Policy instruments: designing an ‘optimal’ retrofit programme

Aaron Gillich provides an introduction to a recent paper co-authored with Minna Sunikka-Blank & Andy Ford in BRI.

The UK has long struggled to drive thermal retrofits in the able-to-pay sector.  Housing accounts for nearly a quarter of UK carbon emissions, and nearly every 2050 low carbon heat scenario used by policy makers is counting on a step change in energy efficiency in the existing stock.  In “Designing an ‘Optimal’ Retrofit Programme” we have argued that the core problem is failing to tackle this issue in a comprehensive way.  Instead the UK have largely relied on piecemeal solutions like financing (Green Deal), and failed to build on promising pilots such as described in the “Low Carbon Communities Challenge: Evaluation Report”.  These are effective ingredients, but not a complete foundation upon which to build a long term market as most policies seek to do.  More despairingly, the fact that these ingredients were not a panacea on their own has created an impression among many that: “well we tried that and it didn’t work.”  The UK’s effort at thermal retrofit is a story of half-measures and false starts.  Although many of the UK’s past efforts have been on the right track, they have suffered as partial solutions that weren’t seen through.

Insights from the Each Home Counts (Bonfield) review and bold ambitions of the Clean Growth Strategy suggest that the UK is determined to make progress with  this deeply rooted problem.  Could the UK finally be ready to move beyond half-measures and deliver a comprehensive policy package that transforms thermal retrofit into a market that can stand on its own?  Scotland is already underway with the Scottish Energy Efficiency Programme. For this and other UK efforts it would be wise to learn from recent retrofit market transformation examples in the United States.

The US Better Buildings Neighborhood Program (BBNP) was created in 2009 in the wake of the financial crisis.  The US Department of Energy gave a half billion dollars to state and local programs to transform retrofit markets in a way that best suited their communities.  This resulted in 41 different versions of thermal retrofit programs with a common goal: delivering a lasting market change rather than a temporary stimulus.  This created a natural experiment in retrofit program design.   The BBNP was successful against nearly every stated objective including upgrading over 100,000 residential and commercial properties, creating over 10,000 jobs, delivering savings of at least 15% in energy costs per home upgraded, and leveraging 3:1 in outside investment for every program dollar spent.  Perhaps most critically, 84% of grantees continued program elements in the post funding period.  The BBNP is widely regarded as a best practice example of turning national level policies into local action.

A key finding of the BBNP was that to stimulate markets the program must create both a supply push and a demand pull simultaneously.  Delivering this required active strategies across five themes:

1) Program design: to identify local market features and suitable program structures.

2) Marketing and outreach: separates the processes of creating awareness versus personal engagement and Community Based Social Marketing in driving demand.

3) Workforce engagement: this emphasised the need for the program to create drivers in addressing skills gaps across the supply chain.

4) Financial incentives: consider the relative merits of grants versus loans and how to effectively use them in combination.

5) Data and Evaluation: presents techniques for effective program evaluation that enables iterative program adjustments.

Based on the experiences and feedback from the people who delivered the BBNP programmes on what constitutes best practice, a template was created for an ‘optimal’ programme model for retrofit programmes with stated objectives similar to the US BBNP.   Borrowing lessons from programmes like the BBNP means that the UK  can develop a more robust retrofit policy that is based on evidence of what works and avoid reinventing the wheel.

Header image credit: Orangezorki, Getty Images

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Dr Aaron Gillich currently works as a Senior Lecturer in the School of the Built Environment and Architecture at London South Bank University. His professional interests cover a wide range of energy and sustainability issues, primarily focusing on the energy trilemma

of delivering a low cost, low carbon, secure energy system.  His PhD work studied domestic retrofit program design and how programs could be delivered at key market intervention points to create a lasting impact.  His current research includes the Balanced Energy Network (BEN) demonstration project at LSBU.  BEN is a prototype heat network that balances the delivery of heating, cooling and electricity using a demand side response control system and distributed storage.

ORCiD: 0000-0002-4132-4824

 

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