The Economics of Energy Conservation

[drplokta]

They've just finished an eight year programme to refurbish a social housing estate near us, and bring it up to modern levels of energy conservation. http://www.24dash.com/socialhousing/20852.htm for details. The highest annual fuel cost saving they have seen was £278 -- let's be generous and say the average was £200 per household. There are 186 properties on the estate. So the total annual saving is around £37,200 and it will take nearly 300 years to pay back the capital cost. Retrofitting the housing stock to meet modern standards of energy conservation is not worth doing. (If you're concerned about global warming, I think it safe to say that the same amount of money invested in carbon sequestration would have removed a lot more CO² from the atmosphere.)

Comments

Incomplete analysis

[purpletigron.livejournal.com]

You're neglecting several key factors: Likely rising energy costs will reduce the payback time; Diverse economic benefits from the improved health of social housing residents, who are more likely to suffer fuel poverty.

Re: Incomplete analysis

[perkinwarbeck2.livejournal.com]

So if energy costs double, it'll only take 150 years? If they quadruple, it'll only take 75?

[voidampersand.livejournal.com]

Over the last eight years, the apartments have been completely reconfigured with replacement windows, new gas central heating boilers, kitchens, bathrooms and video entry phones. The majority of homes have also typically increased in size by some 25 per cent, making their energy efficiency ratings even more impressive.

Gotta love those new energy efficient video entry phones. The ones they had back in 1915 were monsters. Always having to shovel more coal into the USB (Under Step Bunker) port.

[purplecthulhu.livejournal.com]

So this in fact was a lot more than just upgrading the energy efficiency of the homes. What fraction of the costs could be assigned to purely energy efficiency measures? From this list it sounds like its not that much...

[timill]

See http://www.housingcorp.gov.uk/upload/pdf/Sus_dev_Annualreport.pdf where it's Case Study 4.

The refurbishment, which was completed in March 2005, involved completely stripping out the early 1900s building, leaving only the structural walls. A complete internal refit and structural remodelling of the block was undertaken to create a more user-friendly environment. This involved building new internal walls and installing new windows, kitchens and bathrooms. External works included cleaning and renewing brickwork and installing security systems.

The modernisation is the sixth out of a total of eight being carried out on the estate in Rotherhithe. Specialist building contractors Durkan Ltd is undertaking the work.

Brenda Smith, a resident at Deanshanger House, a next-door block that has already been refurbished to a previous high standard, said that the changes have had a positive impact: “I’m a lot happier now. We’ve got a lot more room, the kitchen is nice and I’ve got a great new bathroom.”

[redbird]

Yes: the actual energy savings include the amount of human time and energy saved by getting to use a well-fitted-out kitchen.

[bohemiancoast.livejournal.com]

Purpletigron has it right; the improvement in conservation is clearly incidental to the core refurbishment here. In general, improvements to housing stock that turn it from crap housing stock to not-crap housing stock have broad benefits.

[alexmc.livejournal.com]

I think there are many "quick wins" which should still be done - such as insulating lofts - but others such as double glazing a drafty house will be useless - as you point out.

If anything this is an example of why it is important to think about a problem in its entirety rather than just throwing money at it.

[the-gardener.livejournal.com]

Retrofitting the housing stock to meet modern standards of energy conservation is not worth doing.

Wrong. Houses have much longer lifespans than human beings (our own was built in the 1870s, for instance) so retrofitting them to meet modern standards represents a very good investment, from the perspective of both their current occupiers -- through reduced energy bills -- and future generations -- further extensions to their lifespan, less (theoretically, at least) need for overall maintenance and repair, reduced lifetime carbon footprint, etc.. As bohemiancoast says, improvements to housing stock that turn it from crap housing stock to not-crap housing stock have broad benefits, one of them being, in the longer term, a reduction in the number of new houses which would otherwise be needed to replace the existing stock, and thus an avoidance of the emissions which would be associated with their construction.

[armb.livejournal.com]

With our last house, doubling the loft insulation, adding cavity wall insulation, and replacing the windows that were rotting anyway with double glazed ones was definitely worthwhile (though still wouldn't be up to modern standards, I suspect). With the current house, improving the insulation would mean replacing fibreglass with polyisocyanurate or building new thicker walls and ceilings, neither of which would be likely to be cost effective.

[stillcarl.livejournal.com]

What were the resale values of the properties before refurbishing and what are they now?

[timill]

Not applicable, I think, in both cases. The housing was built by, and is still owned by, a trust.

[stillcarl.livejournal.com]

Well, what if it was applicable?

[vicarage.livejournal.com]

Your point would only be relevant if the 60000 refurbishment cost per flat could have been done for say 40000 if done in an energy inefficient way, and the difference spent elsewhere.