Fuel poverty – time for a new approach?

From guest blogger: Dr Steven Fawkes

 

Fuel poverty continues to grow as energy prices increase and it brings with it massive economic and social costs.  Age UK estimate that fuel poverty costs the NHS more than £1.3 billion a year and around 30% of the 30,000 excess winter deaths can be ascribed to fuel poverty.  This is a massive social and economic problem that we need to address for economic as well as social and moral reasons.

Fuel poverty results from two factors – high fuel and electricity prices and the low energy performance of the UK housing stock.  We cannot control energy prices which are fundamentally driven by global markets.  There are improvements that could be made to the way the energy markets work but at the end of the day the effect of these on prices an only ever be marginal. What we can sensibly affect is the level of energy performance or energy efficiency of the housing stock – it is a choice we make either explicitly or implicitly.  The energy performance of new housing is essentially controlled by Building Regulations and although these have got stronger, and continue to improve, there is still a long way to go.  The evidence is that we can design and build extremely low energy houses at little or no extra cost.  The real problem of course is the existing stock of buildings, the rate of new building won’t even begin to solve the problem in any of our lifetimes. 

Improving energy efficiency brings with it a layer cake of benefits at many levels – including improved health, job creation, reduced need to spend on energy supply infrastructure and improved energy security.  Reducing fuel poverty through improving the efficiency of the building stock would bring all these benefits and more – at a national level we need to ensure that all the benefits are valued and counted in a cost benefit analysis.  Typically when looking at energy efficiency the focus is just on the value of the energy savings and these important co-benefits are not valued.   

At the operational and business level we need to move away from the idea that fixing fuel poverty is in the arena of big, publicly funded and centrally run programmes.  Instead of specifying methods and processes in great detail we need a system in which we pay for the results we want – numbers of households removed from fuel poverty and units of energy saved.  Delivery of the results should be left to a market responding to a price which would be determined by the holistic benefit analysis.  Technical and business model innovation should be encouraged.  Given that many (most if not all) households in fuel poverty pay a higher unit price for their energy than “normal” customers, there is potential and the margin currently being made by the energy suppliers that can be diverted into funding efficiency measures.  This requires energy suppliers with new business models that offer a full energy services, energy supply and efficiency measures – suppliers that could be small new entrants (entering the energy supply market has become easier in recent years), large corporates not currently in the energy supply business but looking to disrupt the energy market, (think mobile phone companies and other companies with good brands and lots of touch points with customers), or the emerging municipal energy companies which will have social as well as financial objectives.      

There are encouraging signs of technical innovation which new entrants into the energy market, (as well as the incumbents), need to incorporate into their thinking.  WHISCERS, developed by the Sustainable Energy Academy and the National Energy Foundation, which uses laser scanning and factory cutting greatly reduces the time, disruption and mess of installing internal insulation.  Technologies such as micro-Combined Heat and Power are entering the market, some wrapped into new energy supply models such as offered by Flow Energy.  Other emerging innovations include the use of virtual electricity meters to supply electricity to specific devices including heaters at times of low wholesale prices – a technology that has been developed by Ubitricity in Germany for electric vehicle charging.  Although whole house retrofits are always going to be the ideal there is much that can be done by using a range of single measures such as Zenex’s boiler heat recovery system, voltage regulation and LED lighting.  We need to encourage innovation in technology and business model to solve the fuel poverty problem once and for all.

 

Dr Steven Fawkes

11th April 2014

Steven Fawkes has over 30 years experience in energy efficiency and has several roles in the sector including being on the Investment Committee of the London Energy Efficiency Fund and a Non-Executive Director of Bglobal plc – a smart meter and energy software business.  He has published widely on energy efficiency including two books and his blog – onlyelevenpercent.com

 

        

Speed dating brings edtech ventures together with investors

Speed dating is not for the faint hearted but at our first ever edtech speed dating evening we helped to make over 430 introductions in under 3 hours! The event was in partnership with Edmix and Emerge Venture Labs, and 36 edtech ventures from across the UK gathered to ‘date’ our panel of twelve investors at Google Campus. With only 3 minutes to make their pitch, the pressure was on the entrepreneurs to really hone their message and get to the heart of what their product could do.Edtech speed date

 

Kieron Kirkland, from investor the Nominet Trust welcomed this novel approach:

“It was a great opportunity to meet so many new ventures, and see how active the edtech sector is with great entrepreneurs and inspirational ideas that have the potential to make a real impact.”

 

 

So, what can we learn from this style of event?

-          From the investor perspective, speed dating is a great way of meeting a large number of ventures in a concentrated amount of time, after which you can follow up with those you have a connection with

-          We had more productive ‘dates’ with ventures that did their research on investors as they had background knowledge and an idea of the context to start off with

-          A product demonstration and a specific call to action really helped ventures stand out from the crowd

-          The edtech sector is a flourishing community that clearly thrives off the opportunity to get together, make connections and share experiences with each other. So, events like these can really work but make sure you plan and get the right ventures and investors in the room

What is a self-sustaining community?

A question I often get asked when meeting people in relation our impact investment fund, is what do we mean by ‘self sustaining communities’?  Is there even such a thing as a self-sustaining community, as we now live in an increasingly interconnected world where any given community relies on the inflow and outflow of goods and services to deliver its daily existence? Are we chasing some utopian vision of the future where we will all be expected to grow our own food, generate our own energy, set-up community banks, lend and borrow our underutilised household assets, maybe even spending one day per week helping to care for our frail neighbours? The simple answer is ‘no’. But the more nuanced answer is ‘maybe’.

 

Through the work we do at Nesta, we are fortunate to meet some amazing people who are pioneering different ways of doing things to the benefit of a broader constituency than themselves and their own bank accounts. People motivated by creating greater equality of access to the goods and services we need to lead our lives. People experimenting and delivering new business models that often turn old value chains on their head. We strongly believe that there are more involving and rewarding models of delivering our daily needs, and that technology can be a great enabler of change if harnessed correctly.

 

In a series of blogs over the coming months I will look at each of the specific social outcomes we are looking to positively address through the investments we make under the self-sustaining community theme and explore what motivates our focus and what type of innovations we are looking to back. The social outcomes under this theme are:

·  increased energy efficiency by individuals and communities;

·  increased resource efficiency by individuals and communities;

·  increased self-reliance of individuals and communities in materials, energy and social capital;

·  increased access to products and services for individuals and communities experiencing exclusion;

·  increased ownership and/or management of assets by communities experiencing exclusion.

 

We view sustainability from both an environmental as well as social dimension, with a particularly interest in solutions that are affordable/accessible to the least well off. And although not evident from the list above, we are taking a broader interpretation of ‘community’ than one purely defined by its geographic boundaries. 

 

If you have any comments or suggestions on this subject, or are working on innovations that could scalably address one or more of these outcomes, then I would love to hear from you

 

Alex Hook

 

Why social entrepreneurs should be celebrating today

Every year budget day reminds me of my early career in one of the big accounting firms.  Clients were invited, food and drink arranged, it was a major event. We stood around big screens and watched all of the Chancellor’s speech – the tax guys actually got animated! It’s a bit different now, most of the news is trailed in advance and we are rarely surprised.

 

But this year I am excited again because today’s budget is really important to the world of social investment and the social entrepreneurs it backs. That’s because we’ll find out the rate of the Social Investment Tax Relief – that might not sound exciting but is has the potential to be a major landmark for investment in social impact organisations.

 

In the last 20 years over £8.7 billion has been invested in more than 20,000 businesses through similar schemes such as the Enterprise Investment Scheme (EIS), with tax incentives catalyzing a flow of private capital. So, imagine if the same capital flowed into charities or social enterprises.

 

So who exactly will this tax relief benefit?

 

The specific measures will focus on registered social sector organisations; CICs, community benefit societies and charities and although the schemes are starting small they will grow. It’s been glaringly obvious for some years that we needed to bridge the gap between tax reliefs on charitable donations and small company and venture capital reliefs. If taxation can be used to incentivise socially useful behavior, isn’t starting a social enterprise at least as good as starting a small private company?

 

It’s vital that early stage investors who want to drive impact can invest in any sort of organisation without their investment allocation or investment decisions being swayed by tax advantages. This new tax relief will start to level the playing field and make investing in charities and social enterprises as attractive as investing in small private companies.

 

When an entrepreneur builds a business focused on social impact they don’t wake up every day thinking about the corporate form of their organisation or about tax incentives for investors. They think about the difference their product or service can make to people’s lives. When Ben Allen the CEO of Oomph! formed his company to provide exercise classes in care homes, his primary motivation was to improve the lives of elderly residents. He is committed to making a real social impact.

 

Ben set up his organisation as a limited company and his early investors benefitted from the EIS scheme before we then invested £200,000 from the Nesta Impact Investments fund. If Ben had set up as a CIC two years ago, raising money might have been more difficult. Importantly, the tax changes in this budget should make raising capital for the Bens of the future easier if they decide to take a different route.

 

Although some may disagree, it really shouldn’t matter what corporate form is used to drive social impact – a private company where management is motivated by social impact, a board that supports that mission and investors that want to maximise impact and grow scale can be a really powerful force for change.

 

But while we welcome today’s announcement on tax relief, we’d still like to see the government do more.

 

Initially the new measures only apply to small investments of around £150,000 and the range of types of qualifying investments will be restricted. It will be fascinating to see how these limits affect the early take up of the scheme. Although our impact fund can provide debt and other instruments like revenue share arrangements, most of the early stage impact investments of around £150,000 haven’t been in charities or other registered social sector organisations. We really hope that the new incentives, even with their restrictions, will encourage a flow of capital to help scale some great social innovations and ideas.

 

Finally, we hope the government follows through on their intention to broaden the scheme as announced in their Social Investment Roadmap. Although this may take 18 months to work through European legislative bodies, this should increase the amounts of relief and scope of investments, which will build on the first steps being taken this week. Further work on indirect investment into funds by individuals, social impact bonds and increasing the qualifying amounts could also make a real difference to the sector.

 

So, while I think the days of partying to budget announcements are long gone, today the sector should be celebrating what could prove to be a real landmark moment for social impact investing.

 

Matt Mead

 

Speed-dating – a new type of investor networking!

There’s no denying that the education technology sector is growing rapidly, and we, at Nesta Impact Investments, are passionate about supporting its growth and the ecosystem developing around it. Over £1bn has been invested in technology in UK schools in the last five years and there are no signs that things are slowing down. Indeed, the recent BBC Radio 4 series, My Teacher is an App highlighted the potential that technology offers education and how it could transform teaching.

So we are determined to find and back the best talent, the most innovative ideas, and the most effective products.   

As part of this, we are delighted to announce we are co-hosting an event with Edmix as part of the Edtech Season that has recently been launched by Emerge Education, in partnership with Eton College and Saïd Business School. 

Our Edtech-Investor Speed Date evening is dedicated to introducing Edtech businesses to investors, accelerators, and industry experts in the sector, to give them a more direct, personal way of connecting with them.  Just like traditional speed-dating, businesses will be given the opportunity to spend three minutes with each investor to present their business and swap business cards. 

Investors attending include Nesta Impact Investments, Bethnal Green Ventures and Orange Start-up Ecosystem. There’s no prize or financial incentive; this is a chance for investors to connect with great teams and explore exiting new products. 

We’re expecting high attendance, so anyone interested needs to apply. Please read the application procedure and get in touch as soon as possible to secure your place. Short-listing is on a first come, first served basis.

Look forward to seeing you there!

 

Isabel Newman – March 2014

 

 

Why we invested in FutureGov

This month made the fifth investment from our impact fund – into FutureGov

FutureGov is transforming public services by using elegantly designed technology to improve local government services in areas of high importance, cost and risk such as child protection or social care. Nesta has been working with FutureGov for a number of years throughout the different stages of its journey. 

Nesta Impact Investments has now made an investment of £750k to support FutureGov to really scale up its products and services across the UK.  Here’s a little bit about why we think this is such an exciting investment….

 

What do FutureGov do and what’s their impact?

FutureGov designs digital products that improve public services.  Read more about it here.  One of the best things about FutureGov is that its tools and products have all been created in response to an identified social need, and developed with a user centred approach to their design. 

Its first product Patchwork was developed in response to the Baby P crisis.  The crisis brought to light the need to improve communication between practitioners working with a vulnerable child.  FutureGov worked with front line staff to design a solution that would work for them in practice – putting an effective tool in the hands of people who can make a difference.

 

Why was FutureGov a good investment?

Nesta Impact Investments is seeking to back great entrepreneurs with a passion to solve social problems. FutureGov’s founders, Dom and Carrie, are exceptionally talented yet modest individuals.  They know how to use their talents to achieve positive impact, through product innovation but also motivating other people to change their practice.  They also know the limits of their own abilities and are open to bringing other people’s views on board.  Exactly the kind of entrepreneurs we want to work with. 

We see huge potential for FutureGov to increase the scale of use of its products and services and therefore to achieve real and lasting impact in the UK and, overtime, internationally.  Public services are facing challenging times; experiencing increased demand for services while at the same time having to implement steep budget cuts.  The sector urgently needs to find ways to improve services and deliver ‘more for less’ – and that’s what FutureGov’s approach can deliver.

FutureGov’s products address big social needs, such as how we address the issue of loneliness among our older population, and how we provide the best care possible to society’s vulnerable children.  These issues are prevalent across all of the UK, making FutureGov’s offering highly relevant to all local authorities. 

 

What is the investment for?

Our investment will allow FutureGov to scale up what it has already developed.  The Patchwork and Casserole products are already being used in a number of local authorities in the UK and internationally.  Our investment will help the FutureGov team reach more councils and therefore more people.   

But the ambition goes much further than that.  There is a pipeline of really exciting products coming through, addressing issues such as helping people to understand and discuss mental health issues, helping people and families manage their personal finances, and much more. 

Watch this space!

 

Katie Mountain – February 2014

Let’s put some Oomph into care

When I started working with the Nesta Impact Investments team I was expecting to be challenged by the jargon that went with social investment and de-mystifying it. I was expecting to work with social entrepreneurs that were more used to giving me their ‘elevator pitch’ than the stories of the people they ultimately help.

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Guest blog: innovation in education

One of the outcomes our fund is looking to target is increasing the educational attainment of children and young people, which means we’re constantly on the lookout for, and meeting with, education entrepreneurs.  And what’s unique about us is that we’re lucky enough to have a team of education experts in-house at Nesta, who we work with closely along every step of the investment process, from the screening of deals through to supporting our portfolio with their expertise and networks.

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We reveal the first social entrepreneurs backed by Nesta Impact Investments

At Nesta Impact Investments we are very excited this week to be announcing the first four investments made from our social impact fund.   Our fund is all about investing in talented entrepreneurs with a vision to make a real and lasting difference to society.  We are proud to be building an interesting portfolio of organisations tackling issues such as elderly care, poor educational standards and financial exclusion. 

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