These three zero-carbon developers are not waiting for a government mandate to make radical change to the way they make places, Catherine Early reports
Earlier this year, Savills made the bold prediction in its 2020 investment trend report that the road to zero carbon would be a disruptor for the residential housebuilding sector.
This followed the signing into law of an upgraded climate change target for the UK to reach net zero carbon by 2050, and a government consultation on strengthening the energy performance of homes through the Future Homes Standard.
“We think it’s a disruptive force, particularly when you tie it in with other pressures on house builders, such as the desire for a greater range of tenures and more affordable housing,” says Emily Williams, associate director of residential at Savills.
She believes it will prompt developers to think differently and adopt new ways of working, for example, by incentivising modern methods of construction, which is typically less wasteful and tends to produce homes that are more energy efficient.
“Property needs to be dragged kicking and screaming into the net zero carbon era”
The UK Green Building Council (UKGBC) has also seen a shift in attitudes from the sector, parts of which have been reluctant to take up the environmental agenda.
“Developers, including major house builders, have really woken up to the fact that environment, and specifically climate, are not going away as key issues. We’ve certainly seen a re-engagement from mainstream house builders in recent months,” says John Alker, director of policy and places at the UK Green Building Council (UKGBC).
Despite the optimism, the government’s proposals for its Future Homes Standard, which comes into effect in 2025, are still not clear enough to give house builders sufficient push on investment, Alker believes. These views are backed by government advisory body the Committee on Climate Change, which has written to housing secretary Robert Jenrick, urging him to strengthen the proposals.
“The property and construction sector has historically been slow to embrace innovation, with very low investment into R&D [research and development]. It’s an industry that needs to be dragged kicking and screaming into the net zero carbon era,” Alker says.
However, a few progressive developers are not waiting for the government’s lead. Innovative business models combined with a rock-solid desire to differentiate themselves from the rest of the pack are driving their agenda.
“We’re aiming to be the Tesla of house builders”
Octevo Housing Solutions with Liverpool Community Homes is working towards three goals – contributing to the net zero target, tackling the shortage of social housing, and reducing fuel poverty.
Its latest development, comprising 37 homes in Huyton and Northwood on the outskirts of Liverpool, will provide long-term affordable homes for rent. Each features the latest insulation, lighting and water efficiency measures to reduce the homes’ energy consumption. The remaining energy demand will be met as far as possible by ground and air source heat pumps, and solar panels.
The company’s earlier developments received a ‘B’ rating on its Energy Performance Certificate (EPC). But after it launched an investment offer with peer-to-peer funding platform Abundance, which targets its investments at sustainable businesses and projects, it realised that it could raise its attractiveness to investors if it pushed for an ‘A’ rating, according to Simon Chapman, director at Octevo.
“All the technology we incorporate is geared to taking us into an A rating”
Octevo estimates these combined measures will slash each home’s energy demand by 80-93% compared with the UK’s average home. “All the technology we incorporate is geared to taking us into an A rating, which is a significant increase on standard building regulations,” he says.
Octevo works directly with the component manufacturers, energy assessors and technical teams to keep it at the forefront of innovation, Chapman says. But he acknowledges that it could be challenging to close the gap on the final 7% between its latest EPC rating and being 100% zero carbon, without completely sealing homes.
Octevo takes on the predevelopment, planning and construction costs and risks from local authorities and registered social landlords in return for long-term leases to secure long-term revenues. The long-term cash flow from rents, combined with the funding provided through Abundance investors, enables it to spread the up-front costs of the low carbon measures over a longer period of time.
This business model could be followed by other social housing developers, but it would not stack up for private house builders, who need to see a margin of return within a certain amount of time, he says.
“We’ve done it, not just to get investors, but also to give us a broader market. The consumer is becoming much more environmentally aware, so it’s good if you’re able to promote something as having greener credentials than the development over the road,” he says.
Then there’s developer Project Etopia: an EPC assessment last year gave their Etopia Corby homes an energy rating of 104/100, and found that it emitted -0.7 tonnes of CO₂ a year, compared with six tonnes a year from conventional homes.
“Essentially we are energy positive – meaning the homes generate more energy than they consume – and the first developer to achieve this on scale,” says Rosanna Lawn, global brand director at Project Etopia.
The development comprises 31 houses and 16 apartments, and is being constructed in phases. The first resident moved in in January. It is part of the government’s Building for 2050 project, which is reviewing different ways of delivering low-cost, low-carbon homes, and monitors their performance in use to improve understanding of how to make low-carbon home construction mainstream.
“We’ve done it, not just to get investors, but also to give us a broader market”
Project Etopia uses a modular system, with panels made in a factory and delivered to site for assembly, reducing construction time and lowering costs. The panels have a thermal efficiency U-value of 0.13, an improvement on the 0.16 U-value for a typical well-insulated wall in a new build brick property.
The homes are equipped with a variety of energy generation technologies including heat pumps, and combined heat supply system by using solar energy and heat pumps, where hybrid solar panels generate heat that can then be stored and used by the ground source heat pump for hot water and heating. The energy earth bank/GeoStore system stores heat energy, while batteries store electricity, meaning the residents enjoy little or no energy bills.
Smart home equipment such as sensors and lights can be combined to monitor and manage energy use in the home. If excess energy is produced, it can be diverted to an independent electricity grid to which it is connected, ensuring nothing goes to waste.
“If we are still having to buy batteries at what we paid a year ago, the numbers look pretty creaky”
Lawn says: “To create the homes of the future, you need to combine different technologies, such as energy storage, solar panels, the wall panels and the smart systems. There’s also travel infrastructure, so we’re installing electric vehicle charging points.”
Project Etopia’s system is being designed to be contracted out to other developers or local authorities, Lawn says. Building offsite helps keep costs down, but manufacturing smart home technology and other components in-house and with partners rather than third parties helps drives efficiencies too, she says.
“Fundamentally people need to rethink property. It’s no longer about being a house builder, it’s all of these different things that come together to create a net zero home. We’re aiming to be the Tesla of house builders,” he says.
A 350-home development in Nottingham is trialling a new business model under which it effectively acts as a decentralised energy grid – where energy is generated locally, stored locally and used locally. The aim is to cut carbon from energy generation, while cutting bills for residents.
Part of the Nottingham Waterside regeneration scheme, Project SCENe at Trent Basin is being developed by a consortium of business and academia, including developer Blueprint, the University of Nottingham, Siemens, consultancy AT Kearney and energy technology start-up SmartKlub in partnership with Nottingham City Council.
The development features solar PV on rooftops and a solar farm comprising 700 panels, which are connected to a 2MWh Tesla battery – Europe’s largest community battery at the time of installation last year.
The energy generated by the solar PV is sold to the grid to correct imbalances in supply and demand on the wider network. An Energy Service Company has been set up to manage this, and the income generated is either used to help pay off the development’s capital costs, or will be used to reduce residents’ bills, once the infrastructure is directly connected to individual homes later this year.
The development is due to add more features such as renewable heat and is hoping to create a model that other developers can follow in other parts of the country. The research element of the project, known as Project SCENe (Sustainable Community Energy Networks), was seed funded by the Energy Research Accelerator – a collaboration of research institutions and industry – and government body Innovate UK.
Nick Ebbs, chief executive of Blueprint, says that once the system is fully set up, the partners will be able to assess if the model is commercially replicable for other developments. Considering current regulations and costs of infrastructure, in particular battery storage, it is not quite there yet, he believes.
“The future of the grid needs to be decentralised, with localised assets and storage capacity”
“If we are still having to buy batteries at what we paid a year ago, the numbers look pretty creaky in terms of what an investor would expect as a return on capital. That doesn’t mean that we can’t get to a replicable model – it might be that we need to be bigger, or that we reconfigure the battery.
“I’m very convinced that the future of the grid needs to be decentralised, with localised assets and storage capacity. We just need to play around a little with the technology, the scale and the business model in order to get to the optimum solution. In many ways, that’s what makes the project so exciting and so important,” he says.
Ebbs also believes that the typically slow rate of innovation in the property industry may be on the cusp of change. “In terms of the disruption that Savills has predicted, there’s almost a sense that if we don’t solve climate change, everything else is irrelevant.
“That thinking is beginning to permeate many sectors, which means that innovation will be forced on the property industry whether we like it or not. The business-as-usual model will not be allowed to continue.”
Net zero development is just one of many topics being covered at the Festival of Place on 7 July at Tobacco Dock, east London. Tickets on sale now.