The CHEESE response to goverment consultation on 'building a market for energy efficiency'
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
- Q1. What information do you have on current rates of delivery of measures outside of Government programmes, including through DIY etc.?
- Q2. What information do you have on the remaining potential for energy efficiency improvements and what savings could be expected from these measures?
- Q3. Do you agree with our assessment of the current market for energy efficiency amongst owner occupiers, including the trigger points and supply chain relationships?
- Q4. 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?
- Q5. Do you agree with our assessment of the current barriers to market growth?
- Q6. Are there other barriers that you think we should be addressing?
- Q7. Do you think there are any other important lessons to learn from past attempts to stimulate the market?
- Q38. Are there other ways that Government could help improve access to data energy efficiency and performance of homes for research purposes?
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:
- As an incentive to take remedial action.
- As a tool to identify building faults (see answer to qu. 6)
- 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:
- are precisely focussed on real problems,
- deliver a high impact,
- first target low cost remedies having a short payback period.
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:
84% had taken action, mostly low cost (<£250 and mostly by DIY, e.g. installing LED bulbs and filling cracks/draught-proofing, which can have 1-year pay-back periods).
10% were implementing or had implemented high cost measures such as floor insulation, new door, new double glazed window, secondary glazing.
92% were planning low cost measures.
35% were planning high cost measures, including installing one or more double glazed windows, floor insulation or solid wall insulation (SWI).
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:
55% had implemented more costly measures, including SWI (n=3), new door and/or window(s) (n=6), secondary glazing (n=2), floor insulation (n=1), roof insulation (n=3).
In one home where internal SWI had been installed before survey, the survey revealed a draught flowing down an air pocket between the wall and insulation, which had to be rectified. This fault would not have occurred had the correct procedure been followed at installation.
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:
- The complexity of the market and the under-performance of many installers, who do not always offer value for money.
- Widespread suspicion of the ‘big 6’ energy companies.
- Top-down funding models
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:
Householders respond well to C.H.E.E.S.E. surveys because we are seen as acting on behalf of the community, give objective advice and do not have a sales pitch. We also operate at low cost. We use income from paid surveys to subsidise free surveys, but rely on grant funding for core costs. This funding is not at present adequate because funders favour helping people in fuel poverty, not addressing owner-occupiers where the largest carbon savings can be made.
Unfortunately, another popular and successful Bristol-based community retrofit organisation, Bristol Green Doors, was forced to ‘go into hibernation’ in November 2016 through lack of funding for precisely this reason. From 2010-2016 it operated an extremely successful open homes day in September each year, where peer-to-peer learning between the general public and 100 households with experience of retrofit could take place. Details, including installers used, are recorded on the “Route to Retrofit” section of their website. They were unable to obtain funding because their work focussed on owner-occupiers. Yet these ‘early adopter’ owner occupiers are precisely the people that the Government should be encouraging – as exemplars to their neighbours who can afford to make changes.
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:
Experience from C.H.E.E.S.E. thermal imaging surveys. Surveys have frequently identified examples of poor workmanship such as:
Faulty PVC double-glazed window installation with draughts round the outside of the window frame and in the window itself, because of faulty adjustment of catches, hinges and failure to seal the frame to the brickwork.
Gaps in cavity wall insulation.
Incomplete and insufficient loft insulation.
Lack of insulation on central heating pipes under floors and in garages.
Use of “dot and dab” fixture of internal SWI (see our analysis in Qu.1), promoting damp and mould growth.
A survey of a flat in a 2 year-old block on the Whapping Wharf development found wall insulation to be missing. The development has won awards and features as having “a high level of finish and specification”. The householder is now submitting thermal images to the developer in the hope of redress.
Together with Brian Harper we have identified a very poor practice, common to many large- scale house builders, where dot-and-dab plastering has been adopted as a de-skilling and therefore lower cost method. Carried out correctly, the plaster-board should be sealed at the top and bottom. In order to save time, or through ignorance, this is almost never carried out. The consequence is the construction of thousands of new homes where cold air passes through roof insulation, or at joist level, into the top of the gap between wall and plaster-board and cascades down to the skirting board where it escapes. This can be seen clearly on our thermal images. The occupants are left, in thermal terms, living in a plaster-board tent. It is very difficult to rectify, yet could be easily stopped by unannounced quality checking using TI. We can supply TI images of these faults on request.
Serious problems experienced by the Bristol European Green Capital 2015-promoted “Warm-up Bristol” project. This was launched in October 2015, to help people insulate their homes through the Green Deal. Because of a clear lack of skills in solid wall insulation, a very comprehensive and readable booklet, A Bristolian’s Guide to Solid Wall Insulation, was published by Bristol City Council in 2016, in collaboration with the Sustainable Traditional Building Alliance, for use by householders and the building trade. Despite this and because of the flawed business model governing the financing of the Green Deal, there existed a ‘cone’ of sub-contractors, each taking their own profits. Inadequately trained management and construction staff, poor communication with clients, and workers often being employed on zero hours contracts and thus having little investment in the quality of their own work, resulted in retrofit that was sub-standard and a lot of dissatisfied customers. Bristol City Council then had to rectify the situation as best it could and refund £3.3 million of unspent funds because of the delays involved.
Because of spending cuts councils no longer have the resources to enforce regulations. Council officers have told us that planning expertise is being lost and they no longer have sufficient personnel to police planning permissions and regulations. This has incentivised builders to flout these regulations and cut corners.
Loopholes in planning regulations that ‘lock in’ building regulations are exploited by developers to boost profits. It appears that developers can buy land, gain planning permission and start a token amount of work, e.g. building a wall. They can then ‘sit’ on the site for long periods of time, during which more stringent regulations may have been introduced, but developers are only legally bound to the standards in force when they completed the token building work.
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:
- What is in it for the lenders?
- Who pays for the incentives?
- Are the benefits to the property and the savings on fuel bills of sufficient benefit to the lender to offset any reduction in interest?
- What is the pay-back period?
- How is verification achieved and policed?
- How is the cost of each transaction minimised?
- What is the role of the community?
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:
Support initiatives such as the one between The C.H.E.E.S.E. Project and Triodos Bank above.
Fund (at small scale in government terms) non-profit and volunteer community projects that work bottom-up to incentivise and deliver energy advice, TI surveying, DIY retrofitting, training apprentices, etc.
In particular, fund community energy-saving initiatives that are targeted at owner-occupiers, such as Bristol Green Doors.
Fund community initiatives aimed at the fuel-poor, but acknowledge that this is for a social good rather than primarily for carbon savings.
Remove VAT from retrofitting and energy-saving products. Members of the project would be happy to enter a dialogue with BEIS on these themes.
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.