Historic buildings are not an energy inefficient burden but an asset argued Historic Scotland at a seminar this week in Edinburgh. The event launched the new Historic Scotland guide (yet to be made available online but I’ll add the link when it’s been put up) on how you can make traditional homes more energy efficient. For those of us interested in the challenges of applying energy efficiency measures to older properties while, at the same time, "retaining the fabric of a building with minimal intervention" it was a fascinating day of talks. And, by the numbers attending from local authorities, architects and the building trade, this is a 'hot topic' right now.
Before we go on, here’s a quick bit of background. What is meant by 'traditional' or 'historic' buildings? The definition used by experts at this event was buildings built pre-1919. In the UK it equates to about 20% of all houses (although the figure is as high as 34% in Wales). This figure rises to 40% if you then include houses built in the inter-war period. It's estimated that around 50% of houses would be rated as moderate to poor in terms of energy efficiency. If you live in a pre-1919 house you are twice as likely to be 'fuel poor' and you are much more likely to have outstanding minor or major repairs required.
A couple of early presenters set the scene. Valerie Sneddon from the Scottish Executive Sustainable Housing team outlined their intention to develop a Sustainable Housing Strategy to support low carbon homes and address fuel poverty. It would look at how a national retrofit programme could be rolled out supported by changes in building standards, financial conditions and new training schemes. It might also look at the main housing types in Scotland (Pre-1919, 1919-1944, 1945-1964, 1965-1982, Post-1982) and make recommendations on the what households should prioritise in terms of property improvements. Be warned...any ideas of a new kitchen will not be considered sympathetically! Currently there is a consultation on this strategy which closes on 28th September 2012 so if you want to comment on it, don't hang about.
Roger Curtis from Historic Scotland explained how this area has evolved over the last 5 years. Historic Scotland have been mandated (in Scotland) to lead on the issue by the Scottish government. From a position where there was little accurate information on implementing energy efficiency measures, there is now considerable research looking at appropriate ways to retrofit traditional buildings. It is now recognised that applying conventional methods used in more modern buildings to traditional structures is both disruptive and costly. Upgrades to traditional buildings should adhere to principles like ‘minimal loss of fabric’, ‘minimal intervention’, ‘durability and resilience’ and ‘use of natural, biodegradable or inert materials’. Like several other speakers he was keen to consign the term "hard-to-treat properties" to the scrap heap - he stressed that "historic buildings should not be seen as the problem but part of the solution... They are not hard to treat, they just require different methods to treat them..and sometimes they are quite simple to treat”.
Moses Jenkins from Historic Scotland gave us a lively run through many of the issues highlighted in the new guide including the ‘before’ and ‘after’ scenarios with the 12 case studies they are monitoring. He ran through the main options they considered for upgrading windows, walls, floors, roofs etc. ...without once mentioning ‘Kingspan’! My own experience of working with architects and builders on projects in my traditional house is so different – I can barely get to page 2 of the spec before Kingspan starts featuring heavily!! I asked him at the break about this...he said Kingspan insulation boards are generally impermeable, unlike wood fibre or hemp board, and therefore not recommended for historic building projects. [Kingspan, if you are reading this, please feel free to comment!]
Nick Heath from Changeworks provided the most engaging presentation of the day for me. It was based on the work his team has done to look at whether the Green Deal is going to entice owners to improve the energy efficiency of their traditional homes (see their report for more). On balance I felt Nick was highly sceptical that Green Deal has been designed to support improvements to traditional homes without the government making further and significant amendments prior to launch of the scheme (planned for October 2012). Many suitable options are either ineligible for Green Deal support or financially unviable without additional support from ECO (a subsidy delivered by energy suppliers). Unfortunately you can only qualify for ECO support if you insulate your walls and this is not easy for many traditional houses. It was suggested that the Green Deal appears to be primarily aimed at larger social housing providers with extensive portfolios of properties built in concrete and potentially off the gas grid. These are considered to be the “lowest hanging fruit” and likely to generate the biggest carbon savings for the least amount of investment based on measures such as cavity wall and loft insulation. Over the longer-term Nick felt the Green Deal may become more relevant to traditional home owners as alternative measures (like draught-proofing) become supported, Assessors become more knowledgeable and assessment tools like RdSAP are improved.
One tip I took for anyone looking at undertaking work on their traditional property – before you do any sort of intervention, check first whether the building has been correctly maintained. You can look for damp patches or musty smells – damp walls are significantly less thermally efficient than dry ones. As John Edwards from CADW said on the day “You need to understand how traditional buildings work – too many people don’t have the skills to do this and all too often they treat them in the same way as more modern structures. You’re not likely to get this expertise from a Green Deal Advisor, you need a specialist who understands these buildings.”
My over-riding feeling from the day was that we are still some way from having the complete information picture we need. There are groups and projects across the UK putting considerable investment into trying to better understand the implications of making older buildings more airtight and well-insulated. But there remain big information gaps, not least when it comes to questions around the economics and financial viability of these solutions. While there are relatively simple things you can do to improve the efficiency of your home (like putting up heavy curtains, preventing draughts and making sure your boiler and radiators work as efficiently as possible), to make really significant and noticeable improvements is likely to be an expensive business with an uncertain payback period. The best way to justify the investment is through predicting what your energy bill will look like in 10-20 years time (which is far from easy - we tried in our blog post).
Methods of measuring the efficiency of your traditional home are also not well developed. The mainstream approach being adopted by the Green Deal (called ‘RdSAP’) has some serious weaknesses when it comes to older properties.
Historic Scotland has already published a range of guides and Technical Papers on this subject including a set of excellent case studies for different house types in different parts of Scotland (see links at the bottom of this article). More publications are on the way. Many of these are aimed at those in the industry and the ‘sophisticated homeowner’.
What I really wanted was a list of people (architects, builders, engineers etc) that you can go to for expert advice..people who work on historic buildings regularly, know how they function and know how to intervene to improve their energy efficiency. As an owner of an old property this would be really useful – any companies reading this who can answer ‘yes’ , please add your details below! [Or if you know of a list online please add this through a comment below.]
It is difficult to say whether enough funding is going into this area to make a big difference – it is, afterall, a minority of UK properties. However, if you consider the proportion of carbon emissions from older properties my guess would be that their contribution is a great deal higher than 20% (I’ve yet to find a figure for this).
So, on the surface, it is no surprise that government incentives like the Green Deal are focusing on easier-to-treat properties where they think the biggest improvements can be made with the smallest amount of investment. But is this short-sighted? As our previous blog post ('Domestic energy consumption linked to affluence') highlighted, those living in socially disadvantaged areas are likely to consume significantly less energy per head than those living in larger (often historic) properties. Through initiatives like Green Deal this ‘energy consumption gap’ is likely to widen further. Carrots and sticks are needed to tackle this issue from both ends!
My own experience of living in a Victorian property suggests that relatively simple and low cost changes can be made - but they only tend to make a relatively small difference. To make a big difference (as is the case with many of the Historic Scotland case studies) requires a scale of investment and disruption that is significantly greater, in my opinion, than would be the case to achieve something similar in a more modern house. For that reason, I'm not convinvced that “hard-to-treat” is such a bad term to describe my home but maybe I need an expert (if I can find one?) to tell me where I'm going wrong! I’m looking forward to seeing what a Green Deal Assessor thinks I should do!
If you are interested in this area there is another CIC Start event coming up on 4th October 2012 in Glasgow - see:
This article is based on a report written in January 2012 with minor updates at the start of April 2012. It does not cover loan-based support from banks or other financial lenders. This type of financial support is now available from most of the major UK banks and also from a number of other commercial lenders. However their terms will vary significantly. Reviewing the best options for this type of loan-based finance would be the subject of a further article.
There is a wide range of Government and other funding assistance available for renewable energy projects although many options will be limited to specific types of applicant – private households, businesses, public bodies, voluntary organisations, community groups etc.
The main options are listed below – the report on which this article is based had a strong Scottish focus. However most of the funding schemes are available across Britain. A more detailedlist of all options is provided on the Energy Saving Trust website under their funding and finance section:
Feed in Tariffs (FITs) were introduced in April 2010 by the Government with cross-party support to encourage the installation of renewable energy technologies in properties (both business and domestic). By legislating on what an individual or company gets paid for the energy generated, the technology is guaranteed to recoup the investment costs far quicker than was previously possible.
The reason the Government was so keen to get people to install renewable energy systems is because there is a legally binding EU target of producing 15% of the UK’s energy from renewables by 2020. At the start of 2010 we were only producing about 2% of our energy from renewables and whilst offshore wind farms and other big energy generation projects will make a significant contribution, it simply will not be enough on its own. Official estimates in 2010 calculated that the tariffs should produce 8% of the UK’s energy from renewables.
The first stage is to install the technology and have it grid connected. Once it starts generating electricity, you will use what you require. Any surplus that your system generates but you do not consume is automatically exported back to the National Grid. Any additional electricity that you need (for example if it’s night time when your solar panels don’t work or simply because you need more power than you are generating) is automatically imported into your property in exactly the same way that you currently get your electricity from the National Grid.
The payments happen in three ways:
1. You get paid for all the electricity that you generated and used yourself
2. You get paid for all the surplus electricity that you exported back to the National Grid
3. You pay your energy supplier for the additional electricity you needed to import
It is your energy supplier who will pay you, typically once a quarter, for point one (the electricity you generated and used yourself) and point two (the electricity you exported to the grid). You will pay them for the electricity you needed to import in the period.
Renewable Heat Incentive
In March 2011, the UK Government announced the details of their Renewable Heat Incentive (RHI) which is designed to provide financial support that encourages individuals, communities and businesses to switch from using fossil fuel for heating, to renewables such as wood fuel. Non-domestic installations can claim the RHI now for any installations commissioned on or after 15 July 2009. Installations that are eligible for the RHI include:
Applications opened on 28 November 2011 for the RHI and must be made to Ofgem. They will make quarterly payments to the owner of the installation.
For domestic installations, the householder, or owner, of the installation will be able to claim the RHI early 2013. In the meantime, the Renewable Heat Premium Payment can be accessed for eligible householders. This is a relatively small grant (available through a voucher) towards the purchase and installation of solar thermal panels, heat pumps and biomass boilers. Any householder can claim this money for solar thermal installation. However, only houses without mains gas can claim the grant for biomass or heat pumps. Note that this grant has recently been extended to 31 March 2013. Householders claiming the grant can also access the RHI when it becomes available to them hopefully around this time.
Green Deal is a new government initiative designed to help meet the upfront cost of making your home more energy efficient. Due to be launched in late 2012, the Green Deal will allow householders to install energy-efficiency measures and pay for the improvements with the savings on their fuel bill. Although they will repay the cost over time, this is not a conventional personal loan as the charge is attached to the meter and paid back through their fuel bill. If they move house, the idea is that the new occupant will pick up the outstanding loan while also benefiting from a more energy-efficient property.
Enhanced Capital Allowances (ECA)
The Enhanced Capital Allowance (ECA) Scheme is aimed at UK businesses allowing them to claim 100% first year capital allowances on investments in energy saving technologies and products, including some renewable energy technologies. Businesses are able to write off the whole cost of their investment against their taxable profits of the period during which they make the investment. The Government’s energy technology (www.eca.gov.uk/etl) lists promote products that encourage sustainable energy use and reward businesses for investing in them through the ECA Scheme. ECAs allow 100% of the cost of the product on the technology lists to be offset against your taxable profit of the year it was purchased. ECA’s bring forward the time that tax relief is available on qualifying investments, allowing the full cost to be written off against the taxable profits of the period in which the qualifying spending is incurred, delivering a useful cash flow boost and a shortened payback period on investment.
The company can claim the price paid for a new product and the costs directly associated with the installation of the product. Claims can only be made for products appearing on the technology lists at the time of investment (i.e. claims MUST be made within the same tax year that the equipment is purchased).
It is possible to use the ECA in conjunction with other sources of financial assistance, such as the Small Business Support Loan (detailed below)
Note that the interest free loan can be used in conjunction with the Enhanced Capital Allowance Scheme detailed above.
Interest Free Loans for domestic consumers
Interest free loans for up to £2000 are available for domestic renewable installations. The householder must contact the Energy Savings Trust to arrange for a free home survey and then the loan application pack will be sent out. Further information can be found at http://www.energysavingtrust.org.uk/
E-On Sustainable Energy Fund
The E.ON Sustainable Energy Fund offers grants of up to £20,000 to community groups and not for profit organisations who wish to consider and implement sustainable energy projects in their buildings - from energy efficiency through to micro-generation. The organisation must benefit specific groups namely:
The RDP is a significant sum of European funding for the development of rural areas. Funding is available for a wide range of activities including the development and diversification of land based businesses and the installation of biomass boilers. Further information can be found at the following website: http://www.scotland.gov.uk/Topics/farmingrural/SRDP
Note that this funding cannot be accessed if the applicant intends to take advantage of the Feed in Tariff or the Renewable Heat Incentive.
Energy Savings Trust
Provide advice on all aspects of energy efficiency and renewable technologies. They also administer the interest free loans. Website: www.energysavingtrust.org.uk
Provide advice to businesses on issues relating to the reduction of carbon emissions. Website: www.carbontrust.co.uk
This article has been published with currently available information in June 2011
“Britain has some of the oldest housing stock in Europe. Our draughty homes are poorly insulated, leaking heat and using up energy. As consumers, we pay a high price for inefficient housing – and so does the planet. A quarter of the UK’s carbon emissions comes from the energy we use to heat our homes, and a similar amount comes from our businesses, industry and workplaces.”
Chris Huhne, Secretary of State for Energy and Climate Change
The Westminster coalition Government has proclaimed that they will be the greenest Government ever. At the heart of their green ambitions is the Energy Bill, which is expected to receive Royal Ascent before the Parliamentary summer recess thus, making it the Energy Act 2011. The flagship policy stemming out of the Energy Bill is the ‘Green Deal’.
This article analyses the details found in Government documents to date and, based on this, explores what the ‘Green Deal’ means to households and businesses. Detailed guidance from government on the Green Deal is not planned for release until Spring 2012 – so there are many areas of this policy where detail is currently lacking.
The core aims of the ‘Green Deal’
The Government sums this up as “establishing a framework to enable private firms to offer consumers energy efficiency improvements to their homes, community spaces and businesses at no upfront cost, and recoup payments through a charge in instalments on the energy bill”.
Who is it aimed at?
The Green Deal is aimed at households and businesses. Under the terms of the scheme, households and businesses would have an independent assessment done on the property, which could help to identify potential energy saving improvements.
Why is it needed?
Customer research (which GEN research validates) suggests there are currently a number of practical barriers to installing energy efficiency measures, including the up-front cost of measures, the length of time required for measures to pay back in
savings and the ‘hassle’ involved in planning and carrying out work. In addition, there is currently a widespread lack of awareness of the benefits of improving the energy efficiency of our homes and commercial buildings. We would also suggest there is a widespread awareness of the likely trend in energy prices which are a strong factor in encouraging more efficient use.
What sort of work is likely to be covered?
The exact details of what types of project will be covered have yet to be published but it is highly likely that those involving installation of insulation (roof/attic and wall) and draught proofing will be included.
At this stage it is not clear how the Green Deal will work with other Government incentives like the Feed-in Tariff and the Renewable Heat Incentive. It is unusual for the Government to allow people to multiply their benefits by qualifying for more than one scheme at a time. There have been recent press reports suggesting that some renewable energy technologies may get assistance through the Green Deal.
Green Deal Terminology
Improver – The household, business or community that carries out energy saving measures through the Green Deal.
Green Deal Provider – This is the organisation funding the Green Deal. They could be your utility supplier or commercial companies, charities or social landlords.
Accredited Advisor – This is the person who recommends energy saving measures that could be carried out on an improver’s property. The advisor would document the energy saving measures on an Energy Performance Certificate which he would pass on to the Green Deal Provider and Improver.
Accredited Installer – Approved contractor who carries out measures recommended by the accredited advisor. The Green Deal provider could be the Accredited Installer but could also contract this work out. Whoever the Accredited Installer is the contractual agreement is always between the Improver and the Green Deal Provider.
The Green Deal Plan – The Green Deal Provider offers the Improver a Green Deal Plan. This includes arranging an accredited advisor and installer. It also includes the financial and contractual agreement between the Green Deal Provider and Improver.
The Golden Rule – The financial savings derived from the Green Deal energy saving measures recommended by the accredited advisor must be equal to or more than the cost of implementing the energy saving measures and the repayments must not be longer than the expected life span of the measure.
When will the Green Deal be ‘open for business’?
There are various Parliamentary procedures and industry guidance to be carried out over the next year before the Green Deal is implemented. The first Green Deal Plans will appear around Autumn 2012.
How will I find out about the Green Deal?
It is expected that the Green Deal will be widely promoted, possibly even through banks, supermarkets and DIY stores all of whom could act as Green Deal Providers.
What’s in it for these Providers?
Providers like banks and supermarkets will charge interest on the Green Deal financing so the Improver will be paying interest on the cost of the energy saving measures. Currently the interest rate is expected to be around 6 to 8%. The Guardian, E3G and Friends of the Earth (to name a few) state that this interest rate is too high for many measures to meet the ‘Golden Rule’. Furthermore, the Government at this time do not intend to regulate and cap the interest rate. If you are motivated by a ‘good deal’ then the interest rate will be critical to you.
What is likely to be the process for taking forward a Green Deal supported project?
The Green Deal provider will set out a Green Deal plan. These are likely to be the steps in this Green Deal Plan:
Customer (the ‘Improver’) expresses interest as a result, for example, seeing an advert – starts to look at Green Deal process without any commitment. If you already have an Energy Performance Certificate (EPC) that recommends specific actions you may be able to skip Stage 2 below.
Customer or Green Deal provider arranges for an accredited, objective Assessor to analyse the energy performance of your property – this could involve using an Energy Performance Certificate (EPC) if you have one. The accredited assessor will recommend energy saving measures. The critical factor for determining the appropriate energy saving measures is the ‘Golden Rule’. Homes and businesses will be recommended energy conservation measures such as draught proofing and roof/floor/wall insulation. If your property is already well insulated the Government suggest that in the future there could be financial capacity in the ‘Golden Rule’ to allow energy generation such as solar PV and thermal.
Customer selects one or more Green Deal Providers to supply a quote to undertake the suggested improvements – this will include the repayments, the interest rate and the length of time over which they will be spread. The advice given must be within the terms of the Consumer Credit Act taking into account the circumstances of the consumer.
Green Deal Provider (who is qualified, accredited and certified) undertakes the improvement measures with appropriate warranties and guarantees.
Once measures have been carried out the consumers’ energy supplier will be responsible for collecting the Green Deal charge.
If the consumer moves from the property, the contract can be passed to future occupiers although there is an obligation on the seller to inform subsequent bill payers as to amount of repayments and duration of terms.
What are the likely costs and savings?
Cost and Savings, DECC 2010.
Saving (£/year) to consumer
Loft insulation top up
Cavity wall insulation
Internal solid wall insulation
External solid wall insulation
The figures in the table do not include the interest that is payable over the Green Deal period.
The Guardian newspaper gives an example of the costs including interest; “A mid-range quote for insulating solid walls (internally) and the loft would be £6,250, and the predicted saving £425 a year. Taking a medium interest rate of 7%, a customer borrowing £6,250 would pay back approximately £875 annually over 10 years, or £530 annually over 25 years”. For the 10 year period the interest alone would be £2500. It should be noted that both the 10 and 25 year periods break the Golden Rule as the yearly costs are greater than the £425 expected saving.
Is there a guarantee that the measures will not break the ‘Golden Rule’?
There is no guarantee that the additional cost on your utility bill for the energy saving measures will be less than the savings made by implementing these measures. However, the Energy Bill includes codes of practice for the advisors and providers to ensure improvers are protected. Assuming the code of practice is followed the Government expects the ‘Golden Rule’ to be achievable by the improver. Beware, there is a phenomenon called ‘Rebound Effect’ which might make you break the ‘Golden Rule’. An example of this is when a household installs energy saving measures and then they feel they can turn the heating up because they are better insulated. This would defeat the purpose of the Green Deal and might cost you more in the long run.
If I have sufficient savings to invest in energy efficiency measures should I wait until the Green Deal arrives?
Not necessarily especially if you are planning to stay in your house or business for at least 15 years as this will give you the opportunity to maximise your savings from lower energy bills.
The benefits in self-financing this work rather than going through the Green Deal are likely to be: (1) Rather than wait until Autumn 2012, you can do it immediately and therefore your savings will start as soon as the work is complete; (2) you will avoid any of the bureaucracy or potential time delays involved in a Green Deal application process; (3) you will avoid paying interest on top of the cost of the work thereby making a substantial savings on total costs and getting to the point of ‘payback’ from your investment faster; and (4) when it comes to selling your house there will be no financing contract that a new buyer will have to take over which could be a negative factor when selling your house.
The positives to using the Green Deal are; (1) it appears to be a lower risk approach for those who are likely to move house in the next 5-10 years because it’s a loan-based deal linked to your property so if you decide to move then you won’t have to pay it all off – you pass the remaining payments over to a new owner; and (2) by the time the scheme starts there will be an accreditation scheme and a Green Deal quality mark for suppliers / products so it should make it easier to find an ‘accredited supplier’ and, if anything goes wrong, it may be easier to get something done about it.
So if I'm interested in doing energy improvement work now what should I do?
For anyone looking at doing this type of work now we would encourage you to look out for existing low cost deals, loans or even grants that are available in your area for energy efficiency improvements. There are still many offers on the market for doing this work; it’s not always easy to track them down! You could start by talking to your energy supplier or even other energy suppliers (if you’re prepared to switch). They are likely to continue to offer incentives to some households and businesses for the period up until the Green Deal starts.
If you are committed to staying in your property for the long-term (maybe you have invested already in a local energy generation project like solar PV) and you have savings to invest in cutting your energy bills (a sensible action in the context of rising future energy prices) then financing this work privately appears to make more sense.
If you don’t have private finance to invest and would need a loan to pay for the costs of the work then it may depend of whether or not you can get a heavily discounted deal (see above) on doing this work. It may also depend how soon you may want to move house. If you can’t get a good deal on the work and/or may move house soon then it probably makes sense to wait for the Green Deal to kick-off and use this scheme.
This article sets out some of the simple facts about the Green Deal. GEN will continue to monitor key developments and provide updates as the Department of Energy and Climate Change (DECC) release more details.
There are measures found within the Energy Bill that we have not looked at. For example there is a provision within the Energy Bill that would allow the Secretary of State to regulate against landlords to improve the energy efficiency of properties if they do not take up on the Green Deal. There are fuel poverty issues where a household can’t afford to have the heating on but their homes are energy inefficient. In this situation it is feasible that Green Deal could increase their energy bill even though their home is more energy efficient and the theoretical Golden Rule is not broken.