There is a real challenge right at the heart of climate change policy in the UK. The Climate Change Act requires us to reduce carbon emissions by 80% by 2050, compared to a 1990 baseline. All parts of our economy must contribute to that objective, and that includes our homes.
Just under one-third of our total energy demand is for domestic buildings, and about two-thirds of that is for space and hot water heating. We also have some of the oldest and coldest housing stock in Europe, and it is replaced very slowly. About 80% of the homes that we will be living in by 2050 have already been built. Currently, over 70% of UK homes are below energy performance Grade C, and we have to do much better than that. Because we need to reserve some of our carbon budget for other sectors where decarbonisation is even harder, we need to reduce carbon emissions for space and hot water heating in homes to zero.
You can argue that with renewables we can decarbonise electricity grid and switch homes to electric heating, but the heating demand is much larger and much more variable than electricity demand today. The chart shows the UK domestic energy consumption as electricity and heat over a year. The electricity demand varies over a day, but is fairly constant over the seasons. In contrast, heat demand is close to electricity demand in summer, and nearly 6 times the electricity demand in the depths of winter. Decarbonising heat is a much bigger challenge than decarbonising electricity.
So, we have to reduce the heat demand of homes, and that means a deep tailored retrofit to the property fabric. That is not cheap, at least at the current stage of development of the market.
There’s good news and bad news
The good news is that when you factor in all the additional benefits of an upgraded housing stock, like increased productivity and a healthier population, investing to improve housing fabric is as beneficial to the UK economy and society as other major infrastructure upgrades like high-speed rail.
The bad news is that it is not happening. Although it is a good deal for the UK as a whole, the payback time is too long for most property owners, and there is no significant pull from the occupiers. Energy efficiency is not top of their agenda.
Energy efficiency does not sell
When working in product development it was always drummed into me that what matters is not what you are selling, but what the customer is buying. Many new products crash and burn not because they don’t do what it says on the tin, but because they are solving a problem that the customer does not have. Technically they may be excellent products with wonderfully advanced features, but unless you give the customer something they really want, all the technical wizardry in the world won’t help.
“…what matters is not what you are selling, but what the customer is buying”
And energy efficiency is just not high enough up their priority list. At a recent event, Agamemnon Otero of Repowering London said that even in more deprived communities saving energy costs was typically only number six on their personal list of wants.
We will not get the attention of owner-occupiers and tenants by talking about saving energy costs. Owner-occupiers, in particular, will ask “What is the up-front cost? How long is the payback time? What guarantee have I got that these savings will be delivered? How much value will it add to my property?”. In most cases they are not going to get answers that will make them invest.
For the householder it is not going to be about saving energy, it is going to be some other benefits.
Quality and comfort sell
I realised that we were selling the wrong thing by focusing on energy efficiency when I visited a Passivhaus development in Frankfurt. As soon as I walked into the light airy property with floor-to-ceiling windows I understood that the key selling point was that the rooms were bigger.
Let me explain. If you are taken blindfold into a typical UK new-build living room in winter, you immediately know exactly where the window is. You can feel the cold from across the room. And so we have radiators under the windows to create a warm air curtain to make things more comfortable. In the Passivhaus, no cold spot, no radiator and the rooms go right up to the edge. With these designs, you were buying a better quality home, a more comfortable home, and with larger rooms for your money. Yes, the heating costs were lower, but that wasn’t the most important selling point.
“With Passivhaus designs you get bigger rooms for your money.”
I asked the developers what was the cost difference between the Passivhaus properties, and similarly sized ones in another part of the development. They said they were the same price. The ones that did not meet Passivhaus standards had a slightly better-equipped kitchen. “It depends on the individual”, they shrugged, “some prefer Passivhaus, some prefer a better kitchen”.
Focus on the householder
So we need to sell in terms of appearance, quality of property, ease and reliability of use and comfort.
I reported on this project a few months ago, and since then it has been completed and tenant responses are starting to come in. The picture shows the retrofit of a number of terraced properties. The one in the middle was a Right-to-Buy property that was not included as the owner did not wish to participate. It shows what the properties looked like before retrofit.
It will be a while before we have good performance data, but we already know that tenants love the fact that the properties look new, refreshed, modern, not old and a bit shabby. The love the increased levels of comfort. For them the homes are functionally bigger because they can sustain a high level of comfort throughout the house, not just in some of the rooms.
Energy savings may turn out to be a real benefit as well, but their focus was on comfort.
The message for Government and Local Authorities is that we need landlords and owner-occupiers to invest in energy efficiency retrofits at a massive scale. To achieve that we need pull from tenants and owner-occupiers, and we are not going to get it by talking about energy efficiency and energy savings. We have to find out what they want from their homes and give them that in a way that reduces carbon emissions.
That is a marketing as much as a technical challenge.