I am a sustainability consultant based in...
Recently I spent my weekends, mental energy and money renovating my apartment. As I handed over the cheques for double-glazed windows and new low-energy lights, I wondered how we could possibly persuade millions of homeowners to go to the same effort.
To save energy on a massive scale, we need to tackle the challenge of retrofit. In my hometown, Melbourne, more than 80% of the buildings that will exist in 2020 are already here today. Around three quarters of homes are privately owned. The picture is similar in the US, Europe and Australia.
For the Arup Global Research Challenge, I helped look at over 20 community-scale retrofit schemes around the world to find out what factors drove or limited their success. It is clear from our research that those designing retrofit programmes must invest as much in creating the consumer demand as they do in developing loan products to help people fund them.
This is because even if taking a loan to retrofit their home would save people money they don’t necessarily do it. Perhaps people are too busy to apply for a loan to pay for improvements. They might be unsure about what is involved in insulating the roof. They might not be convinced that there would be a real impact on energy bills. Or they might prefer to spend the effort on a kitchen renovation or new timber floorboards.
So one approach to creating demand is to offer loans for a bundle of home improvements, some of which improve energy efficiency and others that are known to increase a home’s value. The improvements might include garden landscaping, kitchen upgrades or solar panels.
These bundles can increase market demand for loans because people believe the outcomes are more secure (such as a higher house sale value or income from selling renewable energy). Bundling energy and non-energy improvements might also make the loan amount large enough for people to go to the trouble of putting in an application.
In the US, the Clean Energy Works Oregon scheme has taken this approach, allowing non-energy home improvements to account for up to 49% of the total project cost. Along with other measures such as subsidised energy assessments, they have proven to be a good way of encouraging market demand. Within 24 months of the programme launching, 1,916 housing energy upgrades had been completed.
It looks as though, when it comes to retrofit loans, we might just need someone to throw in the kitchen sink (and the marble bench top) to inspire us to fill in the application form.