Accelerating Energy Efficiency Retrofits in Owner-occupied Homes

This working paper presents a review of policy design and implementation in OECD countries for increasing uptake of energy efficiency retrofitting in medium to high-income, ‘able to pay’ owner-occupied households. Renovation measures to help improve energy efficiency and decarbonise homes can include loft and cavity wall insulation, heat pumps and solar PV.

The review uses a rapid evidence assessment of academic and grey literature to address the following research question:

Which internationally applied, good practice policies have the most potential to accelerate quality, energy efficiency retrofits of owner-occupied, ‘able to pay’ households in the UK?

Review findings

The review reveals that residential energy renovations in OECD countries are mostly shallow single measures, with a small portion comprising multiple measures or deeper renovations. Although some countries such as France, Germany, the UK and the US have retrofitted millions of single measures to homes, this review has not identified any countries which have delivered deep home energy retrofit at a widespread scale.

Through our review we highlight examples of national investment subsidies and ‘one stop shop’ schemes, aiming to support the customer retrofit journey and promote the use of accredited suppliers or products, which have led to a scaling up of interventions. In several cases these have led to 100,000s of single measure installations, although they mostly represent examples of shallow retrofit rather than deeper or whole house energy renovation.

We identify various review studies on policy instruments which have been applied in different countries and are considered important for implementing residential energy renovation. Policy instruments most commonly emphasised are regulations, financial support and information provision. Most reviews also include policies to develop workforce skills and competencies, supply chains and quality assurance.

There is agreement in relevant literature that the application of single policies alone will not be enough to achieve a transformational increase in energy renovation rates. Indeed, the latter remain low despite the application of various policies internationally. In countries where higher volumes of retrofits have been achieved, such as Canada, France, Germany and Ireland, we have identified several cross-cutting success factors which include long-term policy reliability and flexibility, effective policy mixes, policy integration and multi-scale governance, including the use of intermediaries such as ‘one stop shops’.

Policy recommendations

Drawing upon our review of international and UK evidence, we make a series of policy recommendations for an effective home energy retrofit policy framework in the UK, with a focus on medium to high-income owner-occupier households:

• Key success factors are the design and implementation of policy instruments which are credible, stable, long-term and flexible.
• Policy packages or combinations of complementary policies are more effective than applying individual policy instruments alone.
• Effective policy mixes should include policies to stimulate both homeowner demand and a competent supply chain for retrofit.
• The review highlights several retrofit financing mechanisms (e.g., energy efficiency mortgages, low interest loans) that can be targeted specifically at mid-to-high income owner-occupied households. Given pressures on government spending, a blended financing approach combining direct, publicly funded financial incentives with innovative measures to stimulate private financing, is likely to be required.
• For England and Wales, we recommend that a national retrofit programme with financial incentives for ‘able to pay’ homeowners and a ‘one stop shop’ and advice service linked to local and regional hubs could help to support the customer retrofit journey and develop supply chains.
• National, regional and local government retrofit policy should be better coordinated, including through dissemination of financing to support uptake of measures at a local level.
• National policy programmes for home energy renovation should be integrated with mandatory local area planning.
• Regular collaboration should be established between UK and devolved governments, to foster mutual learning and greater consistency in policy design and implementation across the UK.