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HOUSING PROVIDERS TACKLE ENERGY PRICES. Alister Steele Managing Director Castle Rock Edinvar. Introduction to the project Rationale for a market intervention Developing a Business Case Emerging Business Plan Your opportunity. Collaboration Partners. Berwickshire HA

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    1. HOUSING PROVIDERS TACKLE ENERGY PRICES Alister Steele Managing Director Castle Rock Edinvar

    2. Introduction to the project • Rationale for a market intervention • Developing a Business Case • Emerging Business Plan • Your opportunity

    3. Collaboration Partners • Berwickshire HA • Castle Rock Edinvar HA • Clyde Valley HA • Grampian HA • Kingdom HA • Trust HA • West Highland HA • West of Scotland HA • Renewable Power Exchange

    4. Our Vision Addressing market failures which contribute to fuel poverty and harnessing renewable energy • Tackling the 'poverty premium’ where low income and geographically remote customers pay a higher price for their energy • Establishing a vertically integrated supply chain, with secure sourcing of renewable energy, enabling the supply of affordable energy to low income customers

    5. Project Development • Stage 1 Research and Scoping: ‘More than Warm Wishes’ report • Stage 2: Business Plan Development through ‘Vital Spark Incubation’ (Verification, testing, agreements) • Stage 3: Establish and launch licensed energy supply company with renewable generation aim

    6. Energy Supply Chain Image courtesy of SP Energy Networks

    7. Opportunity to be a game changer • Exceeded our expectations for establishing a viable and sustainable licensed energy supply company • Scale is critical • Key risk is that this is not brought to market and the Big 6 can carry on with business as usual • Window of opportunity pre-smart meter mass roll-out scheduled for 2015 Feasibility Study Findings

    8. ‘Our Power’ Business Model • Licensed supplier of gas and electricity and supplier of heat • Owned and controlled by social housing providers and other community controlled organisations • Shareholding through membership • Non profit distributing and social enterprise • Robust business model • Create our own integrated supply chain with generation capacity

    9. ‘Our Power’ GuidingPrinciples • Sustainable and scalable business • Focus on those living in fuel poverty or on low incomes • Generates renewable energy to benefit its customers • Be a company that customers can trust and rely on • Innovating the energy supply chain and its operations to deliver a fresh approach

    10. Tariff Challenge Supply Costs District network charges Transmission costs Cost of pre payment Wholesale energy costs Inequities in Pricing Pre payment tariffs Off gas Use patterns Tenure differentiation Price increases Fair and competitive tariff structure Smart Metering No shareholder dividend Renewable generation Local Grids Company cost structure Management Strategy

    11. ‘Our Power’ Some Numbers • Initial participating landlords own 100,000 homes • Controlled market entry based on 1000 voids • Base assumption of 50,000 customers after 5 years • ‘Profitability’ in year 3 • 50 staff employed by year 5

    12. ‘Our Power’ Housing Provider Engagement • Membership/stakeholder • Customer growth Voids Introduction to tenants Corporate energy requirements/staff • Energy provider Power purchase agreements for renewable energy generators • Funding Debt funding for working capital Investment in renewables

    13. Our Power