Financing Home Renovation

Aligning the stars for deep renovation

Paul Kenny, B.E. C. Eng.Chief ExecutiveTipperary Energy Agency

Co-funded by the Horizon2020 programme of the European Union

2006 House of Tomorrow Shallow Retrofit 80 homes (F to D)

EU SERVE project 400buildings E1 to B2 (HES Pilot)

2013-2015 ~1000 fuel poverty/ Shallow F to E

75 Super-HomesD2 to A2/3 Deep Retrofit

The Journey Deeper into Retrofit

What is Superhomes:- Independent expert led renovation:

Insulation, Air-tightness, ventilation, solar and Heat pumps.

- Grants, trained contractors, quality control.- Research, policy, innovation.- European investment bank subsidy.

Super Homes was developed through collaboration with National Energy Agency (SEAI), Large Utility (ESB), Research (LIT) and delivered by TEA to demonstrate & test the decarbonisation pathway.

“I don’t know what to do, How do I know what is value for money? What product is good, and what is not?”

“Who will do the work, and how can I trust them?”

“I can’t afford the capital cost, but I have high bills!”

“I want cheap finance, but am reluctant to re-mortgage”

“It’s too much hassle, if only someone would just do it for me!”

“Who will make sure it is done correctly”

“if I sell the house, all the money will be wasted”

“How can we expect home owners to design and implement a retrofit of this quality – we need to have an offering, like this” - Irish Government official.

Barriers to Deep Retrofit

Superhomes 2015-2018 (n=550)

Drivers for Retrofit: Why people “want” to do deep retrofit?

0,00% 10,00% 20,00% 30,00% 40,00% 50,00% 60,00% 70,00% 80,00% 90,00%100,00%

Improving the Comfort in my home

Reducing fossil fuel use and improving theEnvironmental performance of my home.

Cost (efficiency) of heating my home

Improving the health of the occupants of myhome

Showing others the benefits of deep retrofit

Its part of an overall retrofit, sensible to do it now.

Drivers of retrofit

Superhomes 2015-2018

Drivers for Retrofit: Why people don’t do deep retrofit?

0,00% 10,00% 20,00% 30,00% 40,00% 50,00% 60,00% 70,00% 80,00% 90,00% 100,00%

The hassle of organising all the different works

The understanding of what and how to improve my home specifically.

Access to cheap finance

Cost of the works

Need support in selecting and supervising contractors

Disruption to our home durning the works

Barriers to retrofit

Superhomes 2015-2018

How do people Finance Deep Retrofit?- Finance isn’t the only barrier – often over stated.- Several modes of finance required

- None.- 30-70% short term, unsecured, simple.- 70% plus secured, cheap, long term.

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Level of financing required

Superhomes 2015-2018

What do people want out of finance packages?- Value for money clearly stands out.- Pay as you save not as important (loan=cost savings).

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Simplicity Low rate/ longterm finance

Loan = savings Options available Mortgage Low depositrequired

Higher summerpayments

Savingsguarantee

Flexible

Important attributes to finance package

Superhomes 2015-20185

The real barrier to deep retrofit?- People want to see investments pay back in a reasonable time frame.- 80% of people would be happy with 5 to 7.5 years- 60% of people would be happy with 7.5 to 10 years.- Smaller market for retrofit over 10 years payback.

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Less than or equal to 5 5-7.5 7.5-10 10-12.5 12.5-15 15-20 >20

Cumulative Acceptable Payback

- Need to build a one-stop shop- Demonstrated technical implementation.- Brand awareness- Development time for business model- Make lots of mistakes, do things wrong,

better, better, right.- Need some help!!- Can’t have early adopters funding all of

this development - ELENA PDA critical to start up phase.- Energy efficiency obligation scheme

Superhomes

ELENA allows Scale & Time for innovation- Initial contact with EIB: November 24th 2016- Application Dec 23rd 2016- Revised Feb-June 2016 – more detailed business plan- Finalised & signed 1/8/17- Very easy to access if:

- You know your market & investors- Understand clearly how and who will do the project development- Listen to the EIB folks & work with them to develop your program.

- Advice from Picardie:- Don’t start ELENA standing still.- 3 years isn’t a long time.

My Blog: www.linkedin.com/in/paulgkennyhttps://www.linkedin.com/pulse/european-funding-opportunity-sustainable-energy-tipperary-paul-kenny/

ELENA

Results

• 71% Primary Energy Savings on average, • Technically settled on methodology to deliver deep retrofit• Still building Delivery, Marketing and Financing

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Pre & Post BER (Energy Certificate)

- Most buildings require Renovation with Renewables by 2050.

- Individual building owners won’t be able to do on their own.

- There is little market capacity & framework right now to see this happen.

- Government, Construction Industry, Financiers, Homeowners all want to see this happen.

- Hundreds of Powerpoint slides have been written about EE and finance and the apparent lack of “conscious coupling”.

- Retrofit isn’t sufficiently cost effective w/o low cost financing (or carbon taxes!)

- Superhomes taking the approach: If you build it they will come.

Financing – the big lever?

- 2015/16: Unsecured loan offer from Bank at commercial rates (10%, 8%, now 7.5%)

- 33% who proceeded<10% took up financing offer. - Many used secured debt (mortgage top up) - People used case / own funds- People used their own bank (maybe cheaper maybe

not)- 66% did not proceed - cost of works/ payback/ finance

key reasons- To renovate Ireland /Europe, we need 1 stop shop

with low cost finance.- Lots of discussions with banks.

- They need scale- Need demonstrated capability to deliver: Counter party- Need to ensure business case is there

Our Financial Package

- Get the technical offer perfected. (3 FT researchers working currently)

- Demonstrate market interest. (ELENA supporting)

- Get the stakeholders on board long term (state/ utilities)

- Build brand awareness.- Either:

- Finance projects directly (with investors) (Picardie)

- Partner with a bank (KFW)- 400 homes by 2021(€20M

investment)

Superhomes Workplan

Delegation from Irish Energy Ministry – visiting Superhomes May 2016

• Non profit, public good social enterprise

• Partnership approach• Energy management• Renewable energy and energy

efficiency• Procurement, project mgmt.• Cost effective, value driven

• Paul Kenny• Chief Executive• T: 052 7443090• F: 052 7443012• E: paul@tippenergy.ie• W: www.tea.ie

Tipperary Energy Agency