Already a trusted partner locally for the public sector, health sector, supply chain and contractors – as an energy agency, Severn Wye joins all the dots required to deliver funding quickly and strategically.

Over the past twelve months we have rapidly upskilled our team, which is now stocked full of technical staff with the qualifications and accreditations required by the PAS retrofit standards – and we are innovating new and exciting delivery models that will support smaller local installers to meet these standards, provide the necessary supply chain to deliver the work and support the householders to benefit at each stage.

There are undoubtedly challenges in balancing net zero ambitions with the need to address energy poverty in the UK. Financial support is being withdrawn from fossil fuel technologies to speed the transition to clean energy; but there is still no economically viable clean alternative that provides the ‘affordable warmth’ so vital to protect people from energy poverty. The shift in language to ‘sustainable warmth’ demonstrates this recasting of priorities. But as we anticipate a promised round of funding in 2022 for heat-pumps, we wonder how many energy poor households will be left out in the cold as the funding for gas-fired heating systems is shut off. We welcome the clean energy transition with open arms, but the transitions must be an equitable one for those in energy poverty.

Renewed commitment to the ‘energy agency’ model

As Governments, policymakers and funders begin to grasp the enormity of the challenge presented by a national, continental and global energy transition, the temptation is going to be to make sweeping, swift changes with national policies and decarbonisation schemes. Centralised national activities are easier to administer, quicker to roll out and easier to quote large figures for. Decentralised efforts are more complex. Just ask our devolved parliaments here in the UK!

But there is no substitute for local if you want to ensure lasting, equitable, sustainable change.

One of the reasons that I believe energy agencies are needed now – perhaps more than ever – is that in order to affect rapid, complex change across all industries, sectors, communities, socio-economic segments, Governments need to leverage trusted intermediaries that are already deeply connected to each of these. The energy agency model is designed to play this role. We understand our local housing stock and the type of retrofit that works. We understand the contributing factors to energy poverty in our area and the local network of support services that address this. Our impartial, independent position in the market paves the way for high quality, trustworthy retrofit in a landscape rapidly attracting new, low-quality entrants. The close links energy agencies have with local supply chains, industry and contractors improves the sustainability of local economies and encourages the growth of local green infrastructure. Our ability to establish effective cross-sector partnerships is a proven way of pooling resources to achieve economies of scale, levering in funding and delivery expertise from health, social care, climate action and community wellbeing organisations that multiply the support provided to those households, communities and causes that need it most.

Tackling energy poverty today is not the same as it was twenty-two years ago. The landscape has changed, the challenges are different and the strategies we use to address it in the future will need to change, too. As our energy systems transition, so will the support we provide to those in energy poverty. And for that reason, I am as convinced as ever that the energy agency model remains the most powerful way to tackle this enduring problem in a lasting, holistic, sustainable way.

At the end of 2021, there is a lot about the future of energy poverty that I am uncertain about. But one thing I am sure of is that energy agencies are needed now, and for the future.