The challenge of retrofitting 26 million homes
In the UK we face a stiff challenge. The Climate Change Act of 2008 sets a legal target to cut greenhouse gas emissions by 80% by 2050.
Every part of the UK economy must contribute to reducing emissions, including our homes.
Domestic energy consumption accounts for about 30% of the total UK energy budget, and about 20% of total UK carbon emissions. We must find a way to reduce consumption and cut emissions if we are going to have any chance of meeting the 2050 target.
Two factors make this a particularly tricky challenge.
First, over three-quarters of household energy demand is for space and water heating, mostly using gas.
As we move away from fossil fuel electricity generation to nuclear and renewables, perhaps we can switch to electric heating?
Unfortunately, there is a mismatch of heat and electricity demand. Electricity demand is relatively constant throughout the year, but we need six times as much heat in the winter as the summer, and the winter heat demand is six times the winter electricity demand. There is no model of a future electricity grid that can cope with that. We have to find a way to dramatically cut the heat demand in homes.
In fact, because we need to preserve some of our carbon budget for sectors that are even more difficult to decarbonise, the Committee on Climate Change suggests that we must reduce carbon emissions from domestic heating and cooling to zero. We must minimise demand, and decarbonise what is left.
The second problem is that we have an old housing stock in the UK, and turnover is low. About 80% of the homes we will be occupying in 2050 already exist.
So we can’t rely on decarbonising the grid, and we can’t rely on building new energy efficient homes. We have to improve the energy efficiency of the existing stock. That means retrofitting something like 26 million homes.
And we should be targeting ‘deep retrofit’; a whole-house approach to design and implementation that takes a property from its current state to near net-zero energy demand in one step.
Is it technically feasible to retrofit homes to zero carbon?
We know how to do deep retrofit. Innovate UK’s Retrofit for the Future programme demonstrated technical feasibility in a range of property types, and pilot projects in Nottingham and other national and international locations show that you can scale up some of the approaches.
The simplest approach is what an architect friend of mine called “throwing a duvet over the building”. You put external insulating cladding on the building with integrated high-efficiency doors and windows, a new highly insulating roof with built-in photovoltaics, and a sustainable heating system. This was the approach used in the Nottingham project, and it is estimated that there are 9 million properties in the UK that are suitable for this method right now.
Solving the retrofit challenge by “throwing a duvet over the building”
What are the barriers to deep retrofit?
So if deep retrofit is essential, and we know how to do it, what are the barriers? Why is it not happening?
We identified four types of barriers which must be overcome:
- A lack of user demand. It is not an attractive enough consumer proposition, particularly if you only look at it in terms of the payback from energy savings.
- A lack of clear and consistent government policy and actions that demand the delivery of the 2050 targets. Many groups have been burned by the experience of the Green Deal and Zero Carbon Homes, and are rightly sceptical about government intentions.
- Costs are currently too high, and we don’t have a supply chain with the capability and capacity to deliver in volume and at speed.
- Lack of finance. Or rather lack of a good financial proposition. There are approximately $9 trillion in government bonds with negative yields sloshing around the world at the moment looking for a home. Looking for a secure investment with some kind of return. We need to tap that resource.
What do successful retrofit programmes do?
We looked at a number of domestic retrofit programmes both in the UK and internationally to discover what works.
Most of them were targeting modest improvements in energy efficiency rather than zero-carbon heating. The exception is Energiesprong; an approach to net-zero carbon retrofit piloted in the Netherlands and now spreading to other countries. This was the methodology behind the Nottingham pilot.
Despite differences in objective and approach, they all shared common success factors including:
- Having a clear policy lead
- Public sector subsidy, or access to low-cost finance
- A whole-house approach to retrofit
- Aggregation of properties into larger projects to reduce costs
- Having a single, trusted point of contact for owners and tenants that will stay with them throughout the retrofit process
- Making a good consumer proposition
- Having a long-term strategy
What should the UK do now?
So what should the UK do to encourage the market for deep retrofit?
We identified four strands of activity needed to learn from other retrofit programmes and overcome the barriers.
First, we need to develop a long-term strategic plan. We need to agree as a society that achieving the 2050 goal for housing is important and justifies concerted action. Creating the conditions for action needs a clear national 30-year plan leading us to 2050, and a supportive policy environment from government.
Second, we need a drive to reduce costs and build the capacity of the supply chain in the UK. This needs a programme to increase the number of properties retrofitted, allowing innovation and scale to cut the costs per property.
The logical place to start is with social housing. At 17% of the UK housing stock, it represents 4.5 million potential properties. Social landlords have large numbers of similar properties and a longer time horizon than many other owners. Perfect for scaling up.
Energiesprong UK estimates that we need to deep retrofit something like 25,000 homes over five years to cut costs to a point where it becomes commercially viable.
This will require public support on a sliding scale.
Third, we must engage with the end-users; the householders. There will be scepticism about the benefits to the individuals, and concerns about whether the planned improvement will be delivered and whether providers can be trusted. There needs to be a strong and easily understood consumer proposition that makes the benefits clear.
Finally, we need to encourage investment in deep retrofit. This requires innovation and flexibility in financing, public sector support in the cost reduction phase, and developing large-scale projects for commercial investment.
These strands need to work together, so the next step will be to get the key players around a table to discuss how to create the programme we need.
With 26 million homes to be retrofitted, we need to start now.