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Green Homes Grant – The Start Of The Journey

The Green Homes Grant voucher scheme was launched in September to support a ‘Green Recovery’. Since then, it has received much attention from industry and homeowners alike. As you might expect, this has been a big area of focus for us. We have been following its development and helping industry understand the eligibility requirements, communicate with their customer base, and engage with government on how the scheme could be improved.

With emissions from our homes needing to decline substantially, government programmes like this are really important. They should provide industry with the confidence to invest in upskilling and expanding the workforce and product development, whilst encouraging a greater uptake of energy efficiency and low carbon heating measures across the country. The Green Homes Grant is no exception and for the most part it has supported these aims. In this blog, I will not repeat what other articles have said around the administrative issues or delays. I know that many installers haven’t been paid for work done under the scheme and understand how urgent it is that these problems are addressed, I am hopeful that these are being considered and the message to government is clear. Instead, I wanted to share some insights we have gained through our engagement with the sector and highlight the opportunity for growth.

In early November, we worked with a number of industry partners to understand the impact of the scheme. It is important to note that the highest number of applications for the scheme occurred in October and at the end of January there were over 100,000 live voucher applications. So, the interest in the scheme has been really strong and the supply chain has reacted. The sector welcomed the scheme as a positive step forward and many businesses saw this as a huge opportunity. Interest from consumers has actually been so high that installers have turned away inquiries due to increased volumes. This alone emphasises the opportunity, but it does bring me onto two important challenges associated with this rapid growth in demand.

Supply chain readiness

We surveyed over 100 energy efficiency and low carbon heat installers, of which 65% were registered as Green Homes Grant installers at the time. The scheme was introduced extremely quickly, so understandably it has taken time for the supply chain to gain the appropriate registrations and training. It is clear that interest from installers is high with around 70% of installers that were not registered at the time stating that they would register if the scheme was extended. With the scheme extended in December for 12 months, the latest BEIS survey results show that almost 1,700 companies have applied for scheme registration with over half of these actively engaged with the scheme. However, this rate needs to increase further if we are to deliver improvements to homes in line with the scheme objectives. But it is a step in the right direction.

Building a stable workforce

A key aim of the Green Homes Grant was job creation. From our survey, it is estimated that 39% of the sector recruited as a result of the scheme. The majority of companies that have taken on additional workers were micro-sized companies. On average, we estimate that these micro companies have grown by 34% in the size and those with 11-50 employees have grown by around 12.5%. Unfortunately, subsequent delays to vouchers being issued now puts these jobs at risk. One individual stated that they had taken on two members of staff but are now furloughing all employees and are worried about collapse due to the delays.

While the current scheme has helped to safeguard some jobs, 67% of installers surveyed said that jobs have not been protected as a result of the scheme. Many highlighted that the scheme has actually put jobs at risk as installations have been held back. Work outside the scheme has also dried up as households wait for vouchers to be issued, which has impacted cash flows. We have heard again and again that the lack of certainty over vouchers and the short timescales are presenting barriers to investment and causing concern for many. This highlights the importance of a stable policy framework to ensure that businesses are able to grow in a sustainable way. Boom and bust policies are not conducive to growth and instead damage confidence.

Whilst these challenges exist and are very real, there is a reason to be optimistic as things are moving in the right direction. The recent Green Homes Grant statistics published by BEIS show that measures are starting to be installed. Of the 21,000 vouchers that have been issued, over 10% of households have now completed installations – the majority of these were completed during October. Over the Christmas period and into January, the number of completed installations fell. A significant proportion of voucher applications were for solid wall insulation measures which often require favourable weather conditions. As the days get longer and warmer, it is hoped that the number of installations will continue to rise. The high interest in solid wall insulation is positive as there are over 7 million uninsulated solid wall properties in the UK and progress in treating these homes has been slow.

I think we can all agree that the Green Homes Grant has been a bumpy ride and there are things that can be improved. The scheme’s quick introduction led to administrative challenges, particularly linked to the influx of applications, but the high level of interest is something we should all be enthusiastic about. It shows that demand can be generated when incentives and policies are introduced at the right time and effectively marketed.

The question is, can it be sustained? I hope so. It is important that this scheme is not a one off and that industry is brought along on the journey. The demand we are seeing today needs to be capitalised on to ensure that the investment in new jobs and skills by businesses up and down the country is not wasted because building a strong retrofit supply chain will be essential to meeting our net zero aspirations. The Green Homes Grant scheme has faced challenges, but these can help to inform better and more impactful schemes in the future.

The Green Homes Grant provides upfront cost support which is important as many of these measures come with a fairly significant upfront cost and whilst the benefits are plentiful, spending money on a new kitchen or bathroom may seem more appealing. However, we need to get into a position where public funding is not the driving force behind uptake. I have been lucky enough to work with some great people and on some fascinating projects looking at the different mechanisms that could enable a self-sustaining market to be developed. It is my belief that a mix of solutions will be needed to ensure that the value of upgrading the efficiency of our homes is recognised. These range from council tax or stamp duty incentives to pay as you save mechanisms and loan products. The Green Homes Grant is the start of the journey, not the end.

To read the full Green Homes Grant installer research undertaken by Ecuity for the British Energy Efficiency Federation (BEEF), click here.

Click here to discover BEIS Green Homes Grant Voucher Statistics.

If you would like to find out more about our work on the Green Homes Grant or other energy efficiency schemes, please contact: samantha.crichton@sustainableenergyassociation.com

 

Monday, February 22nd, 2021