… achieving zero carbon
targets … By Terry Nash, Director, UK Sustainable Development Association
Terry Nash is a director of the UK Sustainable Development Association; he is also the managing director of the Gusto Group which specialises in the design and construction of sustainable homes, and associated specialist technologies such as rainwater harvesting, SUDS and energy monitoring and management systems.
… zero carbon by 2016 .. With Government confirming its commitment to achieving zero carbon for regulated emissions for new homes by 2016, and for non-domestic buildings by 2019, timescales are shortening on identifying how practically this can be achieved. Tools at the disposal of developers include the setting of minimum standards for the fabric of buildings, incorporation into schemes of on-site or connected low/ zero carbon technologies (LZC) to meet specific carbon compliance limits, with the remainder potentially being achieved through off-site allowable solutions.
… building fabric measures … Using the Code for Sustainable Homes (CSH) as a yardstick for the transition, new homes being built today by the social housing sector are already required to achieve level 3 or 4 of the Code, with all new homes being built to this standard by 2012. This will rise to levels 5 or 6 for all new homes being built by 2016. Amended Building Regulations are playing a key role in this transition, particularly in relation to the fabric of buildings, throwing into stark relief the importance of the review currently getting underway for an update due to be issued in 2013.
Not surprisingly, in the current economic cycle for the house-building sector, the consensus in the building industry is that any further tightening of Building Regulations should be “limited”, which can effectively be decoded as “no changes at all”. This is a practical view with which the British Government may be inclined to have some sympathy; however, EC regulations require the harmonisation of national Building Regulations, making the outcome of the 2013 review less certain. Assuming they change very little, if at all, in relation to the fabric of buildings, then this will be tantamount to relying upon LZC technologies and off-site allowable solutions to complete the necessary transition to CSH levels 5/6.
… on-site LZC … The various LZC technologies available to developers (solar thermal, solar-PV, ground and air-source heat pumps et-al) are already well understood, and are becoming more cost-effective as the expanding market brings down prices, and Government subsidies (FITs & RHIs) are introduced; for end-user commissioned homes and buildings, the options are pretty straightforward as investment in the technologies result in an associated compensating and guaranteed income stream through FITS/RHIs.
For the speculative housing developers, however, the equation is much less straightforward as whilst they make
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the investment, the home-buyer reaps the associated income stream. This would not be an issue if the selling price for the property reflected both the investment and the income stream, but for the foreseeable future house- prices are much more likely to be driven by location and local amenities – attributes which new houses share with existing pre-built homes just round the corner. Or in other words, the developer’s building costs are likely to be substantially increased to meet the higher levels of the Code, without compensating rises in selling prices; that, for sure, is not sustainable by the house-building industry unless land values fall dramatically – in some areas possibly to zero!
To overcome this barrier to achieving zero carbon new homes over the next five years, developers are needing to become more innovative in their approach to LZC. Put simply, as they are making the investment, they need to retain ownership of the associated FITs and RHIs subsidies to repay the investment over time. But they are builders, not investment companies or energy suppliers.
The most straightforward way of overcoming this dilemma is for developers to contract with a new breed of energy management companies (“Emcos”) who specialise in funding the investment in LZC; the Emco retains ownership of the technology, and benefits from associated FITs and RHIs. The Emco also provides an ongoing call-out and maintenance service to the home-owners, and sells- on the heat and energy being produced by the installed technologies to the home-owners at a price below the market rate; this arrangement would be guaranteed over the FIT/RHI timescale.
This model, which is already appearing in the market place, produces three winners, namely: the developer, who can meet CSH requirement without investing in LZC; the home- owner, who gets cheaper heat/power and a free service contract; and the energy management company who make their commercial profit through FITs and RHIs. Looking ahead, therefore, it is not too fanciful for developers to start looking at LZC as an additional income, rather than a cost- centre, as the prices of renewables technologies continues to fall, and the purchasing power of the Emcos increases.
… allowable solutions … The third strand of achieving zero carbon, namely use of other allowable solutions, is much less straightforward, with the Zero Carbon Hub organisation being charged by Government with taking the lead in identifying an approach acceptable and practical to all.
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