Retrofitting advancing at-scale as demand increases

It is a challenging time for construction because of inflation, increased building costs and labour shortages, but there are strong indications that retrofitting of homes at scale – a massive decade-long project of critical national importance – is beginning to achieve momentum.

It is necessary to at least halve carbon emissions arising from heat, which is responsible for 25 per cent of total Irish emissions in a sector where 94 per cent of energy is derived from fossil fuels. The traditional Irish house is the main culprit.

In addition, switching to heat pumps in houses, combined with rollout of district heating schemes at scale, is an essential pathway to help meet renewable energy targets for electricity.

The Sustainable Energy Authority of Ireland (SEAI) is the State agency driving this transition in decarbonising homes. It provides grants but also regulates retrofitting by construction companies in a rapidly emerging sector. Its 2022 budget allocation is more than €440 million, of which €267 million is allocated to energy retrofits in homes and communities.

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Under its retrofit remit, a key mechanism to building momentum is the one-stop-shop concept. For the private householder pursuing a “deep retrofit”, an approved contractor takes responsibility for all aspects, including managing the grants process and construction/engaging contractors. This means acting as project manager from the initial assessment through to getting the final BER rating, assuring the quality of the work.

In devising the concept, the SEAI did a lot of research in Europe and conducted behavioural studies. It came to the realisation that while some people know the subject very well, the majority don’t understand when a plethora of experts say different things about their property, explains Dr Ciaran Byrne, SEAI director of national retrofit. There are also strict criteria to respect for contractors in the certification process.

For those with savings, the SEAI’s one-stop-shop service brings bigger grants compared to completing upgrades one measure at a time. It is a whole-house approach that is not cheap but payback lasts decades while energy bills are cut substantially from the start – by a third with a typical moderately-sized house.

In February, Minister for Climate and Energy Eamon Ryan announced the opening of the registration process for the new National Home Energy Upgrade Scheme, including its one-stop-shop (OSS) programme. It offers substantially increased grants for a typical B2 home energy upgrade, including enhanced grants for installation of heat pumps.

“The scheme offers a hassle-free home energy upgrade with one-stop-shops providing an end-to-end service,” Byrne says.

To date, 12 suppliers have been registered and are active on the scheme; 10 additional suppliers are at various stages of the registration process. All registered suppliers are reporting strong pipelines of work and increased conversion rates of inquiries to commitments. A total of 1,300 contractors are registered under the OSS with 328 more due to come on board later this year.

Some 36,000 applications have been received by SEAI across all of its schemes so far this year. “This equates to approximately 28,800 homes being retrofitted [in 2022],” adds Byrne.

Homeowners typically have eight months to complete works after approval, though there are constraints on delivery at present, notes Byrne. The Warmer Homes Scheme, which has retrofitted over 3,200 homes to date in 2022, is the main energy poverty scheme and operates under different conditions.

With huge levels of demand, a “contagion effect” is seen with private houses, where one owner’s deep retrofit prompts neighbours to consider a similar course, Byrne says. Aggregation, where more than one house is done at a time, is more suited to approved housing bodies, or local authorities where, for example, there might be just one or two designs in a housing estate.

Challenging environment

The down side is the new retrofitting regime is experiencing many of the same challenges facing the wider economy, namely inflation and supply chain constraints affecting labour and materials. In particular, retrofitting is competing with efforts to resolve the housing crisis.

“While anecdotal information suggests that the material supply chain constraints experienced immediately post Covid-19 have eased...many suppliers are reporting difficulties in securing appropriate labour supply,” Byrne points out. In the case of retrofits, that includes technical specialists to work on heat pumps and solar PV.

Stephen O’Connor managing director of Electric Ireland Superhomes (EIS), provides the perspective of a one-stop-shop. It effectively started trading under the scheme in mid-April. It is in the throes of a very busy period, hoping to deep retrofit 200 homes by year end. Some contractors do “single measures”, but its solution is a total renewable energy option with heat pump; it does not install gas combi boilers, which are more efficient than traditional boilers but use a fossil fuel.

“We cannot cope with the demand,” says O’Connor. “We have had thousands of enquires.” This has required doubling staff numbers and increasing contractor coverage.

“There is a huge amount of activity,” O’Connor adds. “This is an industry going from infancy to scaling up to meeting demand, and there are growing pains. We can’t hide that.”

He believes the SEAI was right to take time to ensure operators met a high standard. This set “a high regulatory bar that is good for consumers and for the industry”.

Ambition issue

The level of ambition based on a housing stock of 2 million homes is impressive by any international yardstick. The programme for Government commitment is to upgrade 500,000 homes to B2 standard and to install 400,000 heat pumps by 2030.

EIS will provide 20 per cent of deep retrofits this year and intends to double that year on year, says O’Connor. It is perfecting how it deals with potential customers, and guides them in a different direction if they want to embark on single measures. If people are “fuel poor” they are directed to the Warmer Home Schemes; if it is for a council house the local authority should be first port of call.

EIS wants to have nationwide coverage; currently it is strong in 15 areas of the country.

O’Connor confirms the view that Ireland is being incredibly ambitious, yet acknowledges the low retrofitting level two years into a 10-year plan, when 50,000 to 70,000 retrofits annually are needed and workers – the skill base – must quadruple to 20,000 people. “There are massive challenges but we won’t give up...We will be retrofitting 35,000 homes by 2030. We have to make it happen.”

On the required level of ambition, Friends of the Earth chief executive Oisín Coghlan noted last month that the Budget offered people some short-term relief from skyrocketing fossil fuel prices but did not go far enough or fast enough to get us off fossil fuels for good.

“The extra money for retrofitting next year is welcome but the target of 37,000 houses is far too low,” said Coghlan. “This is an emergency. We should be insulating 100,000 houses before next winter. And the Government should be telling the SEAI to sit down with the likes of the SVP and Age Action to make sure we reach those most in need. A first-come, first-served grant scheme isn’t good enough.”

O’Connor fully acknowledges the need for scale-up from this point. There is no shortage of demand but there is a need for more contractors, who are torn between new builds and retrofits – the former often means one design, the latter entails 20 designs or more.

Doing large numbers at once - “50 here, 100 there” - has to be a key driver, he underlines. “That is the holy grail in terms of getting there.”

From the SEAI view point, Byrne points to a combination of increasing numbers of approved one-stop-shops; construction and retrofitting companies getting bigger with increased capacity, and more specialist aggregators facilitating the transition.

The big reward will be an end to draughty Irish homes being the norm, more healthy methods of delivering heat, greatly reduced energy costs and a marked reduction in Ireland’s carbon emissions.