NET ZERO SUM GAME Decarbonising the residential estate: A case study

Sarah Butler

Sarah is Divisional Director and Local Government Lead at Drees & Sommer UK, which is a an international built environment consultancy who operate with their guiding principle of “The Blue Way” which integrates economy, ecology, and functionality. Sarah specialises in strategic estates planning but more recently, she has been supporting several local authorities with their decarbonisation programmes and has also been working alongside UK Parliament as the business case lead for the risk reduction programme at the Palace of Westminster.

Sarah kindly agreed to write up her presentation at ACES National Conference in September 2024. She outlined the strategies and challenges involved in decarbonising residential estates, with a specific focus on Manchester City Council, where Drees & Sommer UK worked in partnership with EQUANS to develop a decarbonisation programme. The case study demonstrates the complexity and scale of decarbonising residential estates and highlights the importance of strategic planning, funding, and community engagement to achieve net zero targets and improve the quality of life for residents. 

Artificial Intelligence (AI) in the form of CoPilot defines decarbonisation within the context of local government as “emphasising efforts to reduce carbon emissions and promote sustainability”. Key areas include energy efficiency, sustainable transport, heat decarbonisation, community engagement, and policy planning. 

Figure 1: AI interpretation of decarbonisation in local government

(Co-Pilot generated) 

When asked Co-Pilot to consider what would happen if local government doesn’t meet its net zero targets: 

“Imagine a town where local authorities have not met net zero targets. Public buildings, homes, and businesses continue to rely on outdated, inefficient heating systems. Energy bills rise, air quality worsens, and the town faces frequent power outages. Property values decline, and the local economy suffers as new businesses and residents choose more sustainable areas. Vulnerable communities are hit hardest, struggling with higher costs and health issues related to poor air quality.” 

Decarbonisation presents significant challenges for local governments, including: 

• Net zero timescales and costs: Achieving the UK-wide net zero 2050 target requires substantial planning, funding, and skills 

• Limited grant funding: Available grants often fall short of the required technical inputs and demand 

• Estate disposals and changing requirements: Post-Covid flexible working and the need for estate rationalisation face political opposition 

• Asset understanding: Limited knowledge of asset conditions and lifecycle plans 

• Retrofit costs: High retrofit costs due to construction inflation. 

Case study: Manchester City Council 

The case study focuses on planning the decarbonisation of Manchester City Council’s residential and corporate estate, involving 12,500 residential properties and 72 corporate facilities. The aim is to meet net zero targets by 2038, while addressing fuel poverty and limiting energy bills for residents. 

The process 

The process and methodology for the residential estate involved several key steps: 

1. Profiling the housing stock 

• Categorising the housing stock into 20 archetypes, such as Direct Access Flats, Multi-Storey Flats, and various types of houses (e.g. end-terraced, mid-terraced, semi-detached, bungalows) 

• Conducting site surveys for each archetype, with 20 prioritised archetypes covering 83% of the housing stock 

2. Energy review 

• Reviewing site energy usage to assess direct (Scope 1) and indirect (Scope 2) emissions 

• Establishing energy efficiency baseline – the approach was based on an expanded RdSAP assessment methodology, going beyond a typical scope to include property condition information, alongside the RdSAP data 

3. Strategy and roadmap development 

• Developing three net zero models (Gold, Silver, Bronze) to outline different levels of decarbonisation efforts and investment 

• Integrating the decarbonisation strategy with the existing capital programme to make the best use of existing budgets 

• Creating a strategy for lifecycle replacement to ensure long-term sustainability 

• Developing a design-based cost plan for the interventions - at RIBA Stage 3 

4. GIS analysis 

• Using a Geospatial Informatic System (GIS) to map the different housing archetypes 

• Overlaying socio-economic data to identify areas with high fuel poverty and target investments effectively 

• Creating a live energy model to visualise real-world data, financial benefits, and communicate plans to stakeholders and councillors 

5. Legal, financial, and social considerations 

• Addressing legal and financial aspects to support bids for funding from schemes like Public Sector Decarbonisation Scheme and Social Housing Decarbonisation Fund 

• Ensuring that the decarbonisation efforts provide social value, such as reducing fuel poverty and improving health outcomes. 

Note: Reduced data SAP (RdSAP) is the UK approved methodology for assessing energy performance and generating EPCs for the existing dwellings 

Figure 2 - Housing archetypes and areas of fuel poverty

The map is overlaid with socio-economic data showing where households are suffering from fuel poverty. The darkest red represents the areas with the greatest fuel poverty. This information shows how investment has been targeted at residents who are most likely to feel the positive effects of the decarbonisation via lowered energy bills. 

Telling a story 

The Storymap uses GIS to present real-world data and insights on the decarbonisation programme. It is designed to communicate the decarbonisation plans and benefits to stakeholders and decision-makers. It helps in visualising the impact of the programme and gaining support. It also provides a comprehensive and interactive way to visualise the decarbonisation efforts and is essential for effective communication and planning, ensuring that the decarbonisation programme is both data-driven and stakeholder-supported. 

Findings and outputs 

The findings of the exercise are summarised as follows. 

• Over £600m capital investment required 

• Expected average tenant annual cost saving of £714 – equates to c£100m total saving 

• A reduction in carbon emissions of more than 18,000 tonnes p.a. – equivalent to the annual greenhouse gas emissions of c 4,000 cars 

• Carbon emissions are reduced by 64%. 

**The programme is based on the implementation of the Silver option, which aims to achieve at least EPC B by 2032. The Gold option is the high-performance option which aims for zero carbon. The recommendation is that that Silver option provides the best outcome in carbon and cost reduction, while maximising the overall programme budget. 

Funding decarbonisation 

There are significant funding challenges faced in decarbonising residential estates, particularly the insufficiency of current grant funding and the high costs of retrofitting. There are various sources of information citing that the cost to decarbonise social housing stock in the UK is in excess of £100bn and up to £350bn. There is grant funding available, as follows, but it falls short of what’s required, especially given the increasing technical requirements and the number of applicants to the funds. 

• Low Carbon Skills Funding: Supports the development of skills needed for decarbonisation projects 

• Public Sector Decarbonisation Scheme: Provides funding for public sector bodies to improve energy efficiency and reduce carbon emissions 

• Social Housing Decarbonisation Fund: Aims to retrofit social housing to improve energy efficiency and reduce carbon emissions. 

We await further details of Labour’s “Warm Homes Plan” which is expected to invest £6.6bn to upgrade 5m homes, providing a potential source of funding for decarbonisation projects. There are alternative funding strategies currently available, but these can carry more risk: 

• Public-Private Partnerships: Collaborations between public and private sectors to fund decarbonisation projects 

• Community Bonds: Raising funds through bonds issued to the community, which can be used for local decarbonisation initiatives 

• Examples from other sectors: such as the DfE Net Zero Accelerator. 

Net zero-sum game 

Economic assessment of decarbonisation 

Funding decarb

By investing in energy-efficient technologies and leveraging available grants, significant cost savings and economic benefits can be achieved (see table), alongside substantial reductions in carbon emissions. This approach not only supports environmental sustainability, but also enhances the quality of life for residents through reduced energy costs and improved living conditions. Drees & Sommer has developed a tool which can economically assess the decarbonisation of projects and programmes. The tool enables monetisation of wider economic outcomes, such as increased property values, improved health outcomes, and enhanced productivity. In this case study example, the wider economic benefit is estimated at £380m. 

Spend to save 

The “spend to save” strategy is crucial for securing and optimising grant funding. By demonstrating the financial benefits and long-term savings of decarbonisation investments, it helps justify the initial costs, attract grant funding, prioritise budget allocation, and mitigate financial risks. This approach ensures that decarbonisation projects are not only environmentally sustainable but also economically sound. The presentation summarised an example of how the “spend to save” strategy works with Air Source Heat Pump (ASHP) installations: 

• Without grant support: The net cost of ASHP over 15 years is £3,000 vs an initial outlay of £12,000, after accounting for energy and maintenance savings 

• With grant support: With and assumed 50% grant, the net cost becomes -£3,000, indicating a net saving due to the grant. 

This strategy supports long-term financial planning by providing a clear picture of how investments will pay off over time. This helps in developing a sustainable funding model that balances immediate costs with future savings. It provides a clear financial rationale for upfront investments by showing how these costs will be offset by future savings. For example, the savings from reduced energy and maintenance costs, as well as lifecycle cost savings, help justify the initial capital expenditure. 

Planning for now 

The GIS analysis is integral to the decarbonisation strategy, providing detailed insights into housing archetypes, socio-economic conditions, and climate risks. GIS can be used to model climate scenarios, adaptation, and resilience. The presentation included maps showing areas at risk of flooding and landslides, helping to plan for future climate impacts. 

Flood risk mapping uses data from various sources including the Ordnance Survey and the Environment Agency. It helps identify areas that are vulnerable to flooding. This is essential for: 

• Planning and resilience: Ensuring that decarbonisation efforts are resilient to future climate impacts 

• Targeting investments: Directing resources to areas that need infrastructure improvements to mitigate flood risks 

• Protecting communities: Safeguarding residents, particularly those in high-risk areas, from the adverse effects of flooding. 

Think differently 

AI interpretation of a net zero Norwich

Hopefully the presentation provided some examples of how to think a bit differently about decarbonisation and adaptation. Sarah concluded with images of an AI interpretations of a net zero Norwich and asked – “if we view AI as a mirror reflecting back our information, are we content with our reflection?”