In asking the question “does retrofit really work?”, you first need to decide what you mean. Some argue, for example, that the rebound effect – people turning up their heating when their home has been insulated – means that it doesn’t. The counter-argument is that if people want to use their savings to make their home more comfortable then that is their prerogative, especially for those who previously under-heated their homes.
Others point to the high cost of funded exemplar/pilot projects. Again, these prove little since more often than not they are specifically designed to trial unusual or innovative ideas without paying much attention to pure cost-effect.
So, it’s a complex issue and a lot depends on your point of view. But in responding to the question for Parity, I would like to break it down into two components; ‘can retrofit be cost-effective?’ and ‘is retrofit effective in non-cost terms?”
Can retrofit be cost-effective?
Undertaking a retrofit project, all other things being equal, should definitely save you some energy. But whether the measures pay for themselves over the long-run depends on a number of factors.
How deep your retrofit is going to be?
Our analysis of over 700 properties shows that in most situations the sweet spot for cost effectiveness is between 50% and 60% reductions. You get limiting returns the more you do to a property and aiming above this will often lead to theoretical paybacks in the hundreds of years.
How much of your retrofit can be considered a marginal extra cost?
If you are having to carry out major works anyway, e.g. the roof needs replacing, all the plaster is blown, a full rewire is required, you are completing an extension, then the marginal extra cost of installing energy measures is much reduced. You can probably knock around £500 off the cost of a PV install if you already have the scaffolding up to fix the fascias. The cost of insulating a suspended floor when the floor is up for rewiring or plumbing is tiny compared to doing it just to install the insulation. Essentially it’s about taking opportunities when you can, without blocking pathways to later measures.
Have you considered cost effectiveness in deciding what to install?
If you haven’t carried out a decent analysis of all the potential measures for your house then you are bound to make some costly mistakes. Numbers may not be your thing but if they show that adding an additional 50mm of insulation is going to cost thousands and save a few extra pence then you may decide to spend you limited resources elsewhere. When carrying out analysis it really is worth taking your actual or proposed use of the property into account as this can radically change what are the most appropriate solutions. The mistakes can range from simple errors that waste a bit of money for no major benefit to falling for erroneous sales claims that could end up costing you money to run.
How much will you pay for the measures and how much of your retrofit will you do yourself?
It’s amazing how different quotes for the same work can differ so much. If you aren’t getting at least 3 quotes for a replacement boiler then you’re likely to be paying well over the odds. I’d also recommend avoiding the big suppliers and getting quotes from local installers – they don’t have to pay large corporate overheads, advertising budgets and shareholder dividends. My double glazed sash windows from a local carpenter were 30% of the price of those from a flashy company with great web presence.
Similarly if you can do some of the smaller jobs yourself then you can save thousands. There is nothing to stop you installing a window and getting Building Control to sign it off – you’ll probably save yourself £300 a window! Lots of insulation works can be done DIY with the added benefit that you’ll have an attention to detail and will know what is actually hidden behind the plasterboard.
Where are energy prices, and incentives going?
Energy prices have increased 8% year on year on average for the past 5 years. We’ve also seen the introduction of a raft of confusing incentives from the Feed In Tariff for electricity generation, ECO for a range of measures such as wall insulation, Green Deal Cashback incentives and the forthcoming Renewable Heat Incentive that will pay out for solar thermal, biomass and heat pumps over a 7 year period. All of these will impact the scale of retrofit that is cost effective and also can skew the order in which measure should be selected.
How will you finance your retrofit?
Hopefully you aren’t financing it with a payday loan as nothing will save you money as much as you will be forking out. You may be one of the few hundred that is tempted by the 7% interest rate of a Green Deal plan. Essentially anything with a financing element will serious limit the cost effectiveness of any measure significantly. If you do need to finance the works then extending a mortgage is often the cheapest option.
Whether there is an effect of retrofit on property values
With people talking about a potential housing bubble it might not be too wise to dwell on property prices too much. However, detailed analysis from 2013 by DECC showed that on average across the country the improvement of a EPC rated G to A/B would result in a 14% increase in its value or around £25,000 based on the average property price. If their analysis is accurate, then that makes a huge difference to the cost-effectiveness of retrofit!
Is retrofitting effective in non-cost terms?
If done well, you can end up with a warm and cosy house. Just from a simple quality of life perspective that can make it worthwhile, but for others it could make significant improvements for health and well being.
A significant proportion of our population is in fuel poverty. This means that they have a tough choice between food, clothes and energy. If any of these are lacking then education, health and behaviour can quickly suffer. The more energy efficient the house the more money available for all three. It’s worth considering that fuel prices are a combination of both supply and demand. This means that if those not in fuel poverty are able to reduce their demand then theoretically the price should also decrease – another help to those in fuel poverty.
Uninsulated fabric elements attract condensation and can lead to dangerous mould growth. A combination of upgrading the fabric whilst also introducing humidity controlled ventilation can eliminate this mould growth and also inhibit dust mites. So in short you need to put a value on the comfort and health benefits. Would you prefer a warmer, healthier home or a new sofa?!
A Case Study
Our demo house underwent a full renovation. Because many elements were carried out DIY and concurrent working was maximised, the marginal cost of doing additional works above and beyond a normal renovation was around £12,500 if renewables are excluded and £26,500 if they are included. We’ve estimated that it has resulted in a running cost saving of £2,800 a year. Even with no increases in price this would be a payback of under 10 years. If the renewables are excluded then the savings would be £1,300 – again under a 10 year payback. Neither of these paybacks include any provision for future price rises so we expect them to be a maximum.
The qualitative factors to also include are that the house is occupied 24/7 and rooms in use are kept at around 20-21 degrees. The air quality is great and we have a very low rate of colds and flu.
In terms of CO2 our house now contributes about 0.5 tonnes CO2 per person per annum. Previously it would have been around 2.6 tonnes per person.
Did our retrofit really work? Too right it did!