Registered provider housing stock energy modelling – a crucial part of an asset management strategy

Author: Luke Smith 14/05/2015

Embarking on stock modelling is a major commitment, and a registered provider should choose a supplier who’s both up to the job and one the client is confident that he can get on with for the foreseeable future. Ideally, the supplier should provide a complete end-to-end package of professional services, be a ‘critical friend’ and guide the client through the associated technical, financial, social and logistical challenges.

The modelling of energy efficiency measures is often undertaken in isolation and there is a significant lack of understanding of how investments in low-carbon refurbishment can affect the Net Present Value (NPV) of assets, tenant satisfaction and their ability to pay, reactive maintenance spend, void turnover and existing planned investment and divestment programmes.

Many software platforms and consultancy services have a narrow focus on energy use, CO2 emissions, running costs and SAP rating impacts - but fail to consider wider matters that ultimately affect investment decisions. What’s more, detailed energy modelling of assets is often outsourced and, as a result, findings end up de-coupled from other internal investment decision-making.

A good housing stock energy modelling service should combine stock assessment and profiling with a detailed review of existing repair and maintenance plans and budgets. It should also actively consider real world implementation challenges such as local site conditions, planning constraints, occupancy levels, behaviour patterns and other variables as well as longer term NPV based on likely maintenance and management costs and potential grant and subsidy revenue.

This kind of approach enables you and your supplier to consider the improvement potential of the stock as a whole and how it aligns with your wider asset management strategy and any property-level factors such as practical application, risk issues, occupancy profiles and other variables.

Stock analysis and benchmarking

At the National Energy Foundation, we start by analysing and characterising all the provider's housing stock data - checking for its completeness, reliability and any conflicts; identifying areas where information is missing or questionable; and making recommendations on how it might be improved. We also profile the stock, benchmark it against both other registered providers and the national average, and identify any quick-win opportunities. We also work with the client at this stage to understand its existing repair and maintenance programme as well as its longer term aspirations in terms of wider planned investment and divestment.

Stock archetypes and targets

Next, we determine a suite of representative sub-sets (typically 20-30 housing types) where buildings have similar physical descriptions and practical limitations. We then identify improvement targets for each of these archetypes, taking into consideration your wider refurbishment, as well as property-level factors such as practical application, risk issues, occupancy profiles and other variables.

Baseline modelling and advanced improvement option evaluation

The third stage is to combine the stock data with other supplementary information in order to build detailed energy models for each archetype and determine their baseline performance. We then model the optimal improvement package for each archetype based on a balance of the client's priorities – for example; resident running costs, cost effectiveness, energy use, CO2 emissions, EPC rating and capital budgets. This is followed by the development of a long-term refurbishment strategy for each archetype that ensures flexibility and takes into consideration the client's existing refurbishment and maintenance plans as well as any context-specific risks and opportunities.

Reporting

Finally, we report on the before and after performance/profile of the stock as a whole, and on any detailed individual property-level refurbishment strategies. We also provide:

  • Practical guidance on refurbishment selection and any associated risks and mitigation measures.
  • All the software used in our stock modelling exercise.
  • Training on how to use the software.
  • Board engagement on stock modelling scenarios and outcomes.
  • Presentations and other support services.

In an environment where there’s a continued drive to improve energy efficiency, invest in housing stock cost-effectively, tackle fuel poverty and save residents money on their fuel bills, stock modelling is a crucial tool. Registered providers should concentrate on the big picture and look for a supplier who can help them do that while, at the same time, offers an innovative approach, provides independent professional support and is interested in helping the client achieve its goals by developing a mutually beneficial long-term relationship.