Boxed Energy

Efficient solutions

We all know that improving energy efficiency is key to achieving net zero and protecting the planet. What you might not know is that the social housing sector has a significant problem with its energy infrastructure, with outdated heating and lighting systems that are costing landlords and residents both time and money. So, what if there was a solution to this problem that could also benefit the environment? Well, fortunately, there is: Boxed Energy.

Turning up the heat

“The social housing sector has a lot of ageing heating and lighting plant which is now reaching the very end of its lifecycle, but the capital expenditure required to replace it is simply outside the very restricted budgets that landlords of housing associations have,” explains Mike Button, Director of Boxed. “What was needed was a means of financing the new energy systems, packaged in a way that would enable landlords to apply it to either individual sites or their whole portfolio, while also giving an energy saving to the residents. Boxed Energy was devised as a juncture between these three stakeholders of funder, landlord, and resident.”

The business was formed in 2012 as a joint venture between FCS Energy and Places for People, a leading developer of affordable homes. Beginning as Boxed Heat, between 2014-2017 the company retrofitted 33 new ultra-efficient boiler systems in social housing developments across the UK. Working in partnership with the landlords, Boxed finances the new systems and assumes responsibility for supply and installation as well as ongoing maintenance. Under Boxed’s unique Heat Supply Agreements, landlords simply pay fixed charges each month, spreading the cost of the upgrade over a 20-year period and having absolute cost certainty for all repair and maintenance costs.

Boxed Director, Peter Tuch, says, “Our models are based upon the premise that putting in modern systems is more efficient than using older systems. The financial savings are such that you can use some to fund the new equipment and still have enough to potentially pass savings on to the residents, and the reduced energy usage is good for the environment.”

Glow up

In 2018 the company introduced Boxed Light, replacing communal lighting in tower blocks and other residential developments with smart LEDs. Gone are the flickering fluorescents bathing hallways in dingy lighting at all hours of the day; instead Boxed’s systems can be programmed to illuminate at specific times and respond to sensors.

Not only does the new lighting create a brighter and more homely environment for the residents, but as Peter alludes to above, the energy savings that Boxed’s solutions yield are considerable - with carbon savings of up to 80% for the lighting systems and over 30% for the heating systems. The lighting systems offer the same convenient payment solution as the boilers, with a 10-year finance model that also provides landlords with double the standard warranty period.

Demand for upgraded lighting in social housing, especially in tower blocks, is extraordinarily high. Following the Grenfell tragedy, landlords now have an obligation to review their emergency lighting from a fire safety perspective and much of the old infrastructure is simply inadequate. Boxed’s new lighting systems incorporate monitoring controls which automatically deliver testing reports in line with British Standard compliance requirements. Many of the lighting plants are also Wi-Fi enabled to alert engineers if there’s a problem with the batteries in the emergency lighting, so residents will never find themselves in a dangerous situation where the power goes out and exit routes are plunged into darkness. Similar control systems are fitted within the Boxed Heat units to immediately identify problems.

“We provide complete peace of mind for the landlord and tenant as well as a much more manageable payment solution,” adds Peter. “If anything goes wrong with the boiler or the lights during the agreement periods, we deal with it. From a landlord’s point of view, the cash flow savings on repairs and maintenance are substantial.”

New partnerships

In order to continue meeting the demand for their solutions, Boxed Energy approached Allied Irish Bank for funding, who introduced Mark Stewart and Johnston Carmichael’s Corporate Finance team to complete due diligence on the deal.

Johnston Carmichael worked with Boxed to enhance their financial model and support them through the fundraising process. Boxed’s concept was met with unanimous approval and in 2021 the business received £20m from AIB. Both Mike and Peter cite this as one of their proudest moments in the business, with Mike saying, “It gave complete credence and validation to this project that we built up from an idea on a white board.”

Procuring this funding was a pivotal achievement for Boxed, but the cash injection wasn’t the only reward – they also gained a valuable relationship with the Johnston Carmichael team.

Peter recalls, “Mark and the team did an absolutely brilliant job on the modelling but what we found really interesting with Johnston Carmichael was that they were proactive about identifying problems and bringing us solutions, rather than just doing what the bank asked. They took the initiative on bringing in their tax and VAT teams so that the numbers all worked together.”

The funding has allowed Boxed to move forward with upgrading more systems in developments for Places for People as well as pitching to additional housing associations, and it is here that Johnston Carmichael’s network is helping the business reach a much wider audience.

“Mark is clearly respected by the banks, which helped us with our fundraising, and he has also introduced us to Scottish Borders and the Scottish Housing Federation - giving us connections we wouldn’t have had otherwise, plus the credibility that comes with a personal introduction. He’s always looking at what we can do next and how we can make this work,” says Peter. “It never feels like the team only contact us when they’ve got a service to sell. They keep in touch all the time because they believe in our product and want us to succeed. You need people with that enthusiasm and confidence in you to help push you forward.”

Johnston Carmichael’s deep understanding of the Energy sector has been another benefit for Boxed. As the net zero initiative continues to gather speed, organisations will be increasingly required to report on their sustainability practices and adhere to climate-related regulations. In order to amplify its support for companies looking to take advantage of the transition to a low-carbon economy, in 2021 Johnston Carmichael reshaped its approach to the sector, forming a specialist Energy, Infrastructure and Sustainability (EIS) team. Spearheaded by Mark, the team brings together the firm’s considerable expertise in renewable energy, infrastructure, oil & gas and sustainability.

Mike notes “When we first met Mark it was immediately clear that he had a genuine passion for green finance and the energy & infrastructure sector as well as a huge amount of credibility in terms of his previous experience. Social housing is understandably a conservative sector - they’re not prepared to do anything that’s too risky, and that’s where Mark’s support is so important for us. Plus, he has a unique perspective in really understanding our clients from his experience working in the infrastructure sector as well as in green finance.”

Bright sparks

The nature of Boxed’s business model means the core team of four work with a range of partners, from housing associations to technical teams to, of course, professional advisers – and for Mike and Peter, it’s crucial that their advisers embody their own principles.

While Johnston Carmichael’s technical skill and extensive network were invaluable for the Boxed team, what really set the firm apart was the recognition that its values of ‘doing the right thing’ and ‘leading our future’ were in natural alignment with Boxed’s ethos. Johnston Carmichael’s commitment to supporting its local communities and championing sustainable energy solutions is a natural fit for Boxed’s ambitions to use its unique model and eco-credentials to benefit as many people as possible.

“What we’re really proud of at Boxed is that it solves a genuine problem. We’re delivering a fair solution that gives people really substantial energy savings, lessens the burden on landlords, creates a safer and more pleasant living environment for residents, makes financial sense for our backers, and helps the planet too,” says Mike.

For every unit Boxed Energy provides, the efficiency of the new system guarantees a reduction in CO2 emissions and Boxed records data on the outputs pre- and post-installation. This allows landlords to benchmark their savings and accurately report their emissions in order to meet any carbon reduction targets they may have been set. Boxed also offers the option of hydrogen boiler systems and renewable heating solutions, enabling even higher carbon offsets.

Trusted advisers

With a pipeline of work lined up, the Boxed team are eager to keep the momentum going. The business hopes to carry out a second round of fundraising to finance further projects and expand their capabilities, with the guidance and support of Johnston Carmichael to help drive them forward.

“Mark sees, like us, that there is scope to do more than light and heat,” says Peter. “With our model we can deal with anything where there’s an energy efficiency. And that’s where Johnston Carmichael can really help us. We need the sounding board and the challenge they offer. It sounds like a cliché but it’s true – the team really are our trusted advisers. There’s a lot we can do together and we’re very excited about the next 12 months.”