The CHEESE response to goverment consultation on 'building a market for energy efficiency'

February 2018

The government department for Business, Energy and Industrial Strategy (BEIS) issued a public consultation in October 2017, appealing for views on to build a market for energy efficiency. Susan Nicholls and Michael Alford Andrews of the CHEESE project compiled evidence and submitted a response, which we have published below.

For reference, the consultation document can be accessed here (PDF).


Background: The value of thermal imaging as a tool to incentivise energy efficiency

There is very little focus on TI in the consultation document, perhaps because the Government wishes to concentrates on automated data collection (para.119), whereas TI requires the expense of a technician. Nevertheless, a C.H.E.E.S.E. survey is a powerful tool to assess heat loss, engage householders and assist retrofitting. Many faults, such as lack of or incomplete wall insulation, are only detectable by internal thermal imaging. TI can help to achieve Government objectives in three very useful ways:

  1. As an incentive to take remedial action.
  2. As a tool to identify building faults (see answer to qu. 6)
  3. As a building skills training tool (see answer to qu. 6).

An academic study at Plymouth University found that people were 4.8 times more likely to retrofit their home if they had seen thermal images of its heat loss.

In order to achieve the year-on-year carbon reduction of 15% required to give us even a 50% chance of avoiding a climate temperature rise of over 2C, it is essential to deliver measures that:

Low-cost thermal imaging delivered through trusted partners in the community can make an important contribution to delivering these reductions by revealing draughts and building faults. Furthermore, these faults can often be remedied though simple DIY actions, as well as stimulate more complex and costly energy saving measures. The approach could also be an important driver of employment in the building and retrofit industries.

Answers to consultation questions

Qu. 1. What information do you have on current rates of delivery of measures outside of Government programmes, including through DIY etc.?

In answer to your request for installation rates of remedial measures (para. 20), The C.H.E.E.S.E. Project’s analysis of 49/56 homes surveyed by TI in winter 2016-2017 showed that 1 to 3 months after survey:

We will shortly be following up these households at 1 year to determine whether planned measures have been implemented.

Analysis of a smaller sample of 22 homes 1 year after a survey in 2015-2016 showed that:

The householder also reset an existing heat recovery system for better efficiency. Neither of these faults would have been detected without a TI survey.

Other groups using TI to improve energy efficiency include the University of Plymouth and Brian Harper of Transition Malvern Hills, who should have more data.

Qu.2. What information do you have on the remaining potential for energy efficiency improvements and what savings could be expected from these measures?

Potential for energy efficiency improvements in Bristol

Bristol has a high proportion of properties that are 100 years old or more. There are still many with sash windows that are not double glazed and are draughty, particularly in rented accommodation. Most properties we have surveyed have some loft insulation, but this is sometimes incomplete or not up to current standards. Draughts are a major problem in almost all older homes that have not been retrofitted (these can be exacerbated by removing carpets). Many period homes, especially in north and west wards of Bristol, have listed or conservation status with brick or stone frontage and are therefore difficult to insulate on the outside. They also have decorative features inside which double the cost of internal 2 SWI. However, there is considerable potential for this in south and east wards of Bristol, especially in rendered Georgian and Victorian terraces. We agree strongly that SWI, indeed whole house retrofit (para. 20), needs to be done wherever possible to achieve UK carbon budgets. Energy savings from this would be considerable, but as the Government recognises, would require incentives because of cost and long pay-back periods.

Our experiences in Bristol have national applicability and we are developing The C.H.E.E.S.E. Project as a replicable model that can be deployed across the UK.

Savings to be expected

The C.H.E.E.S.E. Project is collecting energy consumption figures before and after retrofit, but we have not yet been operating for long enough to assess long-term energy savings from our surveys. We expect to have preliminary figures by June 2018.

Qu.3. Do you agree with our assessment of the current market for energy efficiency amongst owner occupiers, including the trigger points and supply chain relationships?

We agree with the trigger points. Householders regularly tell us that they will take more energy efficiency measures in future when they carry out other planned improvement work. Make their energy-loss visible is a key motivating factor. It is important to note that our clients begin taking action with the low-cost solutions, but this incentivises them to make longer-term and more costly improvements, such as double-glazing or SWI, where the payback is longer.

Qu 4. Do you agree that it makes sense to prioritise those groups most likely to be open to investing in energy efficiency? And do you agree with our assessment of who those groups are most likely to be?

Groups most likely to be open to investing in energy efficiency

It is important to distinguish between energy-loss reduction for social and for climate change purposes. With an estimated two of five households in or close to fuel poverty, having to choose between heating or eating, energy efficiency investment will bring more comfort and better health to those on low incomes. This may result in more rooms being used in the home and the direct carbon savings is likely to be small, if any, because expenditure on fuel bills may not reduce much. However, a secondary gain will occur because illness carries its own carbon footprint in NHS treatment.

Prof. Kevin Anderson points out that it is the most affluent 1-5% inhabitants of the planet that consume 50% of the energy. This would include most or all UK owner-occupiers. Larger houses leak more energy, so these are the people that need to be targeted to achieve the greatest energy savings. We agree that the promise of lower fuel bills is not an adequate incentive to undertake costly remedial retrofitting. Strong incentives or very strong ‘nudging’ are required, as many occupants are not yet engaged with the climate change issue and can afford (or are even ignorant of the size of) their energy bills.

The comfort and health benefits of a warmer home also need to be emphasised.

Qu.5. Do you agree with our assessment of the current barriers to market growth?

Yes, as far as they go, but there are significant barriers that have not been adequately addressed (see answer to qu. 6).

Qu.6. Are there other barriers that you think we should be addressing?

Yes. we believe there are three specific barriers that should be addressed:

1. Lack of trust

The Government sees lack of trust in quality as a market barrier, but, paradoxically, gives little consideration to ways of promoting that trust. Lack of trust in our view is engendered by:

Our experience of the recent disastrous Warm Up Bristol project (see below) and of our own surveys leads us to believe that such models, based on energy bills, will not succeed. People are savvy enough to reject the extremely high interest rates charged by e.g. the former Green Deal finance company. Rather, new initiatives should be bottom-up and led by community groups where possible, who are trusted. There is an opportunity for them to be assisted by lenders.

2. Funding wrongly directed to stimulate the market

We can give two examples of this in Bristol:

3. Lack of skills training

There are no concrete proposals in the document to improve building skills, particularly upskilling to meet the demands of more complex retrofit, or for more stringent enforcement of existing building regulations, both issues that are already recognised as barriers to market growth (paras. 17, 29, 38, 39). We believe that the Government’s targets will not be met unless these issues are seriously addressed. The Government understandably wants energy efficiency to be achieved at minimum taxpayer cost, but this is in conflict with policies being “cost effective” and unlocking “the full value of energy efficiency”. Skills. We believe strongly that apprenticeship schemes should be improved with reference to those that may work well in other European countries, if applicable. Community-led apprenticeship schemes could train ‘draught busters’ to provide a low cost service to householders. We are already partnering such groups in two Bristol wards.

Building regulations. Evidence shows that building standards should be subject to independent quality control, rather than to self-policing by developers, as the Government seems to favour, which does not work (see examples below). Checks should be made without prior notice using TI (the only means of providing thorough checks) and should be performed on behalf of the purchaser or lender (not the builder) on new builds and before and after retrofit. This quality control policing by ‘Green Knights’, who are best seen to be acting on behalf of the consumer public, should be community or council based and require adequate, ring-fenced funding, which is lacking at present. Rectification of building defects should also take place under adequate community-based supervision and be backed up by legal enforcement. Councils are best-placed to carry this out but currently lack the funds (see iii below). Lenders could provide incentive by prohibiting loans without effective independent energy certification (not EPCs, which, in our view, are without much value as they do not assess the actual physical condition of the home). There is accumulated evidence that a combination of suppliers entering the retrofit market with insufficient skills and voluntary codes of practice, leaving the industry to police itself, has resulted in the UK having a large number of poor quality buildings, with consequent less than expected energy savings, from both new build and retrofit, and lack of customer satisfaction. We can offer many examples of these barriers reducing effectiveness of outcomes in Bristol:

Although we cannot supply evidence ourselves, we recognise the importance of learning how other European countries, such as Germany and the Scandinavian countries, achieve better building standards than in the UK, so that we can implement appropriate changes based on proven good practice.

Qu.7. Do you think there are any other important lessons to learn from past attempts to stimulate the market?

Inconsistent messages from successive Governments and ‘stop-go’ incentives have damaged the market for energy efficiency for installers and customers alike, e.g. the Green Deal. There needs to be a more strategic, consistent, long-term approach and more careful design of future incentivising programmes.

The consultation documents states that those who derive value from energy efficiency should be key market players (para 4) and that policies should exploit “what works”. We have given you examples above of what works. In addition we offer a proposal to engage finance:

The C.H.E.E.S.E. Project is discussing with the Bristol-based Triodos Bank the way to develop a Community Development Finance Initiative (CDFI) to encourage energy-saving retrofitting. Triodos Bank already has the precedent of providing ‘green’ energy mortgages in Spain and The Netherlands, where loans with preferential terms are offered to customers who undertake energy efficiency improvements. Our aim is to devise a product that would incentivise such improvements by owner- occupiers at the key trigger points you have identified. Key questions are:

We believe that if BEIS are serious about the imperative to reduce domestic energy consumption they cannot expect to achieve it by market forces alone. In Prof. Kevin Anderson’s words climate change mitigation is a job for the few not the many. An obvious tool to employ to this end is hypothecated taxation, such as modifying stamp duty, a major burden for any house purchaser.

In the meantime BEIS should:

Qu.38. Are there other ways that Government could help improve access to data energy efficiency and performance of homes for research purposes?

Members of The C.H.E.E.S.E. Project would be happy to enter into a dialogue about the use of our thermal imaging methodology for research into the thermal performance of buildings (para. 116), as well as for identifying building faults.