Assessing the effect of grants for home energy efficiency improvements

Panel: Panel 5: Energy Efficiency Markets & Financing Mechanisms

Author:
Les Shorrock, Building Research Establishment Ltd

Abstract

This paper presents analyses of the effects of home energy efficiency grants using historical data on several United Kingdom grant schemes and data on acquisitions or sales of individual measures. It clearly shows that for three key energy efficiency measures the presence of grants increased the acquisitions of those measures.

The analyses show that for every million Euro of expenditure per year on grants for each measure, the acquisitions increased by:

2.7 thousand per year (for loft insulation prior to 1988),
1.2 thousand per year (for loft insulation from 1988 onwards),
2.3 thousand per year (for cavity wall insulation),
1.2 thousand per year (for condensing boilers).

For all three measures the data also show, with a high level of confidence, that a free-rider effect is present. The analyses allow this effect to be quantified. For example, for cavity wall insulation, the analysis indicates about 97 thousand free-riders at a grant expenditure of EUR285M/year and above.

Calculations indicate that, due to the combined effect of the grants, the UK housing stock currently consumes approximately 100 PJ/year less than it would otherwise do, resulting in an emissions reduction of 1.8 MtC/year. Cumulatively, since their inception, the grants have saved about 1500 PJ and 28 MtC. These figures are reduced by 40% when free-riders are discounted. The overall net cost per tonne of carbon saved is -EUR408/tC (i.e. a net benefit of EUR408/tC), reduced to -EUR361/tC allowing for free-riders. Thus, the grants were highly cost-effective, even allowing for free-riders.