Dr Ciaran Byrne, SEAI: ‘How do you put a price on a comfier warmer home?’
We are all familiar with the concept of cost benefit analyses, and some of us rely on them when making significant investments. At least, we think we do. In fact, psychologists tell us that most decisions are strongly influenced by emotion. Even when we think we are being rational or logical, there may be a strong emotional element involved.
Cost is usually relatively straightforward to calculate – think of buying a house, a car, going on holiday or undertaking a retrofit. But benefits are almost impossible to accurately quantify, because so many benefits are intangible or emotional. You know how much the new car will cost, but how do you quantify the benefit of driving comfort or not worrying about breakdowns? Retrofitting your home is no different. How do you put a price on a comfier warmer home?
SEAI recently collated the actual costs from the first 300 homes upgraded through the One Stop Shop programme launched last year. The average is €56,000, reducing to €30,000 with the Government-funded SEAI grant.
There is a wider societal benefit to retrofitting, too, in terms of CO2 emissions reduction, economic activity and employment
Savings are only one benefit of retrofitting your home. The others are a warmer home, an environmentally sustainable heating system, improved property value, better mortgage rates, and an all-round better place to live.
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We all use energy differently, so putting a definitive figure on individual household savings in the absence of energy use data is guesswork at individual household level. Just look at the lights in any suburban housing estate of a dark evening: some homes are dark, some look like they would be better placed in Las Vegas, and everything in between.
In the same way, not all retrofits are the same. However, we can say that if you live in a lower BER rated home, then you are going to make more savings with each upgrade than a higher-rated home.
Installing even basic measures such as attic insulation will yield savings. Savings should not be viewed as the sole purpose of the upgrade, but as one of a suite of added benefits. Imagine if installing a new kitchen was not only a good investment, but could save you money too.
Undoubtedly retrofitting your home also makes a difference, and this is where the other benefits beyond cost savings come in. There is a wider societal benefit in terms of CO2 emissions reduction, economic activity and employment. The significant benefits of retrofitting in terms of improved health, comfort, and warmth were quantified in a recent study supported by the Irish Government and undertaken by the London School of Tropical Medicine and Hygiene. Participants reported improved thermal comfort, satisfaction with their ability to control temperatures in the home, pay bills and invite visitors to their home.
Statistically significant improvements were also reported against standardised health related quality of life surveys. So yes, retrofitting will make a difference. It is about preparing your home for the future. Sure, there are cost savings. But, more importantly, you are getting a better, more comfortable home. As the country moves forward to a more sustainable energy system, we are all poised to reap the benefits.
At a societal level we are collectively grappling with a transition to a low carbon economy, what this actually means, how it is going to work and – critically – how we continue to maintain the prosperity of recent decades while making this transition. Each sector of Irish society has stretched CO2 emission reduction targets, and the residential housing sector is no different. Our target is three million tonnes less CO2 emissions by 2030.
Inaccuracies may guide us towards good, rather than great, energy savings
This is not some imaginary number dreamt up in a random government report, but the minimum Ireland must achieve in the residential sector to have any prospect of making our contribution to stemming global warming. As Antonio Guterres recently announced the era of global warming is over and we have now entered the era of global boiling. Any individual effort will make a difference. The question is about how much we value our own future. Retrofitting means investing in our homes to make them better and more comfortable for ourselves, with savings varying from home to home. But the difference we make in terms of helping to combat, air pollution, climate change and reduce CO2 emissions is immense.
Dr Ciaran Byrne is Director of National Retrofit at Sustainable Energy Authority of Ireland (SEAI)
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Niall Farrell, ESRI: ‘We need retrofits. But we also need better retrofit policy’
I have a confession to make. An energy economist who makes his living espousing the ills of all things carbon, I bought a bale of peat briquettes on the 17th of January 2023. I live in an E-rated building and, in a moment of weakness and a poorly performing storage heater, I cracked. I have since performed many environmental acts of contrition to ease my conscience.
This story is unfortunately quite common and some retrofitting upgrades would help to turn this around. Our climate objectives envisage that 500,000 dwellings should have undergone retrofitting by 2030. This is ambitious and it presents an obvious question: are we doing enough to make it feasible and attractive to homeowners?
Firstly, the investment must make sense to the homeowner. A retrofit is often cost-effective in the long term, but the upfront investment cost is often prohibitive. While ‘green loans’ are available, rates are usually just marginally more favourable than standard offerings. However, there is hope. The National Retrofit Plan states that a low-cost loan will be made available in the near future.
Time and inconvenience can also limit uptake. Research has shown that we tend to value immediate costs more than long-term benefits, while disruption in the home can be a considerable impediment. These factors, of course, are predicated on finding a contractor, which is proving very difficult right now. Government estimates suggest that we need around 22,000 additional workers between 2023 and 2030. These workers will be difficult to find given the tight labour market.
Constraints in the construction sector mean that, at the very least, we need to make every retrofit count. Anyone who has tried to track the fuel consumption of their family car will know that there is often a discrepancy between what is promised and what is delivered. This is also true for Ireland’s Building Energy Rating (BER) system of measuring energy performance. Much research – including some by myself and colleagues – has shown that the actual energy saving is often lower than expected. BER assessments use standardised calculations that can differ in subtle ways from actual performance. In addition, many estimates ignore a change in behaviour post installation. This is known as the ‘rebound’ effect, where householders choose to keep their homes warmer once a retrofit has been completed. While these issues create inaccuracies in measured performance, this doesn’t mean upgrades or the BER system are useless; it means that there is room for improvement.
Inaccuracies may guide us towards good, rather than great, energy savings. For instance, the BER can influence the value of our home and many of us consider this when deciding on what upgrade to carry out. Similarly, certain grant services and policy targets are tied to the BER. If a number of individual decisions are a shade below the best, it may take us that bit longer to achieve the progress we need for the climate. With the total cost of planned energy efficiency upgrades estimated at around €28 billion, it is important that we get the best value we can.
There are solutions to the latter issue at least. We live in a world of big data and smart technologies that tailor their service to individual requirements. Research is ongoing to identify suitable data-driven approaches to measure energy performance.
We all use energy differently, so putting a definitive figure on individual household savings in the absence of energy use data is guesswork at individual household level
Overcoming capacity constraints in the construction sector is more difficult. These challenges will need to be incorporated into climate policy. If construction constraints prove difficult to overcome, a greater emphasis on policies that are less affected may be required.
There are a few takeaways for householders. A home energy survey – or even a few back-of-the-envelope calculations – can help identify any potential savings. Seeing the numbers on a sheet of paper may help counter the tendency to focus on the upfront cost. If that upfront investment cost is prohibitive, keep an eye out for the loan scheme promised in the National Retrofit Plan, which is expected to be available in Q3 2023.
We need retrofits. But we also need better retrofit policy. Improving the way we measure energy performance can better guide individuals towards the best investments, and, if we’re lucky, the day when the purchase of emergency briquettes will be behind us that bit sooner.
Niall Farrell is an economist with the Economic and Social Research Institute (ESRI)