Insulate 25 million homes: Meeting the challenge

The BBC reports that the UK’s commitment to cutting carbon dioxide emissions is in jeopardy because up to 25 million homes will not meet future insulation standards, and estimate that more than one home will need to be insulated every minute.  This presents the two challenges of how to retrofit insulation into a home quickly and effectively; and also funding the massive scale of work.

Previous schemes have focused on the ‘able-to-pay’ market – a sector of the homeowner market with adequate financial resources to self-fund building improvements; and on social housing tenants living below the fuel poverty line.  If the UK has any hope of meeting the challenge of insulating 25 million homes by 2050, a working financial model must be in place to help fund the cost without ‘passing the buck’ to occupants already struggling with a spiralling cost of living.

Ignoring the ‘able-to-pay’ sector, there are three financial models in development to make insulation both affordable and beneficial to homeowners, tenants and landlords:

Both the Green Deal and the Energy Company Obligation have already been used to upgrade the insulation in UK homes, but with mixed success.  The advantage that they offer is that there is already a framework in place for these schemes, but they have both demonstrated significant obstacles (see below) that must be overcome to be truly effective.  Energiesprong UK is a new, not-for-profit organisation with EU funding; based on a successful programme in the Netherlands.

A New Green Deal?

The Green Deal was supposed to be a panacea for the whole market: homeowner, private rented and social housing; with the protection of the ‘golden rule’ – The cost of installing energy saving measures must be less than the predicted savings from the energy bill.  However, take-up of the Green Deal was less than the Government targets because of the 7% interest rates on the Green Deal loans, which meant that the energy savings measures had to cut a substantial chunk off from the energy bill to comply with the ‘golden rule’.

Greenstone Finance have since taken over the Green Deal, and are set to reintroduce the scheme retaining the golden rule, but it is also rumoured that high interest rates will continue as well.  The Green Deal is effectively marketed as no-risk to landlords, because the tenant pays for the installation through the savings in energy bills.  However, could a Green Deal loan affect the rental or market value of the property, because the Green Deal loan is an extra cost that would have to be borne by future tenants / homeowners?

Another criticism of the Green Deal is the assessment methodology, which is a very simple survey that built upon RdSAP data.  As this is often not available, the Green Deal Advisor would often need to carry out a domestic energy assessment to produce an Energy Performance Certificate even if one already exists.  This drives up the cost of the assessment, but is necessary because although an EPC can be freely downloaded from the EPC Register, the RdSAP data is held by the issuing DEA and cannot always be retrieved.

ECO – Making the Energy Companies Pay

The Energy Company Obligation was a Government energy efficiency scheme that mandated a requirement for the ‘big six’ energy companies to take an active involvement and fund energy improvement measures in fuel poor households.  It’s currently in an extended second phase of development, but traditionally ECO funding has been difficult to obtain because it was widely regarded that the existing fabric must meet the same thermal performance as new-build homes, without excessive cost.  The challenge in upgrading existing fabric is that more insulation is often required because of the poor thermal performance of the building materials used in the masonry wall.

A new category was developed for tricky walls – The Hard-To-Treat-Cavity (HTTC) wall which was a masonry cavity wall with less than 50 mm between the two bricks, which meant that the thickness of blown-in insulation would be insufficient to meet modern U values, or provide adequate protection against rain penetration; so thereby causing a damp problem where there was previously none before.  HTTC walls had to be effectively treated as solid masonry walls, and could be insulated either internally with a dry-lining system or externally clad in EWI.

The people who benefit most from the Energy Company Obligation are homeowners, as they fall under the Carbon Emissions Reduction Obligation (CERO), Carbon Saving Community Obligation (CSCO) and Home Heating Cost Reduction Obligation (HHCRO); which all promote the installation of insulation to the building envelope.  Social housing tenants can also apply for ECO funding through the CERO and CSCO obligations, but private rental tenants can only apply under the HHCRO obligation with the landlord’s permission.

Energiesprong UK – The ‘Energy Leap’

‘Energiesprong’ is fast becoming a new buzzword around Parliament and social landlords, because the ambitious scheme also provides a forty-five year guarantee on the energy performance of the improvements; provided by the installer.  It also offers a fast installation, relying on prefabricated, made-to-measure insulation solutions that are applied externally over the existing building.  The aim of the Energiesprong model is that it will enable ‘net zero’ carbon emissions by a combination of reducing space and water heating demand, and electricity generation sufficient to meet the demands of the building via photovoltaic panels.

However, a tenant with Energiesprong measures installed cannot look forward to no energy bills; because the tenant still needs to pay the cost of the installation via paying into an ‘energy plan’ with the social landlord, who will be looking to private investors for funding.  The energy plan will give the tenant an agreed ‘energy allowance’ with the ability to pay more for increased energy consumption, much in the same way that mobile phone operators offer call plans on contracts.

It was estimated by the Westminster Sustainable Business Forum that due to the technical and planning restrictions, the Energiesprong scheme would only be suitable for approximately 5% of the existing stock (2.5 million homes). Although when crunching numbers, if Energiesprong can be used to insulate 10% of the required number; it’s arguably still a significant contribution.  However, the biggest challenge faced by Energiesprong UK is obtaining the funding for energy improvements at a reasonable rate; because private investors will expect a high return for a small portion of the market.

Where Does Thermal Economics Get Involved?

Thermal Economics is a leading insulation manufacturer, with products approved by the British Board of Agrément and the Local Authorities Building Control registered details.  As UK specialists in reflective foil insulation, we have developed solutions for floor, wall and pitched roof insulation to improve the thermal performance of new and existing homes.

To find out more about how Thermal Economics insulation products can be used to meet your thermal performance targets, please contact our dedicated technical team on 01582 544255 or e-mail: [email protected]