Why rural energy efficiency proves challenging

Since last year's RICS Rural Conference the energy market has transformed. Many smaller energy companies have gone out of business and the cost of gas and electricity has spiralled. In addition, Ofgem recently announced that the energy price cap will change every three months from October. The presentations by Stuart Fairlie and Lord Richard Best at last year's conference contain advice, particularly for rural members, that holds good in the current market.

Efforts have been made to improve the energy efficiency of UK housing for decades. However, Energy Performance Certificate (EPC) data suggests that there is still a significant disparity between properties in urban areas and those in more rural settings.

Unfortunately, rural properties are already disadvantaged under the current EPC process. The buildings are much older, with data showing that two in five rented homes in villages were built before 1900. This figure rises to more than half in hamlets. Such properties also tend to be unconnected to the gas grid, using oil, coal or liquid petroleum gas for heating. All these fuel sources tend to automatically lower the EPC rating.

In his presentation at the RICS Rural Conference last year Lord Best emphasised the difference between rural and urban energy efficiency.

The original construction of buildings also has a significant effect on their energy efficiency. Properties in rural areas are often detached, and therefore have four walls through which heat can be lost. They are also typically built with traditional solid walls and floors and are therefore more expensive and often need more expertise to retrofit.

There is less social housing in rural areas, and this too affects the overall energy profile. For decades, much of the investment in energy efficiency has either come in the form of new-build homes – which are far likelier to be granted planning permission in and around existing conurbations – or concentrated on the retrofit and refurbishment of public-sector housing. For instance, recent initiatives such as the £160m Social Housing Decarbonisation Fund announced in August last year, and newly updated this June, tend to concentrate on urban areas.

In April 2016, the Energy Efficiency (Private Rented Property) Regulations 2015 brought into force Minimum Energy Efficiency Standards (MEES) in the residential and commercial private rented sector. MEES currently cover properties in England and Wales, and should be coming to Scotland soon.

Those standards are now to be raised as well. The intention is that commercial buildings will need to go from achieving a minimum EPC rating of E in 2023 to B by 2030. A proposed minimum EPC band of C would probably be introduced for the residential sector in phases, too.

At the RICS Rural Conference, Lord Best mentioned some of the incentives available.

The government has also encouraged lenders to consider energy efficiency in mortgage decisions for privately owned properties, which is an interesting move. It is putting an onus on the lenders to consider their total lending books and the energy efficiency of the homes based on the EPC, with an aim to make them responsible for the impact they have on climate change.

In November 2020, the Department for Business, Energy and Industrial Strategy (BEIS) launched a consultation on improving home energy performance through lenders, which sought views on the way they could help homeowners improve the energy performance of their homes.

Under BEIS plans, mortgage lenders will initially be encouraged, and ultimately required, to disclose information on the energy performance of their property portfolios in England and Wales every year. They will also have to declare the gross value of their lending for energy-saving home improvements.

The government also consulted on the merits of setting minimum energy targets for mortgage lenders, and is encouraging them to sign up to a voluntary target for a portfolio average of EPC band C by 2030.

Deep retrofit takes a whole-house approach to remediation works. Single measures such as external wall or cavity insulation aren't discussed in isolation, but instead looked at in relation to the way they work alongside other interventions.

To do this effectively, we must first understand a home's energy efficiency. This includes its condition and its current issues, such as any gaps, cracks, damp or mould. We also need to look at what the homeowner wants. Are they after a home that is cheaper to run, an improved lifestyle, or simply a property that generates fewer carbon emissions?

For too long, grants and funding have focused on single measures without considering the occupants, what is best for the fabric of the building or even whether these isolated measures are being installed in the right order.

A good example of this is when a boiler is replaced. Typically a new boiler of the same size is installed, even though there is an opportunity to assess whether other energy efficiency measures could be implemented as well. If the home had better fabric insulation, for instance, a smaller boiler could be selected and less energy used (hence lower fuel bills and less emissions).

Once the owner's/occupier's needs and objectives have been identified, a variety of measures can be suggested and linked to any eligible grants or funding. The next stage is to establish a good design and to install the required energy efficiency measures. The key is to assess the energy efficiency of the home afterwards to ensure that the goals are actually met.

This is the PAS 2035 process described in a nutshell. The standard sets out a whole-building approach to the retrofit process, considering the home, environment, occupancy and the householder's improvement objectives when determining the most suitable measures to install. This eliminates the risk of retrofit work being considered in isolation, which can unintentionally damage the overall building performance.

Mortgage lenders and banks are well placed to promote such retrofit works. Specifying a standard such as PAS 2035 as a condition of lending would ensure quality outcomes for residents, raise customer service standards, foster confidence in installers, and help ready our housing stock for a decarbonised grid.

Rural homes are different from those in more urban areas, and often need specialist attention. While the overall principles are the same, tick-box approaches do not work on such buildings. We need properly trained, qualified and competent people advocating and working with homeowners to make their homes warmer and more energy-efficient.

The government has provided funding to train retrofit assessors and retrofit coordinators. Born out of the Each Home Counts review, and introduced as a requirement under PAS 2035, these two new TrustMark-approved roles are designed to ensure quality in low-carbon retrofit programmes and installations.

As of last summer, such professionals must be used on all projects funded under the Energy Company Obligation (ECO3), which adopts the [PAS 2035 approach]. Projects provided under the Social Housing Decarbonisation Fund and phase 2 of the Green Homes Grant Local Authority Delivery scheme also require retrofit assessors and coordinators. 

In effect government has stayed true to its word. When commissioning the Each Home Counts review, and any new energy efficiency funding policies would be required to use the PAS2035 approach to ensure the quality of measures installed.

There are two options to ensure installers and housing providers can meet the new PAS requirements. Teams can acquire in-house expertise by training staff to become retrofit assessors or coordinators, or they can work with external professionals.

As the UK strives to meet its goal of net-zero carbon by 2050, energy professionals will have an increasingly important role to play in helping homeowners and business owners reduce the emissions associated with their properties. Their specialist understanding of how to retrofit rural homes correctly will be particularly important.

Energy bills and energy security have never been more important and newsworthy. Of late, the government is regulating and encouraging stakeholders to improve homes, and the PAS2035 approach is the key to success. The idea is to engage with the owners, ask what their goals are, assess what the energy efficiency and condition of the property is to start with, create a medium-term plan for the owner, put the right retrofit measures, in the right order for the good of the occupants and the home in a quality assured manner.