Slow uptake makes 2030 home energy retrofit targets challenging

Domestic dwellings account for approximately 25 per cent of Ireland’s total energy use – that’s even more than industry. In an effort to reduce consumption and decarbonise home energy usage, the Government has set a number of ambitious targets to be achieved by 2030, including upgrading half a million homes to a Building Energy Rating (BER) of B2 or better and the installation of 600,000 heat pumps – 400,000 of which are to be installed in existing homes.

Householders will benefit from these upgrades through improved comfort levels and reduced energy bills.

According to the Sustainable Energy Authority of Ireland (SEAI), most homes built before 2006 will probably needs multiple upgrades to achieve a B2 rating. It recommends a three-step process for the home energy upgrade journey: have an assessment carried out; insulate the home; and then consider installing renewable technologies such as a heat pump system, solar PV or solar thermal panels to improve the overall energy efficiency of the home.

For the majority of people in those pre-2006 homes, that will entail a full retrofit involving insulation to exterior walls and roof, new widows and doors, and the installation of a heat pump. This can cost up to €70,000, with the overall average coming in at €40,000 when SEAI grants of around €20,000 are taken into account.

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For homeowners who want to carry out a full retrofit the SEAI offers the One Stop Shop service. SEAI-registered One Stop Shops manage the project from start to finish – including grant applications – making it relatively straightforward and hassle-free. Furthermore, the value of the grant is deducted from the project cost upfront, helping with cash flow.

The One Stop Shop will also carry out a home energy assessment which provides a technical report on the energy upgrades needed to make the home suitable for a heat pump and to bring it to a B2 rating. The SEAI offers a grant of €350 for this assessment and the homeowner is under no obligation to carry out the work.

While there is no doubt that the grants are on the generous side, the fact remains that €40,000 is simply unaffordable for a great many homeowners, particularly when looked at from a financial payback point of view. Even if the retrofit were to produce annual savings on heating bills of €1,000 it would take 40 years for the investment to pay for itself. And that’s assuming that the householder availed on an interest-free loan to pay for the work.

“The target of 400,000 retrofits by the end of the decade is going to be very, very challenging to achieve,” says David McConnell, national heating sales manager, Living Environmental Systems, with Mitsubishi Electric.

“The uptake hasn’t been great. The One Stop Shops were slow to get up and running. They are doing a bit more now but most of the volume is coming through housing associations and the local authorities. A housing association might have 60 homes in an estate and do complete retrofits on all of them. Local authorities are doing something similar.”

Mitsubishi Electric is the market leader for retrofit heat pumps in Ireland at present but there are problems there as well, as McConnell explains. Not least of them is the near catch-22 situation faced by homeowners who wish to avail of a grant to assist with the not inconsiderable cost of installing a heat pump.

“To install a heat pump in a 1,300-square-foot house will cost €12,000 to €13,000,” he says. “You will get a €6,500 grant off that but it might be hard to get. Not every house is heat pump ready. In order to get the grant, a room-by-room heat audit has to be done. Failure to meet the standards set by the SEAI means you won’t get the grant. That will make it cost prohibitive for many people to install one.”

He also points out that the householder has to pay to be told they won’t qualify for the grant.

The crux of the issue lies with the way heat pumps work. They extract heat from the air outside the home and use it to heat water for the central heating system. The optimal temperature for them to run at is between 40 and 45 degrees Celsius; as McConnell notes, each degree above that reduces their efficiency by 2.5 per cent.

If a room loses heat through draughts or poor insulation, the heat pump needs to work at a higher temperature and will use a lot more electricity. The SEAI has therefore set certain maximum heat loss levels to qualify for grants.

“It doesn’t make any sense to put in a heat pump if you haven’t addressed the fabric of the building,” says Energlaze managing director Peter Campbell. “You need insulation in the walls and roofs and so on as well as mechanical ventilation in some cases.”

“The uptake has been disappointing,” McConnell continues. “The SEAI has reduced its heat loss indicator requirements and that will pull about 100,000 additional homes into the heat pump ready market. But nobody really says they will change to a heat pump until their existing boiler needs replacement, even if their home is heat pump ready.”

Campbell agrees that finance is the primary motivation for a lot of people when it comes to home energy upgrades.

“It’s mostly driven by savings,” he says. “There is a cohort of people out there who are aware of the environmental benefits and are making decisions based on them. That’s a small cohort but I’d like to think it will get bigger and bigger.”

As the name suggests, Energlaze started out life in the replacement windows business but subsequently expanded into other areas.

“We became one of the original five One Stop Shops in late 2022. There are more than 20 now,” says Campbell. “There is certainly a lot of interest in One Stop Shops and deep retrofits but a lot of people look at it and say it’s quite expensive, even with grants.”

The grants are a huge incentive but if people can’t afford to do something, they won’t do it. People should be encouraged to do what they can afford to do

—  Peter Campbell, Energlaze

That is leading to a more measured approach in many cases. “Some people will do only one simple measure at the start,” Campbell explains. “Our key selling point is that we don’t mind what our customers want to do. We are happy to do what they want and they can come back at a later date when they can afford to do something else.”

Comfort comes into it as well. “We always check with our customers the reason why they are changing and upgrading their windows and doors, and better insulation plays a major part in it,” says Global Home Improvements managing director Barry Shevlin.

“Even in newer houses built within the last 30 years the windows might look great but they are not built to last. If you put in good windows and doors and do it well, you will get immediate benefits in terms of comfort and reduced energy bills, or at least stop them from increasing at a time of rising energy costs. Comfort tends to be number one, according to the feedback from our customers. Security is another reason; people feel safer with new windows and doors.”

Unfortunately, there are no grants available for installing double or triple glazed windows and new doors, even though they can improve the energy performance of the home by 10 per cent or more.

“The grants are very, very confusing for homeowners and very unfair as well,” says Shevlin. “There is nothing available for stand-alone windows and doors but there should be. That would help the Government reach its targets quicker. People would be able to upgrade their homes in stages. The closer we get to 2030 it is going to get more difficult to hit the targets. Why not do it at a steady pace and give grants to everyone?”

Campbell agrees. “The grants are a huge incentive but if people can’t afford to do something, they won’t do it. People should be encouraged to do what they can afford to do, to go on that journey, however long it takes. It is important not to alienate people. We want everyone to do something. Something is better than nothing.”

McConnell too believes the journey could be made easier. “It would help if the grants were increased and it was made easier to get them by simplifying the paperwork involved.”