Delta-ee analysis shows that socially-rented housing accounts for more than half of the UK microgeneration market
(excluding solar PV). But our latest research with social housing providers tells us that low-carbon microgeneration is becoming a tougher sell for this customer group.
We conducted a series of in-depth interviews with Registered Social Landlords (‘RSLs’; councils and not-for-profit housing associations) in early 2014, which updated and extended our previous research from 2012 and 2013. This research shows that while there are still strong drivers for social housing providers to engage with microgeneration, there are also new challenges with this customer group. Why has low-carbon microgeneration become a tougher sell? Principally it’s because of:
- An increasing frustration with the supply chain:
- Policy interventions adding further strain on internal funds:
- Greater competition from lower cost alternatives:
Our 2014 research indicated that the quality of the overall customer experience is too often not living up to expectations. In many cases what this boils down to is a lack of openness in communication from the supplier to customer. This one should be easy to fix, you’d think...
RSLs also told us just how impactful the welfare reforms have been on their day-to-day operations. The bottom-line is that rent arrears are up and access to both internal and external finance is more difficult. Suppliers who can offer financing options will find themselves in a great position. Lower cost options like passive flue gas heat recovery or voltage optimisation have become more attractive as a result of the budget constraints. Despite these barriers, there are still strong drivers for social housing providers to engage with microgen:
- An internal drive for affordability and sustainability:
- Products offer access to secure revenue streams:
- The urge to innovate and stay ahead of the curve:
What hasn’t changed is the fact that microgen saves tenants money on their fuel bills and is one (of several) ways that organisations can meet their sustainability goals. Increasing and diversifying revenue streams, however, is being given more priority - so there is scope for suppliers to utilise the RHI creatively.
The opportunity is not all about incentives though. The social housing sector continues to look more positively than other parts of the market (e.g. homeowners or homebuilders) towards whatever innovations the market can throw at it! So, social housing is still willing to listen, if the pitch is right.
We heard enough evidence to believe RSLs should continue to be a key target for sales over the coming years, and will be responsive, given the right pitch. Crucially, it’s the ‘right pitch’ that’s shifted more than the scale of the opportunity. Delta-ee’s research with RSLs was conducted as part of our annual research programme for subscribers to the Microgen Insight Service (MIS). For more information on the additional deliverables we provide, contact steven.ashurst@delta-ee> or check out the MIS home page on our website.