Green Deal for Real: Key Considerations for projects

1. Green Deal for Real: Key Considerations for projects Stuart Hay Senior Consultant

3. Consultancy services • Low-energy retrofit projects • Energy efficiency • Renewables • Technical support • Hard-to-treat housing • Energy & financial analysis • EPCs, SAP, NHER • SHQS / EES compliance • Stock modelling • Feasibility studies • Tenant guidance

4. The Green Deal For Real • Context • The Carbon Heart Assessment Tool • Examples exploring issues around the Green Deal in terms of assessing projects • Some final thoughts on where we are

5. Project Drivers

6. The Green Deal A financial mechanism made possible by the magic of energy efficiency Its Simple: What could possibly go wrong?

7. Capital costs • Market conditions / competition / uptake / innovation • Economies of scale (social housing) • Costs of finance (market) • Inflation • Fees and project management • Hidden additional costs • Re-decoration • Decanting / voids • Age and value of existing assets • Contingencies

8. Actual costs • Golden Rule subsidy ECO Carbon Reduction • Social / fuel poverty subsidy ECO Affordable Warmth Carbon Saving Communities • Carbon price / factor for project (base price)

9. Savings • Software Predictions (SAP) • Real world • Actual user behaviour vs. software • Rebound effect • Comfort level • Occupancy pattern • Actual performance of measure vs. software • Installation • Maintenance • Operation • Fuel price increases • Inflation

10. Project assessment tools – Carbon HEART • Home Energy Analysis Retrofit Tool (HEART) • Calculates: • Capital costs • Energy savings • Carbon savings • CO2 per £ spent • SAP and NHER ratings • SHQS compliance • Fuel poverty indicators • Green Deal/ECO finance • Analysis of retrofit scenarios • Investment recommendations

11. Carbon HEART • Full, detailed analysis of investment options • For all stock • For each archetype • For each sub-archetype • Also analyses impact of numerous variables not recognised by other energy software • Householder heating patterns • Repayment interest rates • Inflation (fuel bill rises) • Rebound effect

12. Carbon HEART • Up-to-date databases • Retrofit costs • CO2 factors • Fuel costs • Accurate, ‘real-life’ outputs • Uses actual property data (drawings, specifications etc.) • Uses actual retrofit costs (agreed in advance) • Can use any energy data (RdSAP, SAP, NHER etc.) • Does not rely on generic averages

13. Carbon HEART • Well suited to complex property types • Blocks • Terraces • Tenements • Strategic investment tool for social landlords • Baseline performance • Impact of different retrofit scenarios • Indentifies optimal scenario • Best Value For Money

14. Issue 1: Identifying Cost Effective Solutions • 3-storey No Fines block • Double glazing • Non-condensing gas combi boiler • Concrete walls, no insulation • Modelled 3 improvement scenarios • External wall insulation • As above, plus • Loft top-up • Condensing boilers • Lighting • Improved double glazing • As above, plus • Floor insulation • PV

15. Carbon HEART –Targets • All 3 retrofit scenarios will meet 2020 CO2 target • Meeting 2050 target will be much more challenging • Limited additional savings achieved for higher-cost retrofit scenarios • Scenario 2 & 3 waste resources No Eco support

16. Carbon HEART – Scenarios Limited additional benefit from investment

17. Carbon HEART – Scenarios FITs level? Level of ECO available? Golden Rule Able?

18. Carbon HEART – Example

19. Issue 2: Hard to Treat Measures • Historic Scotland Technical Paper 16 • Financial modelling of traditional property types • Detached cottage • Tenement flat • Identified qualifying measures • Tested variables to assess impact on eligibility

20. Hard to Treat Properties • Detached cottage • 600mm sandstone walls • Solid & timber floors • Single glazing • No loft insulation • Coal & electric heating • Tenement flat • Mid-floor • 600mm sandstone walls • Single glazing (extensive) • ‘G’ rated gas boiler

21. Variables • Energy rating software • Interest rates • Inflation (fuel costs) • Rebound effect • Heating patterns / behaviour • Installation costs • (Used actual £ data provided by Historic Scotland)

22. Improvement measures • Walls (internal only) • Blown beads • Slimline ‘blanket’ • Thicker (100mm) fibre board • Windows • Double glazing x 2 • Secondary glazing x 2 • Shutters • Draughtproofing • Floors • Timber floor hemp board • Solid floor board

23. Improvement measures • Roofs • Sheep wool • Doors • New insulated front door • Insulate existing door • Heating • Gas boiler & full controls • Electric storage heaters • Biomass boiler • HWC & pipe insulation • HWC thermostat • (Also packaged measures)

24. Results – detached house Wall insulation (Blown beads) Eligible? Loft insulation Solid floor insulation HWC insulation Eligible? Eligible AW only Secondary glazing Door upgrade Biomass boiler Timber floor insulation New door Eligible AW only Double glazing Wall insulation (blanket) Draught proofing Not recognised by RdSAP

25. Results – tenement flat Eligible? Secondary glazing Wall insulation (blown beads) HWC insulation Gas boiler HWC thermostat Slim double glazing Shutters Door Door Draught proofing Electric heating Secondary glazing Wall insulation (blanket) Double glazing Wall insulation (fibre board) Not recognised by RdSAP

26. Issue 3: Software Limitations • Theoretical average • High assumed heating use + poor assumed U-values = over-estimated savings • Only as good as the assessor collecting and entering the data • Time and cost penalty for going beyond default values

27. In use factors • Performance factor catered for • ‘In-use’ factors • Will reduce available finance • Will exclude some measures • Will be updated over time & account for in situ results “The in-use factor is not intended to protect against occupants changing their behaviour, for example, comfort taking to achieve a warmer home. We recognise that such comfort taking can be a major reason for the apparent underperformance.” DECC

28. Issue 4: Funding for measures • Green Deal Loan (7.5% over 20 years) • Savings (1% interest) or Mortgage (4.25% - 20 years) (Public Sector 2.86%) • Energy Company Obligation ECO • Rate of deployment and timing • Development of the carbon market / brokerage • Energy company priorities (PR) • Ofgem and government tinkering

29. Green Deal Loan Analysis Changes to loan details Effect on ECO

30. The Market Place for ECO • Ideal ECO scenario • Avoid expensive hard to treat properties • Find tenants that qualify for affordable warmth stream • Similar properties / economies of scale (social housing) • Basic measures in poor (low SIMD) areas • Maximise £-per-tonne-CO2 • Off gas properties (rural?) • Terraces with external wall insulation CO2 £

31. Other Considerations • Timing and cost of technology – penalties for early adopters (e.g. solar PV) • Future proofing vs. short-term targets • Full lifecycle costing / retrofit vs. replacement • Issues beyond energy efficiency e.g. housing management or property conservation • Wider project benefits e.g. health, energy security economic spin offs

32. How the Green Deal is going to work is still a puzzle • Lots of variables • Lots of uncertainties • Technical • Human • Financial Fingers crossed!

33. Thank you for listening shay@changeworks.org.uk