Key outcomes FUNCTIONALITY Improving functionality is core to the NZN model. By renovating homes to improve energy performance, it increases the functionality of residential buildings, pro- duces co-benefits for human and environmental health, and upgrades housing built decades ago. Community interventions increase the functionality of the wider neighbourhood, for example, through the incorporation of additional green space or transport infrastructure. ENVIRONMENT Increased energy efficiency of homes and adjacent sus- tainability interventions (e.g. local renewables gener- ation, green mobility measures) reduced greenhouse gas (GHG) emissions, saving, on average, an esti- mated at £25.6 million in energy costs. ECONOMY The economic benefits of building retrofits are clear. According to the International Energy Agency (IEA), energy efficiency measures could create up to 9 million jobs per year globally through 2030. Pilot projects such as one led by the West Midlands Combined Authority2 are demon- strating the economies of scale achieved by taking a street-by-street approach. Economic benefits are at the individual, project/ neighbourhood and societal level. Individual residents and households should see a reduction in energy costs as improved energy efficiency decrease energy use, all other things being equal. At the neighbourhood scale, the capital cost of interventions benefits both from economies of scale and economies of proximity. SENSE OF PLACE NZN creates a strong sense of place by working at the neighbourhood scale in close collaboration with the communities, which strengthens the communities’ attachment to the place. Replicability While place-based models are always influenced by the local context, the blended funding model (Figure 2) that backs the delivery model is scalable to attract institutional private capital. This scale could be achieved by aggregating multiple projects in different places. A blended funding model is required to support NZN development as the financial returns from retrofit (pri - marily via energy savings) would be insufficient to repay the upfront cost of retrofit within a reasonable timeframe. Therefore, to attract return-seeking private finance, some level of non-return finance must be incorporated to increase the attractiveness of the returns for the remain - ing portion. In Figure 2, the suggested forms of non-return funding would be public grants and/or outcome buyers. These groups are motivated by non-financial outcomes, such as environmental and social benefits of the NZN. By incorporating these funding sources, a leverage effect is created through attracting additional return-seeking financial investors for whom the investment would not have been possible on a standalone basis. FIGURE 2 Stakeholder funding flows 1 Initial blended capital stack funds NZN vehicle 2 Supply chain funded to deliver NZN to community 3 Resident energy bills reduced allowing NZN service charge to be paid 4 Annuity income stream sold to long-term funders. Capital raised used to refinance initial short term private sector debt 5 Co-benefit outcomes tracked and reported to outcome buyersNZN implementation vehicleSupply chain Community Energy supplierPrivate sector debt finance 20-40 year tenorPrivate sector debt finance 2-4 year tenorPrivate sector grant fundingOutcome buyers Capital not repaid, but specific outcomes delivered 1 41 15 52 2 33 45 4 Source: BwB INNOVATIVE PRACTICE: RENEW Districts 3

PR199 Innovative Practice RENEW 2024