With the retrofit market seemingly caught in an unhelpful feedback loop, Sophie Whinney argues that more integrated supply chain structures are necessary in order to build trust across the spectrum and create the levels of growth required to hit our decarbonisation targets.
There exists a paradox in the retrofit market. On the one hand demand is too low to drive business development. On the other, customers struggle to find competent installers. How is it that we find people on both sides eager to invest, but unable to progress? The market appears to be caught in an unhelpful feedback loop.
Meanwhile, transformational growth is needed now. By 2028, we’ll need to install six times as many heat pumps as we did last year to meet our decarbonisation targets.
Clearly solutions are needed that help build supply and demand in tandem. We’ve seen negative consequences arise from short-term influx of demand to which the supply chain struggles to respond, and vice versa.
Given all this, in the short term, does activating supply chain growth need a helping hand at the local level?
Regen unpacked this question for the MCS Foundation and UK Green Building Council, to inform the inception of the new Local Area Retrofit Accelerator (LARA) programme. The research found that, rather than blaming either lacklustre supply or demand, at a high level two things are holding back the market in these early stages. Firstly, trust – which has been eroded at all levels. Secondly, fragmentation – the growing pains of moving past piecemeal offerings towards different service providers working together to deliver a complete package of support for customers.
Some exciting industry-led solutions to these challenges are emerging. In our research, we explore the different supply chain integration methods and discuss their trade-offs regarding delivery (efficiency, reliability and accountability) and customer trust and experience.
However, this is unlikely to fully address issues around trust and fragmentation in the near term. Proactive support is needed.
If the UK is serious about meeting its decarbonisation targets, there are several opportunities for local actors (be it local government, community groups or businesses) to play a convening role to fill gaps:
Nurture a local retrofit community. Providing structured forums not only facilitates knowledge exchange, but can help build trust, enabling more effective resource sharing.
Assess supply chain health holistically. A deep understanding of, and connection with, the local retrofit sector is imperative for informative assessments that account for qualitative indicators of health and context-specific nuances.
Support schools to inspire the next generation. Schools must actively showcase diverse retrofit workers’ stories to raise awareness among the next generation, who will make up the retrofit workforce of 2028 and beyond.
Adopt a partnership approach to training. Career pathways need to be codesigned, and collaboration is needed between industry, colleges, local authorities, job centres and community groups.
Bolster and consolidate demand through area-based projects. Local actors should explore new ways to pool demand, building on social housing retrofit projects. These could also be connected with apprenticeship and training schemes.
Critically, long-term and dedicated resource is needed to act on this – building trust takes time. The role of ‘supply chain relationship manager’ is emerging to take this on, but consensus on the name has not yet been reached – additionally contributing to the sense of lack of joined-up thinking.
Regen is continuing to explore this issue, including in our work with local authorities on Innovate UK’s Net Zero Living Project. Do get in touch if you are interested in contributing to future work on the topic.
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