Designed to help affordable housing providers fight fuel...

Designed to help affordable housing providers

fight fuel poverty.

Social Stock Exchange Impact Report

Social Stock Exchange Impact ReportSwitchee January 2017


Contents1. CEO Overview 12. Social Purpose and Context 103. Who Benefits 134. Activities and Operations 175. Stakeholders 196. Evidencing of Social Value 217. Other Sustainability and Reputational Issues 26


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Switchee is the first B2B smart thermostat custom designed for large social landlords. We are bringing an innovative, automatic heating control combined with a domestic environmental monitoring solution to the UK social housing market. Our aims are twofold:

• To reduce residents’ energy consumption by up to 15% and in so doing combat and ultimately eliminate fuel poverty.

• To provide social landlords with actionable, enterprise level analytics aimed at optimising their ability to allocate energy efficiency retrofit budgets, deliver better asset management services and ultimately create better outcomes for residents – all whilst saving money.

Our solution, which replaces traditional thermostats, is particularly relevant to the affordability element of the energy ‘trilemma’. 1

Product differentiation

Switchee differs from the current range of B2C smart thermostats, such as Hive or Nest, which are reliant on a domestic Wi-Fi connection, in three key ways:

1. GSM connectivity: Wi-Fi penetration in social housing varies, but can be under 20%. Switchee cannot rely on residents’ Wi-Fi, so each device is mobile phone network (GSM) as well as Wi-Fi enabled. Switchee can be installed anywhere and remain connected. This enables us to reach all parts of social housing, including the digitally disenfranchised.

2. ‘Fit and Forget’: we operate in sector where levels of resident engagement with landlord installed technology can be low. Switchee can operate entirely passively; it will regulate heating and send data to our cloud even if residents do not interact with it. Over time we anticipate more and more residents will manually operate Switchee so it has a as simple, intuitive touch screen which has been designed for operation without the need for instructions. But Switchee will work if no-one touches it.

3. Landlord dashboard for display of actionable, data driven insights. As a B2B solution a key part of our offering is the provision of actionable, data driven insights to our landlord customers. Over the course of 2016 we have invested significantly in the development of our web-based portal on which social landlords can review their Switchee estate, see alerts for metrics such as fuel poverty, mould or poor insulation or review device health and download environmental data from individual Switchees.

Switchee is the only smart thermostat which clears the two main barriers to entry into the social housing market: low Wi-Fi penetration and low resident engagement. We don’t need Wi-Fi and we don’t need engagement.

Section 1:

CEO Overview

1 https://www.worldenergy.org/work-programme/strategic-insight/assessment-of-energy-climate-change-policy/


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The Switchee Landlord Dashboard

Summary metrics with specific building KPI’s below

Landing Site


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The Switchee Thermostat

Each Switchee contains five sensors: temperature, humidity, air pressure, motion and light. Sensor readings are passed to our secure cloud where a proprietary algorithm processes information to produce a bespoke occupancy profile for each home. It takes three weeks for the first accurate profile to be calculated and from that point each one is constantly and automatically updated. This occupancy profile allows Switchee to predictively optimise heating settings. Simply put, Switchee knows when you are at home and turns the heating off when you are not there.

In addition to the five sensors contained in the Switchee head unit, up to 250 additional sensors can be wirelessly connected to each Switchee unit via z-wave. 2 This allows us to add granularity to specific readings, for example by placing additional temperature or humidity units around the home or to increase functionality, for example by adding CO2, leak or energy consumption detectors.

Data from Switchee sensors is analysed to provide targeted, cost reduction insights for landlords which we display live on our dashboard. Switchee provides the following metrics/alerts and will rank properties to identify potential issues:

• Risk of fuel poverty• Mould risk• Poorest insulation • Overheating risk • Void risk • Time to heat • Humidity

In addition to alerts, landlords can book engineer appointments through the dashboard and will soon be able to message tenants directly and remotely test heating systems.

Installed head unit showing main touch screen display

2 z-wave is an IoT communications protocol, designed for use in buildings. It uses a radio frequency that can penetrate walls.


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Our Vision

Organisational Summary

• Eliminating fuel poverty;• Cutting the carbon emissions of social housing stock;• Providing key environmental data to social landlords, empowering them to make better energy

efficiency improvements to improve living conditions; and • Delivering tangible asset management savings to social landlords, setting up a virtuous circle:

savings creating an impetus to install more Switchee’s which leads to greater fuel poverty reduction, further savings for landlords and better outcomes for residents.

The founders drew on their experiences of working in social housing, commercial engineering, hardware design, founding and growing hardware businesses and energy efficiency to identify an underserved market and significant opportunity to make a difference.

Since becoming a private limited company in July 2014, Switchee has grown to a team of eight, with ambitions of doubling in size each year until 2020. The business development and operations teams are based in London, with the R&D team based in Bristol. Switchee outsources manufacturing to ATT Walters in High Wycombe, and completes installs with the use of sub-contracted electricians.

Switchee’s structure has evolved since its inception and will continue to do so as it undergoes phases of rapid expansion whilst scaling up, and to ensure expansion is achieved in accordance with our social and environmental values.

Switchee was founded with the aims of:


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Key Members of the Switchee Team:

Adam started his career as a consultant at BCG, with a specialisation in medical technology and FMCG, before leaving to found his first hardware business. Adam is an experienced entrepreneur with a proven track record in delivering complex commercial hardware solutions at scale.

Russ is a senior engineering manager in Ministry of Defence and a serial entrepreneur, having run a successful electrical design consultancy. Russ also patented, commercialised and sold the IP to the UK Government for a robot which he designed that automated a blood test programme. Russ has numerous awards, including the Engineering Leadership Award (RAEng) and UK Best Mechanical Engineering Student 2005 (IMechE).

Prior to Switchee Ian had 10 years’ experience in corporate finance and capital markets, with a special focus on client relations and sales. Having his started his career at Morgan Stanley, Ian then joined a financial services start up where he built a private capital raising franchise alongside his day job as a corporate financier. Ian was a Royal Marine Reservist for four years.

Wojciech is the architect of Switchee’s cloud-based data analytics service and web-based client dashboard. He has previously designed, engineered and deployed an encrypted data storage system capable of processing petabytes of data; taking this solution from concept to series A funding of $2.8M, building a tech team of 10 individuals. He has previously led teams in blue chip environments, including Volvo and Charles Tyrwhitt.

ADAM FUDAKOWSKI

RUSS MACMILLAN

IAN NAPIER

WOJCIECH TUROWICZ

CEng - CEO. University of Cambridge MEng Engineering 2.1, MBA INSEAD

CEng - CPO. University of Cambridge MEng Engineering 1.1, MBA INSEAD (Distinction)

CCO. University of Cambridge MA History 2.1, MBA INSEAD

CTO. Technical University Wroclaw BSc Computer Science and Management 2.1


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Ed is Switchee’s social housing expert, with 7 years’ experience working for two large Housing Associations and before that 2 years with Local Partnerships, the precursor of the Homes and Communities Agency, the HA regulatory body. For 2 years after INSEAD, Ed managed the Welcome Trust’s £1Bn London property portfolio and is currently Corporate Development Manager at Regus.

Isabel is Switchee’s buildings, environmental sciences and urban poverty expert, with over 3 years’ operations experience as a Distribution and Operations Manager for two private businesses. Isabel ran a climate change project in the Norfolk Broads that gathered all stakeholders of the area to exact change in response to the effects of climate change in Norfolk.

Matthew has over 20 years’ experience delivering embedded systems for a range of critical applications including power substations and transport networks. He has the ability to build and validate different applications based on a wide variety of chipsets and operational requirements. Matthew has built Switchee’s firmware from scratch.

ED WARRICK

ISABEL TAYLOR

MATTHEW CONSTANCE

Non-Executive Director. University of Durham BA Geography 2.1, MBA INSEAD

University of East Anglia BSc Environmental Sciences 2.1.

Firmware Engineer


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Our advisory board consists of:

Pilgrim is a seasoned technology innovator with a string of connected-product startups under his belt. He was CTO at AlertMe which was sold to British Gas in 2015 and became Hive. He now runs DevicePilot who supply some services to Switchee.

David spent 10 years as Vice-President of General Motors and completed the establishment of the largest industrial joint venture in Russian history – a $340m integrated automobile facility between GM, AVTOVAZ and the European Bank for Reconstruction and Development. He is a Harvard Law School graduate.

Ian began spent his career in private equity, mostly with 3i where he was Chief Investment Officer (2009-2011). After 3i, Ian left to set up the UK’s Green Investment Bank, where he was its first CIO from 2012 -2014. Ian now dedicates a portion of his time and resources to social impact ventures.

PILGRIM BEART

DAVID HERMAN

IAN NOLAN


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Alex is a Co-founder of Mustard Seed Impact Ventures, a social impact investor. He was formerly SVP at Mubadala in Abu Dhabi, Project Leader with BCG in New York and an Analyst with Goldman Sachs in London. He has a Stanford MBA a BA in Government and Economics from the London School of Economics.

ALEX PITT

Vinnett is Head of IoT (Internet of Things) at Telefonica UK. She leads a dedicated team of specialists delivering solutions through partnership and is heavily involved in the UK’s smart cities program.

Mike started his affordable housing career with the GLC housing department in 1969. He is now a Board member at Homes for London and Chair of Westminster Community Homes.

VINNETT TAYLOR

MIKE YOUKEE


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Social Stock Exchange and Switchee

At its core Switchee is an impact business. We were delighted to be introduced to the Social Stock Exchange by Mustard Seed Impact Ventures who, alongside Clearly Social Angles, led our seed round. To be part of a group of like-minded companies with the backing of the SSX team is hugely appealing to the management team on a fundamental level. We look forward to getting to know other businesses, sharing ideas, learning from them and of course working with the SSX team on a number of fronts.

Practically, we see two main benefits from membership:

1. Customer networking and business development

The Social Stock Exchange has established contacts with Housing Associations (HAs) and Local Authorities (LAs). We would hope to be involved, where appropriate, in events organised with HAs and LA’s to discuss issues relevant to housing - for example fuel poverty, energy efficiency, retrofit and maintenance, stock surveying and resident well-being. We are very keen to be part of these important debates and would hope to be able to bring some insight to the conversations from our own experience.

The adoption of digital technology in UK social housing is lagging the consumer space by some margin, for a variety of historical and organisational reasons. The landscape is changing but there is much work to be done and many benefits for social landlords and residents alike still to be won. Switchee is very much at the forefront of this evolution and we see an opportunity to help the SSX enhance its ability to lead the conversation, particularly at the intersection of technological innovation and quantifiable social impact.

2. Investment and corporate finance support

We will raise a funding round in 2017. Membership of the SSX could play an important part in this process, from investor introductions and/or advice from the SSX team prior to launching our investment round.

Over and above business development and investment, membership of the SSX gives us a platform from which to articulate the core social mission of our business. This is very important to us. Given our alignment in purpose, we anticipate there will be other mutual benefits that accrue to both parties from Switchee joining the SSX. We are looking forward to exploring our partnership.

Reporting & Information Disclosure

Switchee provides a quarterly update on impact and commercial progress to its investor base. Annual accounts are circulated to all investors on filing date. In 2016 we hosted one investor drinks and update presentation and plan to hold at least one in 2017.

For our wider stakeholder community we will launch a bi-monthly newsletter in the first half of 2017.


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Mission Statement

Switchee has two linked missions:

• To combat fuel poverty • To provide social landlords with actionable building and welfare analytics and KPI’s aimed at

optimising their ability to deliver certain asset management and landlord services Two investor directors Ian Nolan, a member of the ClearlySo network and ex CIO of the Green Investment Bank, and Alex Pitt, Founder of impact investment fund Mustard Seed sit on our Board. Part of their role is to monitor progress and see that planned strategy remains true to our mission.

Fuel Poverty

The latest figures estimate that 2.38 million English households are in fuel poverty, representing 10.6% of all English households.3 Fuel poverty is only likely to worsen and begin affecting increasing numbers of the population. This is largely due to two factors:

1) Households close to the fuel poverty threshold have seen lower than average increase in income, as shown by figure 1, and have been pushed into fuel poverty.4

Figure 1: Comparison of annual percentage change in median full income and AHC

Section 2:

Social Purpose & Context

3 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/557400/Annual_Fuel_Poverty_Statistics_Report_2016_-_ revised_30.09.2016.pdf 4 Ibid.


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Income by income deciles, 2013-2014

2) Energy prices have increased more than energy efficiency gains, and at a faster rate than all CPI items, as shown by figure 2, leaving households with higher energy costs. 5

Figure 2: Domestic energy prices and the Consumer Price Index (cash terms), 2003-2014

The UK government’s Fuel Poverty report states that households in older and larger buildings, those with non-condensing boilers and those with solid walls compared to cavity walls (of which there are still 8.5m in the UK), see higher levels of fuel poverty. 6 Many social housing dwellings, built in the 1960s and 1970s, meet these characteristics and are hence highly inefficient, making it yet harder for the low-income tenants to avoid fuel poverty.

Furthermore, the government’s Fuel Poverty report states unemployed households have higher levels of fuel poverty, with lone parent households having the highest; the unemployment rate of working age social housing tenants is 52%, whilst approximately a third of social housing tenants live in lone parent households.7 These statistics show that the social housing market is heavily affected by fuel poverty and requires simple solutions which can reduce energy bills and combat fuel poverty.

5Ibid. 6https://www.gov.uk/government/collections/household-energy-efficiency-national-statistics7http://s3euwest1.amazonaws.com/pub.housing.org.uk/Worklessness_welfare_and_social_housing_-_Executive_summary.pdf


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Energy Efficiency

The energy efficiency of the UK’s housing stock is poor, since 88% of the 22 million homes were built pre-1990. Whilst in London 37% of carbon emissions are domestic, compared to 25% worldwide. Despite this, the Energy Efficiency Standard for Social Housing (EESSH) requires social housing providers to achieve SAP rating targets for specified house types by 2020, ultimately cutting household carbon emissions by 29%, with new targets being set up to 2050. However, progress in making social homes more energy efficient has stalled after radical cutbacks in the amount energy companies contribute to works, a new report has found. 8 The 2015 Sustainable Homes review revealed the average SAP rating of 1 million social homes dipped from 70.9 to 70.3. This dip was widely attributed to cuts in social housing funding and the sudden and unexpected changes to efficiency regulations that are frequently imposed upon social landlords.

To compound the problem, current energy efficiency measures, such as solar, wall insulation, ground source heat pumps present a range of logistical challenges. From a business case perspective, results are uncertain, costs are up to £100,000 in extreme cases per household and they can take weeks or months to retrofit. During implementation, tenant engagement can be poor, it disrupts the provider’s ‘day job’, a lengthy consultation process is required and rent can be lost as properties are vacated for works. There is a significant opportunity for a simple, or even passive, easy to install and cheap solution.

Lack of Data

Part of the issue faced by Landlords owning tens of thousands of typically dated social homes is that they have to make retrofit and cyclical repair, energy efficiency upgrade and community management decisions with very little data. They own a lot of homes, but they don’t know what is going on inside them. A typical Switchee customer will own between ten and fifty thousand homes: deciding where to target energy efficiency upgrades, knowing which homes are falling short of Decent Homes standards or even knowing which homes are occupied can present a challenge.

It is Switchee’s vision to provide live building KPI’s so that landlords can identify which properties have the poorest insulation, the highest risk of condensation and therefore mould potential, or even which are occupied during a cold snap and have the temperature set below NHS recommended levels.

8 http://www.insidehousing.co.uk/energy-efficiency-progress-on-social-homes-stalls/7010051.article


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Social Housing Residents

Fundamentally, Switchee seeks to address fuel poverty and improve the living conditions of tenants in social housing. Switchee is designed specifically for low income tenants who face financial challenges and are disproportionately affected by the cost of energy. The most recent figures show the number of households in fuel poverty in England was estimated at 2.38 million, representing approximately 10.6 per cent of all English households. Fuel poverty will increase further as the price of fuel is projected to rise further in the long term. However, Switchee, with its major strategic goal to eliminate fuel poverty, can alleviate these challenges, providing low income families with more disposable income by cutting their energy bills by up to 15% (£150 p.a.). Switchee achieves this by:

1. Learning tenant occupancy patterns and optimising thermostatic boiler settings.

2. Offering proactive energy saving advice to tenants and compares tenant energy consumption with that of their neighbours, leading to positive behavioural changes in relation to energy use.

3. Triggering automatic alerts if temperature or humidity thresholds are breached.

4. More efficient boiler use.

Section 3:

Who Benefits


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Social Housing Landlords

Switchee brings considerable benefits to social landlords, which will enable better energy efficiency improvements to their homes that will improve the lives of residents. Unlike the range of consumer smart thermostats available, Switchee is designed for social housing. It has Wi-Fi and GSM so can be installed anywhere and remain connected - we don’t rely on residents’ Wi-Fi. Moreover, it has been designed to operate as ‘fit and forget’ technology - it will save energy and report back even in households where residents choose not to engage with it at all. If residents do want to interact with it, we have given the device an intuitive, clean user interface which doesn’t require instructions.

Switchee aggregates the sensory data (temperature, light, motion, humidity and air pressure) on the landlord dashboard, which presents landlords with KPIs, such as mould risk, poor insulation and fuel poverty risk. This information encourages landlords to make proactive repairs to their housing stock.

Using the messaging function, Switchee can be used as a communications portal between residents and landlords. This function ensures residents are made aware of any visits regarding maintenance to their home. This tool ensures maintenance visits are convenient for both residents and landlords.

Furthermore, prior to the heating season, Switchee can remotely test boilers by sending commands to a household’s heating system. This can reduce the pressure on maintenance teams at the start of the heating season: faulty boilers can be identified and pre-repaired to prevent multiple call outs at the beginning of winter. If boilers are not working to full capacity, or if other thresholds (mould risk, fuel poverty risk, time to heat, etc.) are being exceeded in certain households, automatic alerts will be sent to Asset Management teams, encouraging a proactive response.

Mould is a major issue in social housing, and by encouraging a proactive response to households with high mould risk, Switchee can reduce damp and mould expenditure before the cost of remedying escalates. By taking the average difference between the internal temperature and dew point of each household, the Switchee Dashboard clearly indicates which households require damp prevention. This encourages landlords to be proactive and intervene in damp properties at risk of mould, this will improve living conditions for their residents and save them money before the issue escalates. In addition, Switchee enables landlords to detect issues in the fabric of their buildings causing high levels of humidity, allowing them to target resources more effectively.


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Once maintenance and energy efficiency measures have been put in place, SSwitchee allows landlords to assess the effectiveness of their retrofit upgrades. Using the analysis of pre and post installations sensory data and thermal profiles, landlords can objectively and remotely assess the effect of building fabric upgrades such as EWI or double glazing. Similarly, Switchee provides comparative data to highlight performance gap monitoring between new build properties to ensure building contractor building specifications are met following delivery from development to asset management.

The Environment

According to our calculations Switchee will have a significant cumulative effect on overall UK energy and carbon output, as set out below.

Energy Savings

We estimate Switchee energy savings to be 15 % per household, which across thousands of properties has the potential to represent significant savings. However, since Switchee has only been on the market since the end of 2015, our energy saving estimates are based on data from the National Energy Efficiency Data-Framework (NEED) report and our own readings. 9

The assumed saving per Switchee per annum is 0.984 MWh. 10 Thus, having installed 160 units, our overall savings estimates for our first year is 157.44 MWh.

The mean gas energy usage per social or low income household in the UK in 2013 was 10.95 MWh. Assuming a 15% energy saving, we would save 1.64 MWh in energy per household. Yet, by adhering to the Energy Trust’s estimation that 60% of yearly gas energy bills goes towards heating, we have reached the figure of 0.984 MWh saving per Switchee household, per annum.11

1.64 x 0.6 = 0.984 MWhAssumed 15% energy savings 60% yearly energy towards heating Mean energy saving per Switchee

9 https://www.gov.uk/government/statistics/national-energy-efficiency-data-framework-need-report-summary-of-analysis-201510 Ibid11 http://www.energysavingtrust.org.uk/home-energy-efficiency/boiler-replacement12 The CO2 Experts Ltd.13 http://www.energysavingtrust.org.uk/home-energy-efficiency/boiler-replacement14 https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2016

CO2 Savings

Switchee will have a similarly significant impact in reducing the UK’s cumulative carbon output.

The assumed CO2 saving per Switchee per annum is 0.181 tonnes, equivalent to a household investing in a £1,100 on a 2Kw 5m2 solar system. 12 Thus, having installed 160 units, our overall CO2 savings estimate for our first year is 28.96 tonnes.

The mean gas energy usage per social or low income household in the UK in 2013 was 10.95 MWh. Assuming a 15% energy saving and by adhering to the Energy Trust’s estimation that 60% of yearly gas energy bills goes towards heating, we would save 0.984 MWh in energy per household. 13 Finally, by using DEFRA’s CO2 conversion factor (0.18407) , we have reached the figure of 0.182 tonnes of CO2 savings per Switchee household, per annum. 14

0.984 x 0.18407 = 0.182 tonnesMean energy saving per Switchee CO2 Conversion Factor CO2 savings per Switchee


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The issue of energy efficiency in social housing was highlighted by the European Planning Studies’ 2012 report that emphasised the importance of retrofitting existing social households with improved energy efficiency measures to cut CO2 output. 15 The problem was augmented in 2015, when Sustainable Homes reviewed the environmental performance of 66 housing associations and revealed the average energy efficiency rating was the same as in 2012.

There is therefore a clear need for a simple and affordable energy saving solution that can be rolled out en masse, we, and our 15 clients to date, we believe this is Switchee. Moreover, the same report asserted the importance of tenant behaviour change, stating that ‘tenant engagement was a ‘big opportunity’ for energy savings, with an estimated 26,820 tonnes of energy saved through energy advice and training, compared to 57,615 saved through energy efficiency improvements’. 16 Switchee’s energy consumption alerts, comparing their tenant’s consumption with that of their neighbours, is designed to fundamentally alter tenant’s approach to energy consumption.

Public Health

In early 2016 the Guardian reported that cold homes are a bigger killer across the UK than road accidents, drug abuse or alcohol abuse. In the report Maria Wardrobe, director of National Energy Action stated that “Cold-related illness and hospital admissions will cost the NHS more than £22bn over the next 15 years”. 17 Switchee’s heat and humidity monitoring will enable landlords to pinpoint households at risk of dangerously high mould or those with poor insulation and can fix any problems before they lead to any serious health risks. Similarly, landlords can send alerts to households where temperatures are consistently low to help prevent public health issues arising as a result of cold living conditions. We are committed to helping solve the significant public health issues caused by poor living conditions as part of our combined goal to improve the social and environmental problems surrounding social housing.

15 Minna Sunikka-Blank, Jun Chen, Judith Britnell & Dimitra Dantsiou (2012): Improving Energy Efficiency of Social Housing Areas: A Case Study of a 16 Retrofit Achieving an “A” Energy Performance Rating in the UK, European Planning Studies, 20:1.17 http://www.insidehousing.co.uk/energy-efficiency-progress-on-social-homes-stalls/7010051.article


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‘Lock step’ business model

Switchee’s business model is designed so that our core social mission and financial performance operate in ‘lock step’. Revenue and impact are not separable: as we grow revenue and our installed base, we grow our ability to combat fuel poverty and reduce carbon emissions. For each property we install into, we aim to save a certain amount of energy, which can be calculated as both a £ and CO2 saving. We don’t believe in an ‘impact report’ per se. ‘Impact’ is not separable from ‘business’. Our financial model includes impact calculations and the consolidated output shows profit and impact bottom lines in parallel – these are linked and flexing assumptions effects both.

Over our base of quantifiable impact (£ and CO2 savings) we are looking to build a structure of other outcomes. Positive impact on living conditions, enhancement in quality of life through savings or fabric upgrades, health benefits from better heating and/or reduced damp and mould, energy awareness and improved landlord / resident communications will become more quantifiable and increasingly evident as we begin to scale and have more units in the field. In our 2018 report we expect to provide tangible figures on homes improved and positive health impacts. Based on our sales forecasts we are confident Switchee will lead to significant social and environmental impacts in the social housing landscape.

As previously described, Switchee optimises heating settings, reducing energy bills and the carbon footprint of low income homes by up to 15%. Based on our sales forecasts, within 5 years Switchee will have saved a cumulative total of £85m worth of energy. This money goes back into the pockets of the most vulnerable in our country, making a material reduction in fuel poverty as well as energy savings.

The data provided by our heat, motion, humidity and air pressure sensors is used by landlords to improve the energy efficiency and upkeep of their housing stock. We look forward, in future reports, to updating our impact metrics to reflect the positive outcomes thereby created.

Hardware Design and Manufacture

Hardware and electronic development are managed in-house, with Bristol based sub-contractor Realise Design used for support in mechanical and user interface design. Realise have also conducted market research and our initial branding exercise.

All of our hardware is manufactured by ATT Walters in High Wycombe. We are committed to keeping volume manufacturing in the UK and supporting UK employment.

Cloud Architecture

Switchee’s cloud architecture, where we communicate with devices, receive data and conduct analysis, is run on Microsoft Azure. Azure is considered the most secure, industry leading cloud provider for both Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS). Azure provides the combination we

Section 4:

Activities and Operations


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need of a robust, scalable platform so we can ensure business continuity for our customers, married with industry leading data encryption and storage protocols to ensure the safety of all of our data.

Also hosted in Azure - to maintain reliability, scalability and security across our whole architecture - we have built a customer facing data and analytics dashboard.

Revenue Model

Our revenue model is to charge an upfront annual fee for Switchee hardware and an annual fee for subscription to our web-based energy and data analytics dashboard

Patents

We have submitted a British Patent application (GB1423260.7). Our research report indicates the product is patentable with specific innovations including the size, and form of the product, the interface mechanism with the wall pattress and the unique integration of sensors, decision making, output devices and a touchscreen. We have an ongoing registered trademark application, and will make full use of registered design rights and copyright.

Where appropriate, we will publish our innovations in academic and trade journals, to promote awareness of our innovations. We will keep our website updated, and promote the benefits of our innovation on social media.

Customer Base

Since launching in late 2015 we have grown our customer base to 12 Housing Associations and 3 Local Authorities. Our client base, listed below, own a total of more than 250,000 homes.

User Support

We operate a 24/7 helpline which social housing residents can call if they need assistance operating Switchee. Our team is on hand to provide telephone and in person support - with elderly or vulnerable residents located near the office in London we can be on site within hours.

In advance of the first deployment of Switchee version 1 in late 2015, we had customer support resource in place to assist with any experience bugs associated with first rollout. We also conducted - and continue to conduct - post installation surveys. We have learnt a lot from talking to and visiting residents and have enjoyed getting to know some users well.


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Section 5:

StakeholdersSwitchee’s key stakeholders and how they are engaged with in order to deliver our social mission.

Stakeholder Description and Engagement

Investors Switchee has received equity capital investment totalling over £1.05 million since its establishment. Our main investors are Mustard Seed, ClearlySo, Telefonica, Pi Labs, InseadAlum Ventures and a number of private individuals in the UK with strategically relevant backgrounds and experience. Switchee regularly communicates with its investors through face-to-face meetings, reports and investor drinks.

Mentors / Advisors Switchee have compiled a highly experienced group of advisors, who have a range of backgrounds in clean technology, social housing, and social impact. As a relatively new, fast growing company it is critical we draw upon the experiences and knowledge of our advisors as much as possible; for this reason our executive directors have regular meetings with our advisors, to gain insight into how best to approach different aspects of the business.

Employees Switchee has employed three new members of staff in the past year, and aims to double in size in 2017 as we scale the business. Staff at Switchee benefit from fulfilling employment under good working conditions, with a range of opportunities to develop skills. Staff get exposure to all aspects of the business and work closely with the company’s experienced directors.

Student & Education

Switchee’s collaboration with universities has enabled students and graduates to gain broad business experience while making a contribution to Switchee’s social and environmental impact. We have also hosted work experience for London school children to experience the environment of a growth company and were involved in an initiative to introduce young girls, who might not otherwise have the opportunity, to technology companies.

Customers – Housing Associations / Local Authorities

Switchee’s Housing Association and Local Council customers are the path by which the company’s social and environmental impact is delivered. The installation of Switchee in our customers housing stock enables the reduction in energy consumption across UK social housing and is the necessary condition for data collection and analysis to empower landlords to create better outcomes.

Switchee’s customers benefit directly by: reduced fuel poverty in their communities, great energy efficiency of housing stock, greater data and insight into housing stock allowing optimal retrofits and repairs.

Our Business Development and Operations team regularly engage with customers to build strong relationships ensuring optimal service is provided.


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Stakeholder Description and Engagement

Direct Users – Social Housing Residents

Social Housing tenants benefit from reduced energy bills and the prospect of greater and faster maintenance services in their households.

Switchee is committed to rapidly responding to the needs of tenants, and has a 24/7 helpline open for tenants with questions regarding their Switchee. We take very seriously our responsibility for the heating of tenants’ households and are committed to responding accordingly.

Communities Switchee brings connected technology, previously only marketed at owner-occupier consumers, to families living in social housing.

We have engaged with social housing communities to gain feedback on Switchee’s performance. We have received very positive feedback, with some households saving 20% on their energy bills and one resident reporting a 50% saving.

Design Partners - Realise

Switchee have established a strong partnership with Realise Design, who are used for support in mechanical and user interface design. Realise have also contributed to marketing collateral by providing market research and branding.

Manufacturing Partners - ATT Walters

Switchee outsources manufacturing to ATT Walters, High Wycombe. We are committed to keeping manufacturing in the UK, which we expect to bring significant economic benefits to the UK manufacturing industry as we anticipate spending £13m in the UK supply chain by 2020.

Installation Partners - T Brown

We are partnered with T Brown Group to organise and complete larger installs the London area, while Housing Associations outside of London use their own employees or maintenance contractors to complete installations.

As part of Switchee’s services, we spend a day training sub-contractors and installation teams how to install Switchee units in households with System Boilers and Combi Boilers.


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Impact Units Calculation

Fuel Poverty Reduction

• £ saved (desktop calculation)

• Annual Energy Consumption – 10.95 MWH• Adjust for Heating Element of bill – 60%• 60% x 10.95 MWH = 6.57 MWH• Assumed Switchee saving = 15%• 15% x 6.57 MWH = 0.99 MWH• Assumed annual Switchee saving, per house = 0.99 MWH• Assumed annual Switchee saving per house = £150


• £ saved (future calculations, in progress)

• 2016/17 heating season energy usage in Switchee properties compared to 2015/16 heating season before Switchee installation

• Data seasonally-adjusted to normalise for differences in weather over the two seasons

• Buildings Research Establishment (BRE) will independently validate the results

• Target release of data – Q3 2017


• £ saved (future calculations, yet to be implemented)

• If Switchee can be connected to energy consumption data, and given access to past consumption data, it will be possible to provide live savings information.


• £ reduction • Mean fuel poverty gap = £37118

• Assumed Switchee energy saving per household = £150 • £371 - £150 = £221• Fuel poverty gap in Switchee households = £221


• % reduction • Mean fuel poverty gap = £37119

• Switchee energy saving = £150• (£150 / £371) x 100 = 40.4%• % reduction = 40.4%

Section 6:

Evidencing of Social ValueMeasuring impact is core to our mission.


18 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/557400/Annual_Fuel_Poverty_Statistics_Report_2016_-_ revised_30.09.2016.pdf

19 Ibid


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Fuel Poverty: excerpt from DECC (now BEIS) 2016 Annual Fuel Poverty Report

“A household is considered to be fuel poor if it has higher than typical energy costs and would be left with a disposable income below the poverty line if it spent the required money to meet those costs. It captures the fact that fuel poverty is distinct from general poverty: not all poor households are fuel poor, and some households would not normally be considered poor but could be pushed into fuel poverty if they have high energy costs. Fuel poverty is therefore an overlapping problem of households having a low income and facing high energy costs…

…The Government remains interested in the amount of energy people need to consume to keep their homes warm. They therefore measure fuel poverty based on required energy bills rather than actual spending. This ensures that households with low energy bills that actively limit their use of energy at home, for example, by keeping their home cold are not overlooked…

The fuel poverty gap is a measure of the additional costs faced by fuel poor households compared to non-fuel poor household thresholds. This is explained in Figure 3, below, where the indicator consists of:

• the number of households that have both low incomes and high fuel costs (shown by the shaded area in the bottom left hand quadrant in Figure 3); and • the depth of fuel poverty among these fuel poor households. This is measured through a fuel poverty gap (shown by the vertical arrows in Figure 3), which represents the difference between the required energy costs for each household and the nearest fuel poverty threshold.

The fuel poverty gap for each individual household is then aggregated across all fuel poor households to produce an overall aggregate fuel poverty gap, which gives a sense of the depth of fuel poverty at a national level.” 20

Figure 3: Domestic energy prices and the Consumer Price Index (cash terms), 2003-2014 21

20 Ibid.21 http://www.cieh-housing-and-health-resource.co.uk/mental-health-and-housing/key-issues/


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Fighting fuel poverty is at the core of our mission and as the figures above show, we expect to make a significant dent in the level of fuel poverty in the UK. Reducing fuel poverty has a number of important secondary impacts. Firstly, by reducing the amount of money vulnerable families spend on domestic energy, we create tangible financial savings that can be spent on keeping households warm and well maintained. This has a large material impact on the quality of life of tenants, with well documented impacts on physical and mental health and wellbeing. The NHS and Chartered Institute of Environmental Health encourage households to be kept warm to prevent heart and lung diseases, depression and slower growth and cognitive development in children. 22

Impact Units & Measurement

Calculation

CO2 Reduction

• Tonnes saved (desktop calculation)

• Assumed annual Switchee energy saving, per house = 0.99 MWH

• CO2 conversion factor = 0.18407 23 • 0.99 x 0.18407 = 0.182 tonnes • Assumed annual Switchee CO2 reduction per house = 0.182

tonnes

CO2 Reduction

In conjunction with reducing fuel poverty, another of Switchee’s major strategic aims is to reduce energy consumption and simultaneously reduce carbon emissions. Switchee uses nudges on its user interface to encourage behavioural change towards energy usage, encouraging tenants to avoid unnecessary heating and to book regular boiler services to ensure their heating system is working at maximum efficiency. Much like our impact on fuel poverty, the higher the volume of Switchees in the field, the greater the environmental impact achievable by Switchee.

22 http://www.cieh-housing-and-health-resource.co.uk/mental-health-and-housing/key-issues/23 https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2016


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Impact Units Outcome

Appointment scheduling

No. of missed appointments

On average, each missed appointment in social housing costs £72, and with more than 50% of gas safety appointments alone missed in social housing per year, HA’s waste thousands of pounds. Switchee’s occupancy sensing and messaging functions enable HAs to schedule appointments for maintenance visits, when we know residents will be in. Our dashboard shows HAs the time of the week with the highest probability of tenants being at home and through Switchee’s messaging function, HAs can send appointment request that tenants can accept or decline.

With the use of this scheduling function, we aim to cut the number of missed appointments and significantly reduce expenditure on missed appointments, providing HAs with more money to spend elsewhere, namely maintenance to improve the living conditions of their tenants.

Mould detection

Properties improved / NHS £ saved

Mould is a major problem faced by HAs. One of our major clients receives 400 complaints a year regarding mould growth. The base cost of a mould wash is £400. If left untreated this can rapidly escalate to over £1000 and frequently much higher. The health implications of living in damp, mouldy conditions for extended periods of time can be severe. By alerting landlords to mould risk, Switchee enables proactive, early intervention and remedy. This saves money.

Preventing damp and mould improves living conditions and, more importantly, residents’ quality of life. This has a direct positive impact on health, reducing incidents of respiratory illnesses and consequently saving the NHS money.

Abandoned property alerts

No. of properties abandoned

Abandoned properties with the heating left on can cost up to £29 per week in energy bills. Using Switchee’s occupancy data we can quickly identify and alert HAs of households that are void and remotely switch the heating off.

Temperature alerts

NHS £ saved By alerting housing management teams of occupied sheltered housing (housing for vulnerable residents) where temperature falls below set safe levels (the NHS recommendation is 18 degrees Celsius) during cold weather, Switchee may prevent illness. The prescription of heat to prevent illness is being trialled by a number of boroughs in England.

Qualitative metrics – methodology being established with pilot customers

The frameworks by which we measure the below areas of impact are being developed in partnership with our trial customers. We look forward to updating with progress on these (and other, new) fronts in our 2018 report.

Switchee’s Key Performance Indicators alert HAs of multiple issues in their housing stock, facilitating faster solutions that save money and allow better targeting of resources. By saving HA’s money, Switchee frees up expenditure within HA’s / LA’s to invest in other areas, namely those that have social impact i.e. improving living conditions and reducing health risks. We may be able to measure the flow-through impact of this freed up additional capital.


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Section 7:

Other Sustainability and Reputational IssuesWhilst Switchee offers both tenants and landlords a range of benefits, we are aware that some unintended results may occur as a result of operations. Set out below are the unintended consequences we anticipate:

Greater Energy Usage & CO2 Emissions

A primary aim of Switchee is to reduce fuel poverty. In optimising heating settings we will create more disposable income for residents. It is possible that some residents elect to take the savings generated in comfort (heat) as opposed to money. Say, for example, we saved a resident £100 on an annual energy bill. That resident may choose to maintain Switchee heat settings and save that money. Alternatively, that resident may choose to spend the £100 saved on additional heat / comfort. In this scenario our fuel poverty and CO2 saving performance would be flat - but we would have created higher levels of comfort. The point is that our objective of combating fuel poverty my create incentives to act differently, in a less energy efficient manner.

As a hardware company, we must account for energy usage during manufacturing, transportation of goods and transportation of electricians to install. We currently test and manufacture in High Wycombe, however, we install units across the UK and have ambitions to install in countries across Europe in the next 5 years.

Data Breaches

Data management, data privacy and security are at the core of our activities. A theft of Switchee data would harm residents, if personal information became available. Furthermore Landlords, in the event of a data breach, may have to deploy resources alongside Switchee to assist residents. Switchee’s reputation as a trusted partner would be damaged and we may lose our ability to act as a registered data controller. This is a risk we take very seriously. It is mitigated by storing all of our data on Microsoft Azure, which has the highest levels of IaaS and PaaS cloud security.

Some residents might be uncomfortable with the concept of Switchee’s occupancy algorithm and/or KPI monitoring. As a business we believe in the power of using the right data to create positive outcomes. It is fundamental to what we do to be open and transparent about which data we are using and why. We educate all residents about Switchee: how it works and how the data is used to optimise heating settings, save them money and make more informed maintenance decisions to improve the quality of their homes.

All users are asked to signed a data privacy agreement. The policy is available on our website.

For more information or a demo,

Please contact:

www.switchee.co

[email protected]

4th Floor, 20 Air St

London, W1B 5AN

Date post:	18-Mar-2018
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