The Retrofit Challenge

Glen Irwin, MEP & sustainability manager at Stepnell, examines the factors influencing the retrofit industry’s lack of progress.

Any building professional with the basic ability to perform a few ‘back of an envelope’ calculations will have determined where the vast majority of carbon emissions in buildings originate: the existing stock.

Even during a building boom, existing stock is only replaced at a rate of around 2% per year. It doesn’t take a genius to realise that the vast majority of these properties will be with us well beyond our 2050 80 percent carbon reduction target – according to the Carbon Trust, ‘approximately 60 percent of the buildings that will be in use in 2050 have already been built today.’

So, what is the reason for the lack of action in improving the existing stock? Well, after looking into this for about ten years, the lack of hard drivers remains the same. There are numerous ‘carrots and sticks’ at work in new construction, including constantly increasing carbon restrictions, the most prominent of which is Building Regulations Part L.

It is easy to focus on the new because it is much easier to start from scratch, and this is where legislators can really sink their teeth. However, many of us live and work in old buildings with little control over how much energy we use to heat, light, ventilate, and cool those buildings – as long as we pay our energy bills.

When confronted with the prospect of refurbishing old buildings, the immediate question of ‘how much’ is quickly met with – ‘that doesn’t stack up with my rental returns’ or ‘the end product won’t sell for enough to make a profit’. To any businessperson, it’s simple economics.

The Green Deal launched in Jan 2013 was meant to unlock masses of potential in low carbon refurbishment, but that failed for the same reason – the numbers don’t stack up. So we often see legislation as one of the few means by which the playing field is levelled – to a higher level.

So, what might change in the future to kick-start the massive transformation of the existing stock in the kind of numbers that will have an effect on our national carbon emissions?

The Energy Savings Opportunity Scheme (ESOS) and the Energy Act 2011 are two examples of new legislative drivers.

The ESOS is centred on energy audits for medium to large organisations, which must be completed by early December of this year. However, feedback from the few assessors available at the moment indicates that firms simply see this as another set of forms to fill out and ignore.

At most, 10% of businesses will take action as a result of these energy audits. However, the Energy Act may have more teeth, with the current proposal being that starting in April 2018, any property that does not have a minimum ‘E’ rated EPC will be prohibited from being sold or rented – assuming that a change of Government does not overturn the entire thing. According to one estimate, approximately 20% of commercial properties with EPCs have a ‘F’ or ‘G’ rating.

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So, if this legislation is passed, we will either see a massive increase in demand for refurbishment or a large number of empty buildings awaiting demolition. This has two knock-on effects: the rental and buyer’s market generally improves, as the flushing out of the low-end of the market increases demand higher up the quality rankings. However, it is possible that some businesses will go out of business if they are unable to raise capital to improve their stock.

In a capital-strapped economy, this is where the Green Investment Bank should be active. A look at their website reveals that the vast majority of these funds are going to worthy but high-profile projects like waste-to-energy, biopower, industrial scale, and large offshore wind projects, with only a few normal building renovations supported.

Perhaps this is due to a lack of demand, but it will undoubtedly be present by April 2018. I’m not sure how much money they have to lend, but it’s unlikely that the Green Investment Bank will be able to finance a tidal wave of demand for low-interest loans to support national refurbishment. So the question remains: where are the billions of pounds undoubtedly coming from? Perhaps economists can provide some answers, but my guess is that it will have to come from everyone in the end.

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Technology is unlikely to be the most difficult barrier to refurbishment. There are numerous new developments in building insulation (outside is better than inside for a variety of reasons), efficient heating options, high performance glass and films, and, of course, new lighting technologies. Designer capability isn’t the real issue, as there are plenty of consultants ready to take on the challenge, and contractors are eager to do refurbishment work.

It all comes down to money, as it does with most things, and until building owners and tenants are forced to pay more, the refurbishment market will remain limited to those with altruistic ambitions to do their part for the environment. Surprisingly, the recent slight decrease in energy bills is likely pushing the focus further down the boardroom agenda. The unintended consequence of lower energy bills is that payback periods become even longer.

However, new legislation is not the only motivator; corporate morale and the simple economics of operational energy costs can also play a role, which is why we should support initiatives to introduce Voluntary Display Energy Certificates (VolDECs), which provide more reliable clues about a building’s efficiency than EPCs.

Last Updated on December 30, 2021

Indra-Gupta

Author: Indra Gupta

Indra is an in-house writer with a love of Newcastle United and all things sustainable.

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