Retrofitting domestic dwellings for a net zero world: a case study

In Net Zero Britain, no domestic dwellings will have fossil-fuel heating. We take a detailed look at one London Borough, the missed opportunities and the potential going forward.

In the humble opinion of The Green Edge, we’re missing too many opportunities in the UK to make progress on decarbonising domestic dwellings. While the tasks and skills for retrofitting are all well documented, building standards, planning permissions, wholesale house refits, reroofing, and the development of skills to manage integrated net zero solutions are all lacking.

We recently did a case study for Richmond Upon Thames in West London, using local data as well as data for London and the UK generally, to explore the state of domestic retrofitting - or refurbishment, as we’ve been told recently is becoming the preferred term - there. Here’s what we found.

Lots of EVs, but where are the heat pumps?

There are something like 85,170 domestic dwellings in Richmond Upon Thames. This number is rising and is projected to rise above 90,000 in the next 5 to10 years. The average additions run at between 250 and 300 per year, but we note there was a major jump in 2020-21 of 1,362. The type of properties vary: there are 1,870 bungalows; 35,240 flats (apartments for our US readers); 24,740 terraced houses; 16,720 semi-detached houses; and 5,620 detached houses. Ownership is important here as regards potential investment in net zero: Richmond has 50,750 owner-occupied properties, of which 23,756 are fully owned and 26,994 are owned with a mortgage. Of the rest, 16,410 are privately rented and 20,102 are socially rented.

Charts: TGE

On the movement side, around 600 houses (not flats) are bought and sold each year - these are the properties that are most open to adopting full net zero technologies. 500 of these are terraced houses.

Focusing on Richmond Hill – a pretty affluent area - from a total of around 1,000 houses something like 100 have been fully refurbished over the last 3 years. We use the term ‘fully refurbished’ here to mean something like 18 to 24 months of building work, almost always including an extension requiring planning permission and often including a new roof. Investment is typically in excess of £150,000, suggesting that the additional cost of “going net zero” would not have been significant relative to the total cost of the refurbishment project.

Yet, despite the frequent re-roofing, none have had solar panels fitted. None have included heat pumps, neither air nor ground source. We do note that most have benefitted from enhanced insulation in roof and walls, and an increasing number of EV charging points have been added. But, neither planning permissions nor building standards were used to encourage or even enforce the adoption of net zero domestic heating and energy efficiencies above the current standards. Certainly a few missed opportunities there.

Looking closer, we find the following data for Richmond in the Energy Efficiency Infrastructure Group (EEIG) dataset for local authority areas:

• Out of 100,600 households, 76,000 are lower than C on the EPC scale. 8,000 are F or G;

• 1,666 households received assistance over the 7 years of the Energy Company Obligation;

• 10,000 households are in fuel poverty (prior to the current energy price hikes);

• To improve the 76,000 households from EPC Level C would cost £342mn by 2030 - this would create and support 584 jobs;

• Under Phase 1 and 2 of the Green House Grants funding stream for households with an income with less than £30,000, 226 households have benefitted.

Source: TGE communication with the London Borough of Richmond-upon-Thames.

We also see one-off opportunities. For example, in January/February 2020, a major water main burst causing the flooding of the local gas mains, which in turn required the replacement of all gas appliances (boilers in particular) in more than 2,200 homes. The installation work called upon 100 Cadent engineers and 140 Aspect Maintenance boiler engineers/plumbers to rectify the situation. Gas boilers were replaced on a like-for-like basis. The cost was in excess of £30mn. No heat pumps were installed. Need we say more?

Expanding our view

Still sticking with what’s going on in Richmond Upon Thames, the highly-detailed Retrofit London Housing Action Plan tells us a few things. We learn that the average cost per dwelling in Richmond to achieve the interim efficiency target is £16,230. To achieve full net zero it’s £28,530. This is supported by the London Councils: Pathway Report which complements the Housing Action Plan. The analysis in both reports cover 3,781,477 domestic dwellings, which in total will require £98bn of investment to achieve EPC B by 2030.

Both the Housing Action Plan and the Pathway Report does help on the skills side. Between them, they identify 9 key occupations required for retrofit work, with numbers peaking at 33,000 FTE (full-time equivalent) by 2030, sloping off to 13,000 FTE by 2050. We note that this builds on previous work undertaken by the Construction Industry Training Board.

What about local heat network schemes, we ask? Are there any planned for Richmond? We can consult the register held by BEIS, covering large scale social housing schemes. This is an interesting topic in its own right. As we work our way through the Excel spreadsheet of listed projects up to the end of 2021, in London we see 9 boroughs active with 18 projects. The biggest numbers are in Greenwich and Haringey, but we see nothing in Richmond¹.

On the brighter side, Richmond does have a Climate Emergency Strategy for 2020-2024. The 2022 action plan lists out 143 actions across six headings: council, legacy, waste, air, nature, and resilience. For residents, there’s a communications and engagement programme, and the Strategy also makes reference to a Green Skills Hub with a particular focus on retrofit skills. The rules for planning permission are interesting: permission is not required for the first air source heat pump under a permitted development (legislation was changed in 2011 to allow for this) but a second one does require permission². Installers need to ensure their installations meet MCS standards and requirements.

The wider context

The current version of Driving Retrofit of Existing Homes - a Resource for Local and Combined Authorities” (V2.1, February 2021) has a useful section on skills. There’s also a handbook developed by a few local authorities. The Heat Pump Association has undertaken work here too and has run the numbers on the required installation rates of heat pumps versus manpower requirements. We see here heavy emphasis on installation rather than design and development of net zero options, and phased implementation.

Coming soon, we’re looking out for Octopus Energy’s plans to develop and manufacture heat pumps priced at around a grand. We think this could make a huge difference. Octopus’s thinking is very much working from right to left: what is the maximum cost of a heat pump that would allow rapid and widespread uptake? Compare this to the average gas boiler, costing between 2 and 4 thousand (though some wall-mounted ones are cheaper). At the moment, heat pumps cost between £8-14,000 before even taking into account the new piping, radiators and so on that they need. Go for it, Octopus.

Elsewhere, the news is not so good. At the national level, we know there are 55,000 heat pumps being installed each year. But we need to hit 600,000 per year by 2028 and 1.9mn per year by 2035³. So, it seems opportunities aren’t being progressed nationally either. And, looking at the simple decarbonising tasks for domestic dwellings, we see they’re also falling well behind:

Source: The Retrofit Toolkit. Helping Local Authorities to Kickstart Deep Retrofit (from BEIS, UK Green Business Council; and Institute for Engineering Technology, no date, and CCC data for 2019 which is the most up-to-date data available). Charts: TGE.

Other schemes have been used to boost decarbonisation, of course. The Green Homes Grant Vouchers, for example. The most recent data we saw from BEIS on that told us that 113,700 applications had been made by the end of March 2021, with 31,000 being made in March 2021 alone. But 20% of these were withdrawn or rejected, resulting in nearly 90,800 live applications. Of these live applications, only 70% were approved. Government contribution funding for the vouchers issued totalled £264mn, of which £211mn was allocated for low income vouchers. The average government contribution for all issued vouchers was £4,590, while for vouchers issued to low-income households the average was higher at £5,980. But overall, the conclusion made by our friends at the National Audit Office in their Value-for-Money Report on the Green Homes Grant Voucher Scheme did not make for comfortable reading.

There are also other grand Treasury schemes: the Social Housing Decarbonisation Fund (£110mn); Home Upgrades Grants (£150mn); the Public Sector Decarbonisation Scheme (£1.475bn); and the Green Homes Grant-voucher and Local Authority Delivery (LAD) schemes (£2.32bn)⁴. So, it seems the money is there, it’s a case of using it well.

Talking heat pumps

We found some interesting information in this recent report from Nesta. The report looks at the heat pump skilled manpower requirements and shows there is a national need for 27,000 engineers by 2028 – that’s 4,000 - 6,000 per year - to handle 25mn fossil-fuel boilers. The report also goes into the skills required for heat pumps: system design and integration, installation, and maintenance. Scaling this down to our Richmond case study, we estimate 600 FTEs of various types will be needed to handle the workload over the next 8 years. Looking at this way indicates, to us at least, that the capacity to install is a major barrier to progressing the domestic transition to zero carbon.

Looking out to Europe, there’s also data from the European Heat Pump Association which tracked heat pumps installed per 1,000 homes in 2021 across Europe. Numbers ranged from 45-50 for Finland and Norway, down to 17-25 for France and Sweden, and then down to the stragglers. Sad to say, the UK is a straggler, at a mere 1.48 per 1,000 homes. Even in 2017, when the UK was at 0.78, Norway was at 34.3, Finland 23.7, Hungary 1.8, Slovakia 3.59. Even Germany was way ahead at 4.3. Not exactly casting the UK as a world net zero leader here, then⁵.

Another point here is that Finland and Norway are also very active in cooling and heat retention (insulation), and in tapping into geothermal. Are there some lessons to be learnt there?

From the macro to the micro

There’s lots of data for us to examine here and as usual, building a coherent picture is like doing a massive join-the-dots puzzle. Council data, regional data, national data, European data, even sources like the London Building Stock Model. We could look at Energy Performance Certificate (EPC) data but remember that this is limited, as it only operates for relatively recent property sales, is primarily driven by energy costs as a proxy measure for emissions, and lapses after a few years. But many folks do merrily use the EPC for published assessments. We urge them to be careful: we sampled the data for one road in Richmond and it showed a huge variation for very similar properties.

Perhaps, in conclusion, we can make this point: when used carefully, existing datasets can be used to set priorities for domestic decarbonisation and its required skills. They can be used locally (as in Richmond), at city levels, and across nations. Ideally during 2023 we will see this happen within the English Local Skills Plans (LSIPs), the drafts for which we expect to see later in the Spring.

One final point. In this post we’ve looked at Richmond Upon Thames in London, a relatively privileged area. A look at the average regional boiler efficiency ratings in the UK in 2022 indicates it’s perhaps even more important for the other regions to catch up:

Source: Uswitch via DLUHC and Scottish Government

1. The London-based projects are: Barking and Dagenham (1 project); Enfield (2); Kingston (1); Haringey (4); Islington (1); Kensington and Chelsea (2); Ealing (1); Lewisham (1); Greenwich (5). Four projects have been dropped in Westminster, Lewisham, Greenwich, and Southwark.

2. We asked Richmond Council to confirm this as there was an application for a heat pump installation in 2015-16 but the Council informed us this was a part of a wider planning application.

3. References: Chapter 4: Buildings in Progress in Reducing Emissions 2022 Report to Parliament by the Climate Change Committee, June 2022; also see Independent Assessment: The UK’s Heat and Building Strategy, March 2022 by the Climate Change Committee'; and, Decarbonising Heat in Homes, House of Commons, BEIS Select Committee, January 2022.

4. Total spend figures to 2021/22 giving a total commitment to £4.055bn for decarbonisation.

5. We’d recommend a look at the European Heat Pump Association annual dataset for anyone interested in seeing rates of progress.