Autumn 2022 UK Market Report
Climate crisis and the role of retrofitting
The climate emergency remains high on the agenda, but a report from the UN Environment Programme (UNEP) has warned that the world is heading for a disastrous “climate catastrophe”, with a gulf between the level of action currently being taken to tackle climate change and what is actually required.
Inger Andersen, UNEP executive director, said, “only a root-and-branch transformation of our economies and societies can save us from accelerating climate disaster”, with swift changes to electricity supplies, industry, transport and buildings required. There will also need to be preservation of natural landscapes and the removal of carbon from food supply chains through diet and farming changes.
The report suggests that between $4 trillion and $6 trillion of investments per year would fund the transition, requiring reformation of the entire financial system.
The 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27), is to be held in Egypt from 6–18 November 2022. Heads of State, ministers and negotiators, along with climate activists, mayors, civil society representatives and CEOs will meet in Sharm el-Sheikh for the largest annual gathering on climate action. The gathering seeks renewed solidarity to deliver on the landmark Paris Agreement.
Awareness and discussion continue around the benefits of retrofitting existing buildings as opposed to demolition and rebuilding.
Domestic and non-domestic retrofitting requirements
The Energy Saving Trust found that homes in the UK account for more than 21% of the country’s total carbon emissions, with three quarters of this coming from heating systems. Retrofitting houses with low carbon heating systems is a key challenge in reaching net zero carbon targets as 85% of homes are on the gas network.
Energy Performance Certificates (EPCs) indicate energy efficiency, with bands from A (most efficient) to G (least efficient). Data published from the ONS on 25 October indicates that England and Wales both have a median energy efficiency rating in band D, with scores of 67 and 65 respectively. Flats and maisonettes were the most energy-efficient property type in both England and Wales, with a median energy efficiency score of 72 in England and 73 in Wales which is equivalent to EPC band C.
Previous work by the Climate Change Committee suggests that the cost to retrofit a typical family home to net zero standard is estimated at about £26,000. It is projected that approximately 26 million UK homes will need to be retrofitted by 2050 — an overall price tag in the region of £676 billion.
Retrofitting measures include installing loft insulation, double glazing and may also include the installation of a heat pump to transition away from gas boilers.
The ONS data previously referenced shows that social rented dwellings had the highest median energy efficiency score across all property tenures in both England and Wales. This is in line with expectations of maintenance and upgrade regimes and there is focus on reducing energy demand and bills as a result of the energy crisis. However, it is thought that encouraging private homeowners may be more difficult and there is even suggestion of EPC ratings being linked to mortgages or house sales.
The government has also set its intention to lift the minimum energy efficiency standard to let non-domestic buildings incrementally to EPC rating B, as part of its target for the UK being net zero by 2050.
The Government estimates that implementing the EPC B target will cover around 85% of the UK’s non-domestic rented stock.
EnerPHit standard
Gleeds is seeing increasing awareness and consideration of the EnerPHit standard for projects involving existing properties. The standard looks to meet high levels of energy efficiency when retrofitting — similar to Passivhaus standards for new builds.
Passive measures to reach the standard include installing high levels of insulation, high-performance and external doors (usually triple-glazed), achieving high levels of air tightness and installing mechanical ventilation with a heat recovery system.
The placement of insulation can be challenging, and achieving the standard requires a skilled design team. It is also intensive to implement and timing needs careful planning to minimise disruption.
Rising demand
It is clear that there is a massive demand for retrofitting over the next few years.
The considerable demand brings opportunities. Scaling up brings the cost down — currently, there is a significant premium for certain technologies as there is a small supply chain, but as demand grows, the premium will reduce.
Technological advancements will also be made due to greater investment and competition.
However, at a time of significant cost escalation and labour and skills shortages, the outlook for 2030 is challenging, given this is just over seven years away.
Encouragingly, 64% of non-contractor survey respondents said that clients are prioritising retrofitting and energy performance as key project objectives.
However, interestingly, just less than half of contractor respondents said the same. This could be related to cost challenges, with clients intending to prioritise energy efficiency but measures being scaled back when budgets are tight.
Over nine in ten of our survey respondents said that there should be more focus on retrofitting and energy performance from the government.
On the journey to net zero, governments will need to incentivise the switch to electricity. They will likely increase carbon taxes or have other financial inducements to shift away from gas.
The UK government is expected to incentivise retrofitting, developing and using low-carbon materials and investment in low-carbon construction skills.
Over three quarters of non-contractor respondents said that their projects are incorporating futureproofing measures such as flexibility for changing use, extension and the easy renewal of components. Nearly seven in ten contractor respondents reported the same.
