video Podcast Episode 18

Patrick Berry from Together Group

This week, we're talking with Patrick Berry, the Managing Director at Together Energy Services. We talk about the difficulties in hitting Net Zero targets, the impact of residents on Net Zero plans and the importance of data in Together Housing's strategy going forward.

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Podcast Transcript

Alex:
Hello and welcome to the “Switchee Podcast” My name is Alex. And I’m joined today by Patrick Berry, the Managing Director of Together Energy Services. How are you doing Patrick?

Patrick:
I’m very well, thank you, Alex!

Alex:
Great. So you obviously work extensively with Together Housing and have for many years. Your responsibilities are pretty varied but one of the things that we're most interested in is talking about net-zero. So we've been having some conversations about net-zero in the last few months. What do you think, do you think that net-zero and carbon reduction targets are going to be difficult to hit?

Patrick:
The short answer I suppose is yes, absolutely. There are two parts of that - one is generally I think for the nation as a whole and that is particularly challenging. My focus has been more on what we as a social housing organisation, large social housing provider, how we are going to do our part in achieving those targets. So we've been focused on that. I suppose the answer is yes absolutely and I think if it was easy, we'd all just be getting on with it. We'd have plans and we'd say we're going to do it by this time or that time but it's much more difficult than that. For me, the target of net zero implies a root and branch change in how the organisation functions, thinks about and makes decisions about its investments and how it relates to tenants. The whole caboodle and that change alone will take time. My role is to be the lead for carbon reduction for the Together Housing group. So I’m immersed in this stuff all the time and I think about it all the time, have been thinking about it for many years, in one form or another but that's not the case for everybody.

So this appears to have been, I think, a bit of a silo where people who are really interested in solar panels and all the other things that we've done. Now that has changed. Now it's becoming something that's about the whole business. So the carbon reduction strategy that we have produced and we have produced one, it's been very strongly supported by the board. It's very much a corporate strategy so it's about what the whole business chooses to do in the future and that transition to me is the key ultimately to whether we are able to do anything like what we would like to achieve.

Sitting behind that I think is money. Because whichever way you look at it, it's going to involve a pretty massive investment and we've tried to look at that from a number of different ways so that we try and capture benefits from that investment rather than it just being a cost to achieve the net carbon objective, worthwhile though that is. There are clearly things we would want to achieve for tenants. So what we've tried to do or my rationale throughout all this is to try what we call a “Triple bottom line”. So there should be measurable benefits for tenants. There should obviously be carbon reductions that we can measure but also it originally started as a kind of return on investment. However that's measured. That might be in operational improvements, it might be cash, new revenue generation, it might be grants and so on. But trying to do all those three things together also makes it challenging. But if you don't, someone's gonna be the loser along the way. So I think it is a massive challenge.

It is by definition long term. Our strategy has, at this point, a 15-year horizon on it because that's the kind of scale in which we have to make decisions and think about what kind of financial expenditure we want to have, how we prioritize it, who does this involve, how do we make those changes and they're all across the organisation. From an organisation that's been totally focused on the provision of gas as the heating and hot water systems for 31,500 of our homes. You're not talking about shifting to something else which has skills implications, has management implications, some good, some more difficult to deal with. But it takes a lot of planning to actually shift and turn that oil tanker to face a different direction.

Alex:
Yeah, we talk about net-zero a lot and in social housing obviously, it happens. It's one of the big topics to talk about at the moment. As our 20 years are starting to get closer and closer and closer. And those requirements don't seem to be getting any less, if anything they're getting worse. Your three-pronged approach is actually a well thought out one. That you can look at this as a cost - okay, well, over the next 20 years we've got to make our properties net-zero and that's going to cost us X amount. Or you can try to make sure that it's a worthy investment not just for the environment but for your residents to make sure that you're doing the social good that, ultimately, all social housing providers are set up to do. That it's good for your business as a whole. That's quite an interesting way of kind of approaching the problem.

Patrick:
Yeah, I think there are big opportunities, particularly for the business. Because a lot of this involves new technology going into properties of one sort or another and a direct relationship in particular to how the electricity grid works and the kind of revolution that's taking place there. It allows us to think about using our housing assets as energy assets. Energy assets that can generate revenue in the future partly for the benefit of tenants but also partly for us to get some of the cash back that we have to invest in to making very low carbon assets.

Alex:
Yeah.

Patrick:
So we have to think completely differently because asset management has always been about just putting a cost on a new bathroom, a new roof, etc. This is different. These are active operating energy assets that can be traded in various forms. Again for the benefit of carbon, for the benefit of tenants and the benefit of revenue. There's a whole new way of thinking about it. It's complicated at the moment. Those markets are fledgling. I mean some of the stuff we've been doing is I think right at the edge of that but it's quite exciting - the potential for it. But it is, in my view, the whole renewable energy engagement element of social housing that should be the norm as we go forward for social housing because it provides lots of opportunities that mitigate the cost but also provide these wider benefits for tenants and give the opportunity for tenants over time admittedly to also engage in what their role is to make those things work.

Alex:
Yeah. So, that's an interesting segue on to another area that I’d like to talk to you about because obviously, net-zero is all well and good but you need to remember and keep in mind the residents in all of this. So the resident comfort aspects of net-zero can be confusing sometimes. The goal is to improve energy efficiency for global warming reasons but it should have very, very positive impacts on your residents. But how exactly are the resident comfort aspects affecting your way of thinking, when it comes to the net-zero strategy and going forward net zero in general?

Patrick:
That's a good question. I’ve seen quite a few of the reports that have been done by the combined authorities as they start to think about the carbon reduction issues and the challenges and there's often a crossover between carbon reduction on the one hand and the reduction or eradication of fuel poverty on the other and a bit like a Venn diagram. There's a big overlap between those things but they're not actually the same and you could go down the purely carbon reduction route without thinking too much necessarily about the tenant. But actually, from our point of view, that's not a sensible way to approach it, given what our business model is - tenants being able to pay their rent and our commitments to their well-being means that first of all, we do need to think about the fabric of the property.

That's the big one. A lot of us have inherited quite old stock - council house transfers, pre-war and post-war properties, where the standards are very different to those houses that are currently being built. And a lot of the work, the easy stuff, was done on those as part of the decent homes investment. So most should have already have had cavity wall insulation, loft insulation, double glazing, etc. And there were things that were missed out in that but we have to go back to that. And frankly, all our houses are in the north of England. They tend to be in places where property values are not particularly high and where incomes are low so, rents are not particularly high. And so we don't have huge headroom in our business plan to wrap every property in an external installation which is going to make the energy demand in the property next to nothing. That's just not going to happen in practice when you've got 38,000 properties.

So we have to be kind of more pragmatic about what we are trying to achieve here. From our point of view, we're trying to just make sure that all the right insulation on the property is in place. That would include underfloor as well in some cases and for the vast majority of our properties, that's going to get us to a point where we should be able to use an air source heat pump sensibly. And we will test that through the use of data. So using software to look at the heat losses etc. It needs to be an objective assessment, not a subjective one. We don't need to use a heat pump in all circumstances because then they'll be ones where we can't. And there'll be a group of properties that are solid wall or different kind of non-traditional construction where it's going to be hard to achieve what we want to achieve and we'll have to think about our choices then or a smaller number of properties maybe we can spend a lot more money on to get them to where we want them to be. Maybe even knock them down and start again, who knows.

But they're the kind of big choices we'll have to make but it's about trying to think across the whole chain of investment. We do the fabric first, we can't reach net-zero with gas in the property. That's just a kind of a given and a lot of people are extremely used to gas. We're all used to gas. We're all used to turning the heating on and it getting warm and having hot water on tap and for the most part, and when you change from that to a low carbon heat, it's going to be very different and almost everything they've ever been told about how to be efficient with gas central heating will be turned on its head for heating from an air source heat pump for example. Don't turn it off when you leave the house because you're going to end up with big bills. There's a massive information campaign to get people to start to think in a different way about what they're participating in. But it is initially about reducing the heat demand that people need to have in their properties to stay comfortable.

Let's begin to get people used to understanding these alternative heating systems and then thirdly, let's make sure we're efficient in our ability to maintain those systems. Also, we can safeguard tenants because we can see using connected assets, how those tenants are behaving in those properties with those systems. There's no point with a tenant that doesn't understand how to use a system, using it wrongly for six months and ending up both cold and with a big bill. If we can intervene because we can see in the first 3 weeks they're not using it properly and there's a re-education element to be undertaken. So we're trying to think in that kind of way - we are starting going down the PAS 2035 routes. So, you know, we think there's a whole house plan a year. We might not be able to do it all at once but we need to do this in a sensible way that allows the chain of events to take place, over time.

Alex:
It sounds like one of your core priorities in this is efficiency. So where you could just as you said, if you've got high property values and surpluses in the budgets, you can just wrap a whole bunch of properties and move on. The importance for you is to make sure that you can do this economically and that obviously should be a priority for most housing providers I would say. But data in that instance is your secret weapon, so to speak. Because it's allowing you to pinpoint where you've installed a new piece of technology and the resident isn't using it correctly or doesn't know how to use it correctly. So in the heat pump example, we've had Switchee's installed in heat pumps across the country and one of the things that we were so interested in influencing was their behaviour because as you say, gas heating is you turn it on, it goes. You turn it off again and many social housing residents are used to doing that. Okay, turn it on for a few hours. Turn it off, go on with your day. And that obviously is ineffective and extremely expensive when it comes to heat pumps where when what you need to do is use that time to build up the heat.

With data obviously, you can spot that. So the interesting thing that I’d like to kind of understand from you is when you're looking at the data itself, are you using that at a portfolio level? Are you trying to use data to analyse all of them or are you looking for problem cases? So are you looking to address specific issues or are you looking to ask what does our entire portfolio look like? We're trying to move from a reactive approach to a lot of the energy savings kind of advice to a proactive approach?

Patrick:
Well, I think to be fair Alex, we are at the start of that journey. We do have connected assets so we've had solar PV since 2011. We can just see the meter readings and so on there. The latest solar we put in which was solar PV and battery, we can see everything that's happening in the property. We can see power imported, power exported, power to the battery, what's happening in the inverter, the state of charge of the battery, et cetera. And it changes your outlook entirely. So what we've been doing, I like to think this is a bit of forward-thinking is, first of all, we employed an experienced data analyst and programmer. And so we've been building an energy data warehouse where we are taking lots of bits of data from around the company in our CRM systems and asset management systems but also from our solar, from various heat pumps and also from the Switchees we have in and so on. And we can put them in a data warehouse for energy or carbon is probably better to call it now. And that allows us to slice and dice those different data streams in lots of different ways.

Some of those ways are about how can we strategically plan and target the rollout of things over the next 15 years in the most sensible way to achieve the best outcomes utilizing the money that's available through grant and in the best way which gives you some hoops to jump through and so on. Whilst there are probably three things, the first one is proper strategic planning driven by data and looking to improve that data all the time as we go along. So, we've had to flip our EPC strategy from being one of compliance to rent a property to now being the data that's going to drive our carbon measurement. And so we need more of it. It needs to be more if we will scientifically apply it. So that our coverage is better and targeted at problem areas.

The second one is to use that data ultimately to drive a rapid change in our repairs approach. So that over time we gradually shift towards something that allows our repairs to be proactive because we can see what's happening to a heat pump or whether or not there is a misuse of a system in a property which is going to lead to high levels of humidity and potentially to damp. We can see if the solar system is broken or not working properly and then we can go out and fix that. In most cases, we can diagnose what's wrong with it before we go, so the man with the van knows what he's got to do when he gets there. So that whole system becomes much more efficient and we would normally call it “Responsive repairs”. So we shift to a proactive repairs basis - that implies all kinds of new skills for our existing technicians which need to be delivered over time. So you can see here the one action, one strategy has all these spin-off actions across the business.

The third one is this whole safeguarding approach that having the data flow gives you towards tenants. One is just using appliances incorrectly. So that's not to their advantage etc. But the other is even for the particularly vulnerable tenants if there's no activity in a house where there usually is for a period of time that might trigger some kind of emergency response to see whether people are vulnerable in some way. Collecting that data means new data relationships and GDPR-type relationships with our tenants as part of the way we do our business. So this is what I mean when I started the conversation in the first place. That the net-zero ambition has multiple implications for me across the whole business and right at the start of planning that journey as a corporate enterprise rather than just being my responsibility because I own the strategy or wrote the strategy. It doesn't work unless everybody kind of buys into it.

Alex:
Yeah, I think that you are probably one of the forerunners in the industry, when it comes to using data for net-zero and taking an approach of trying to pull as much information together. First to go okay, well, this is the type of information we need. Okay, let's go out and gather it. And then EPCs - it's a great example of something that could just be used for compliance but instead using it for the benefit of the resident's and using it for the benefit of the housing provider. It's a very sensible plan. I think it's curious about your data scientist role - that's one of those roles that seems obvious actually when you look at it. Okay, we've got all this data we have a problem of reaching net-zero. Let's take a data scientist and let's give them that problem. I can't imagine the kind of interesting results that's going to impart in the next few years.

As you talk about GDPR, I mean, as Switchee you can imagine we're always focused on that. It's one of the things that we want to make sure that the residents are always happy with but it's an inevitability in the modern world that at some point, housing providers in order to provide the best quality of service. Whether that is for net-zero, whether it's for proactive maintenance or any other number of things, they're going to need to gain data. That data used to be in the form of surveys and paper and that kind of stuff but that's expensive and it's inconvenient. The more convenient way is to use technology. Sensors and gather that data compliantly obviously. But I’m sure you're hoping for the same payoff for your housing provider and for housing providers across the country in the long term because that data is value for you as a business.

Patrick:
Yeah. If the data's reliable and your decisions become objective around what the data tells you. Often that defies what you might have thought as a subjective view on the matter and so it becomes really important. Although, we have a business improvement team with data scientists and so on. This would not normally be part of their agenda. So hence my decision to recruit someone who could specifically build this data warehouse because we were collecting lots and lots of data and we could see the potential for where that was going to go. Including things, as you say like, smart thermostats and sensors in properties that just give you that virtual view of what's happening with our assets for everybody's benefit. That's the transition you normally get when you talk about digital transformation - this is what it is really about. How tenants book repairs and pay their bills and do that without necessarily having to speak to anybody, through the internet but this is a little bit different. It has those big data flows which mean you've got to look at that big data in there in a kind of different way. But again, we expect all that to change radically over the next few years. But I think you've got to be in there, you've got to be sat on the train to go for the ride, don't you? That's the way.

Alex:
Yeah, very much so. Okay, well we are unfortunately running out of time. I’m sure we're gonna try and get you back onto the podcast for an even more detailed conversation about the data side of it because it's one of those things that is fascinating to me personally but also to our audience. But, thank you so much for coming on the podcast! You've been one of our most insightful guests I think.

Patrick:
That's lovely. Pleasure to be here. That went very quickly.

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