DECC Assistant Secretary Barry Quinlan: ‘National Retrofit Plan at a turning point’

Amid the implementation of programmes to enhance residential energy efficiency and, ultimately, decarbonise Irish homes, Ciarán Galway discusses the challenge of sustaining momentum with Barry Quinlan, the Assistant Secretary leading the Energy function with responsibility for Built Environment, Retrofit and Heat Policy at the Department of the Environment, Climate and Communications (DECC).

A residential retrofit is an upgrade to the fabric of a home which improves its energy performance. A ‘deep’ retrofit combines several energy upgrades in tandem. This includes enhanced wall and attic insulation, improved windows and doors, efficient renewable heating systems (e.g., heat pumps), and renewable energy technologies (e.g., solar PV panels).

Across the State, Quinlan outlines, a total of 15,500 retrofits were completed in 2021, with 27,700 in 2022, and a further 37,000 targeted for 2023. “Residential retrofit is undergoing a major escalation,” the Assistant Secretary observes, adding: “The National Retrofit Plan is about building on that momentum. We have a very strong project pipeline heading for 2023 so now, it is really about delivery.”

Context

Sustainable Energy Authority of Ireland (SEAI) figures for 2021 illustrate that one-quarter of all energy use in the State occurs in the residential sector and that fossil fuels are used as the primary heat source in 73 per cent of dwellings. As such, the residential sector accounted for 27.5 per cent of Ireland’s total energy emissions (9.8 MtCO2eq) in 2021.

In the same year, according to figures Environmental Protection Agency provisional data for 2021, the built environment accounted for 12.3 per cent of Ireland’s greenhouse gas emissions (a decrease from 13.6 per cent in 2020). Figures indicate that of the total built environment greenhouse gas emissions in 2021 (8.5MtCO2eq), the majority (7 MtCO2eq) originated in the residential sector.

Targets

Programme for Government (PfG) 2020 committed to the publication of the National Retrofit Plan, “as part of the National Economic Plan”. Under the Green New Deal mission, the PfG outlined the Government’s intention to “deliver this expanded and deepened climate ambition” through policy changes which included retrofitting the equivalent of 500,000 homes to a B2 building energy rating (BER) by the end of 2030. This target was originally established in Climate Action Plan 2019.

“This year, 2023, marks a turning point in terms of the trajectory of our retrofit ambition.”

Barry Quinlan, Assistant Secretary
Department of the Environment, Climate and Communications

Published in November 2021, originally as chapter 14 in Climate Action Plan 2021, the National Retrofit Plan outlines the route to achieving national residential retrofit and heat pump targets.

As per Climate Action Plan 2023, the residential sector must reduce emissions from 7 MtCO2eq in 2018 to between 3.4 and 4.5 MtCO2eq by 2030. Overarching sectoral emissions ceilings for the built environment have been set at 36 MtCO2eq for the first carbon budget period (2021-2025) and 28 MtCO2eq for the second carbon budget period (2026-2030). These ceilings have been subdivided, with the result that the ceilings for residential sector are set at 29 MtCO2eq for Carbon Budget 1 and 23 MtCO2eq for Carbon Budget 2.

To achieve these targets, Climate Action Plan 2023 (CAP23) insists that there must be a significant and urgent reduction in the use of all fossil fuels to heat residential buildings alongside a major expansion in retrofit activity. Alongside the rollout of district heating and other zero carbon heat initiatives, the National Retrofit Plan will play a central role in delivering this targeted reduction.

National Retrofit Plan

Designed to address barriers to retrofit across four key pillars (driving demand and activity; financing and funding; supply chain, skills, and standards; and governance), the National Retrofit Plan has two core objectives by 2030: firstly, retrofitting the equivalent of 500,000 homes to a BER rating of B2/cost optimal or carbon equivalent; and secondly, the installation of 400,000 heat pumps in existing premises.

Achieving the required reductions targets, therefore, is dependent on increasing the depth and number of retrofits, as well as increasing the number of heat pumps installed. As noted in the Climate Action Plan, this will require “hundreds of thousands of homeowners to make the decision to invest in decarbonising and making their properties more efficient as well as the State playing a central role through the retrofitting of homes at risk of energy poverty”. Simultaneously, the retrofit sector must grow and develop its capacity to deliver the ambition.

National Retrofitting Scheme

In February 2022, the Minister brought an updated package of retrofit supports, to government for approval. The package was then launched containing five key measures.

1. A new National Home Energy Upgrade Scheme to increase grants to up to 50 per cent of the total cost of a “typical deep retrofit” to a BER of B2.

2. A network of one stop shops offering a comprehensive project management service, including access to finance.

3. Significantly increasing the number of free energy upgrades for those at risk of energy poverty, up to 400 per month from an average of 177 per month in 2021.

4. A method of prioritising homes with the worst energy performance through the Warmer Homes Scheme, which provides free energy upgrades for eligible homeowners who are most at risk of energy poverty.

5. An enhanced grant rate equivalent to 80 per cent of the “typical cost” of cavity and wall insulation for all households.

Having already supported 450,000 home energy upgrades, the SEAI is DECC’s delivery partner for the programme, working very closely with the Department’s team. Following launch of the National Retrofitting Scheme, almost 50,000 applications for SEAI support were received in 2022, representing an increase of 148 per cent when compared with the same period in 2021.

Over 27,700 home energy upgrades were completed, and around 6,000 homes were upgraded to at least BER B2.

“A top priority for the Minister and with government, SEAI, and industry support in its sails, the National Retrofit Plan has gained significant momentum,” Quinlan comments.

Finance

In addition, the Government delivered financial certainty for the retrofit sector with a total Exchequer investment of €8 billion to 2030 via National Development Plan funding. This figure includes €5 billion of carbon tax revenues.

Budget 2021 allocated a total of €221 million to home energy upgrade schemes. En route to becoming a multi-billion-euro scheme, this figure increased to €348 million in Budget 2023.

Meanwhile, DECC is collaborating with the European Investment Bank (EIB), the Strategic Banking Corporation of Ireland (SBCI), and other financial institutions to unlock a “new low-cost loan option” for households.

Benefits

Amid the combined European energy and cost of living crises, rather than focus solely on the energy savings unlocked by more energy efficient homes, Quinlan emphasises that retrofit can enhance the sustainability of the energy system as a whole, support socioeconomic development, deliver environmental goals, and increase prosperity. “The National Retrofit Plan is very much citizen-centric in terms of the benefits it will unlock. The experience of people living in upgraded homes is transformational,” he remarks.

Among the benefits of retrofit are warmer and more comfortable homes, reduced household energy bills, improved health and wellbeing, reduced GHG emissions, increased economic activity, and improved energy security through the electrification of heat via indigenous renewable energy projects.

Demand side challenges

However, the DECC Assistant Secretary, acknowledges the scale of the challenge with the Home Energy Upgrade Scheme’s 2030 target encompassing almost one-third (30 per cent) of the State’s housing stock. Firstly, DECC estimates indicate that the total cost of retrofitting the fabric of a house to BER B2 and installing a heat pump ranges from a minimum of €12,600 and a maximum of €79,000. For instance, the average total capital cost to upgrade a home from an average BER F to an average BER A3 is €60,814. Secondly, navigating a deep retrofit programme, including accessing finance, has a degree of complexity.

In response, the Government’s new National Home Energy Upgrade Scheme ensures that private homeowners, non-corporate landlords, and approved housing bodies can avail of up to 50 per cent of the total cost. Grants, therefore, range from €6,300 to €39,500.

“DECC gave significant economic consideration to the decision to increase grant levels from between 30 and 35 per cent to up to 50 per cent and subsequently we have observed a significant upsurge in interest,” Quinlan notes.

Meanwhile, in relation to complexity, he adds: “Through the one stop shop model, DECC introduced a streamlined and customer-focused model, removing the hassle for homeowners undertaking a deep retrofit. One stop shops are SEAI registered private operators which manage the entire process from initial assessment through to completion, ultimately minimising disruption.”

Supply side challenges

Simultaneously, it is necessary to cultivate an effective retrofit supply chain. “When the State begins a project on the scale of the National Retrofit Plan, it must be met with a supply side response. We are building that supply chain, taking actions to address challenges relating to taking account of cashflow, construction material inflation, and streamlining processes,” Quinlan comments.

Published in November 2021, Skills for Zero Carbon: The Demand for Renewable Energy, Residential Retrofit and Electric Vehicle Deployment Skills to 2030, an Expert Group on Future Skills Needs report, estimates that labour demand is set to increase rapidly as residential retrofit and heat pump targets take effect. This increase, it projects, will require the full-time equivalent workforce increase from 3,990 to at least 17,400 by 2030.

Commenting on skills demand, Quinlan stresses that “much work has been completed”. In 2022, enrolment in the near zero energy building and retrofit upskilling programmes increased by 460 per cent when compared with 2020.

“There is a swell of skilled people who can see the opportunity and are making the decision to upskill. With the funding and grants in place and demand evident, there is a real opportunity. As such, in 2022, over 320 extra contractors registered with SEAI to work on home energy upgrade programmes. At the same time, 12 one stop shops also registered with SEAI. There is still a lot to do but there is a lot of positivity there,” he insists.

“The objective, therefore, is to simultaneously unlock demand, cultivate the supply chain, and deliver the skills, that can achieve the National Retrofit Plan ambitions. It is a huge endeavour; challenging but very rewarding.”

Ambition

Conceding that Ireland’s retrofit ambition has “a long way to go still to get towards the numbers that we need”, Quinlan explains that around 75,000 retrofits to B2 will be required each year in the second half of the decade up to and including 2030.

To accelerate and drive delivery in this key area, a Heat and Built Environment Delivery Taskforce has been established by the Minister. This Taskforce will focus on the acceleration of system-wide project and programme delivery, ensuring blockages are removed in relation to retrofitting and heat priorities.

“In terms of behaviour and economics, Irish people want to do the right thing and can see the benefits. When it comes to retrofitting, it is important to help people understand how they can do it, while making sure that it is an attractive proposition.

“For instance, as fossil fuel boilers approach end of life, it is important that people know what their options are and that we ensure that zero carbon heat initiatives are both attractive and accessible to end-users.

“Similarly, by aiding with retrofit cost and project management, we can ensure that people are supported to choose the best option to unlock myriad benefits. For many people, decisions on heating and renovation are often once or twice in a lifetime, so we must seize the opportunities.”

Overall, the Assistant Secretary believes that the State’s journey towards the decarbonisation of homes has entered a pivotal phase. “This year, 2023, marks a turning point in terms of the trajectory of our retrofit ambition. From a policy perspective, many people have bought into the National Retrofit Plan. Now, we must deliver, and we are determined to do so.”