Net zero: what are the opportunities for social housing?

The UK’s 2050 net zero target will mean big changes in how we generate and use energy, including more renewable energy, switching to electric vehicles, and changing how energy is used in homes and businesses. The energy system will become more flexible and adaptable to meet the growing needs of consumers whilst balancing the significant changes required for decarbonisation.

So, what does this mean for social housing providers and their residents?

The road to net zero presents opportunities for social housing to support the transition to a greener future and help residents afford energy bills—an increasingly pertinent issue given rising energy costs in recent years and the cost of living crisis.

Four key changes impacting residents will be:

• How we heat homes will change. Most homes are currently heated by gas boilers, but in a net zero future, that will need to change to low carbon solutions. It is expected that going forward, we will heat our homes with heat pumps, heat networks or other types of low carbon heating.
• Homes will become more energy efficient. The UK’s housing stock is less energy efficient than in other European countries, although activity in the social housing sector means these properties are, on average, more efficient. Substantial measures such as solid wall insulation will become more common to reduce energy costs and emissions further.
• Using energy more flexibly will offer customers a chance to lower bills. Tariffs that provide customers with electricity at a lower rate during periods of the day, such as Economy 7, are nothing new. However, there will be increasing opportunities for customers to use dynamic energy tariffs that reward them for using energy flexibly, for example, by switching consumption to off-peak times of the day or when renewable electricity is abundant.  
• Technologies such as solar panels and batteries will present a route to lower energy bills. This gives residents the ability to produce and store electricity for later use, whilst also potentially selling any excess power back to the grid.

The transition to net zero is not without significant challenges and costs. Many of these technologies, including heat pumps and solar panels, require several thousand pounds of investment per property. Innovative business models are emerging to address this, such as subscription or ‘as a service’ models, where the customer doesn’t pay an upfront cost. Given the scale of the opportunity, some investors are being attracted to this space, and social housing can present economies of scale.

Other barriers will need to be overcome to unlock this opportunity. This includes engaging and educating households with new services and products, as well as getting the right supply chain. Overall, we see a real opportunity for the social housing sector to engage with this transition and reap the benefits of upgrading housing stock, reducing emissions and alleviating fuel poverty.

LCP Delta’s consultancy provides clients with the insight, advice and strategic support they need to navigate energy transition and net zero. We help by leveraging our proprietary data, expert market insights, deep relationships across the energy sector and world-class modelling capabilities. We’re experienced in assessing the best energy solutions for social housing stock and can help identify how the array of new services can help the sector. To find out more, visit LCP Delta or contact us.