Oireachtas Joint and Select Committees
Tuesday, 5 April 2022
Joint Oireachtas Committee on Climate Action
Implementation of the New National Retrofit Plan: Sustainable Energy Authority of Ireland
We will begin in public session. Apologies have been received from Deputy Bríd Smith. Deputy Paul Murphy is substituting for her. The purpose of this meeting is to discuss the implementation of the new national retrofit plan and the broader issue of emissions from buildings. We are joined by witnesses from the Sustainable Energy Authority of Ireland, SEAI, which is responsible for the roll-out of the national retrofit plan. SEAI has published a very interesting national heat study in the past number of months so we will touch on that as well. On behalf of the committee, I welcome Mr. William Walsh, CEO; Dr. Ciaran Byrne, director of national retrofit; Mr. Brian O'Mahony, head of the community and national retrofit department; and Ms Margie McCarthy, director of research and policy insights.
I remind witnesses of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. If witnesses' statements are potentially defamatory with regard to an identifiable person or entity, I will direct them to discontinue their remarks. It is imperative that witnesses comply with any such direction. There are limitations to parliamentary privilege for witnesses attending from outside the Leinster House campus and as such, they may not benefit from the same level of immunity from legal proceedings as those physically present on the campus.
Members are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members that they are only allowed to participate in the meeting if they are physically located on the Leinster House campus. If they are joining us online, I ask that prior to making their contributions to the meeting, they confirm that they are on the grounds of Leinster House. I now invite Mr. Walsh to give his opening statement.
Mr. William Walsh:
I thank the committee for the invitation to attend the meeting today to discuss the national retrofit implementation plan. I am joined by my colleagues Ms Margie McCarthy, director of research and policy insights; Dr. Ciaran Byrne, director of national retrofit; and Mr. Brian O'Mahony, head of the community and national retrofit department. To assist this discussion, we separately submitted relevant briefing material on the national retrofit programme to the committee last week. I thank the committee for affording me the opportunity to present my opening statement.
SEAI is at the forefront of Ireland's clean energy transition. We are funded by the Government of Ireland through the Department of the Environment, Climate, and Communications and the Department of Transport. In 2022, our budget allocation is more than €440 million. Of this, €267.2 million is allocated specifically to energy retrofits in homes and communities.
At SEAI, we are acutely aware that the energy transition must be a just transition. This is carefully considered across our delivery programmes, our research and our policy advice. Of the €8 billion allocated in the national development plan to home energy upgrades, half of this figure is ring-fenced for action to support vulnerable and energy-poor households.
SEAI places citizens, communities, suppliers and other stakeholders at the heart of everything we deliver. We are catalysts for action through our grant and incentive programmes and our capacity-building processes with citizens, communities, and the business and public sectors. We have had a major transformative impact on the Irish economy and in the past decade, our actions have underpinned more than €1.2 billion in energy savings.
The Government's climate action plan 2021 sets ambitious residential energy goals for 2030. This includes installing 600,000 heat pumps, 200,000 of which will be in new homes while 400,000 will be retrofitted into existing homes. It also includes achieving 500,000 B2 building energy rating, BER, home upgrades. Both of these key targets support the reduction in carbon emissions from the residential sector from approximately 7 million tonnes in 2018 to between 3.5 and 4 million tonnes in 2030. The quicker we achieve this, the sooner the broad range of benefits will flow to Irish households in the form of cheaper-to-run, warmer and healthier homes; improved air quality; and improved security of energy supply.
In 2021, SEAI was designated as the national retrofit delivery body. SEAI has unique experience in residential energy policy implementation. In the 20 years since our establishment, the warmer homes scheme has helped to improve the warmth, comfort and health of more than 143,000 vulnerable energy-poor homeowners while the house of tomorrow programme demonstrated the feasibility of technological solutions leading to stronger building regulations for energy. Through our implementation of the BER programme, more than 800,000 homes, or almost 50% of the housing stock, have a BER, which puts Ireland to the forefront of this important consumer empowerment instrument. The greener homes scheme supported 33,000 renewable home heating systems building market confidence in, and establishing, robust supply chains for technologies like solar thermal and heat pumps. The better energy homes scheme has provided €292 million to support more than 268,000 homeowners to complete shallow and moderate home upgrades.
SEAI’s community energy grant scheme has demonstrated the power of aggregating projects across homes, communities, and commercial buildings. Last year’s national home retrofit pilot helped demonstrated a proof of concept for the OSS approach to home energy upgrades. This addresses some of the key challenges to date, namely, multi-annual funding for contractors, more generous grants for increased measures, and greatly reduced complexity for homeowners. The national roll-out was launched by the Minister, Deputy Eamon Ryan, in February. All SEAI programmes follow the same principles of establishing clear objectives, focused development, fast deployment, efficient delivery, regular review and refinement, and clearly measured outcomes.
SEAI programmes benefit from our modelling and research capability, which supports the delivery and design of programmes, founded on an evidence base. Our recently published national heat study is a comprehensive analysis of the options for reaching net-zero emissions from the heating sector by 2050. Comprising analysis across all sectors, the study includes key insights to decarbonise the residential sector. This study is informing Government heat policies and will support the evolution of the national retrofit programme, ensuring it is best in class to meet targets.
February’s announcement by the Minister of the new grant rates paves the way for the next wave of residential energy upgrades and sets Ireland on the journey towards our 2030 targets. The new national home energy upgrade scheme offers increased grant levels of up to 50% of the cost for a typical B2 home energy upgrade, up from 30-35%. The scheme offers a hassle-free home energy upgrade with OSSs providing an end-to-end service. This includes surveying the home; designing the upgrades; managing the grant process; helping with access to finance; managing contractor works; and quality assuring the work. Homes owned by private homeowners, non-corporate landlords, and approved housing bodies are eligible for the scheme. Fixed, transparent grants ensure contractors and homeowners alike are clear on their entitlements.
The scheme was developed using design thinking principles, putting the customer at the heart of the journey. We undertook a significant amount of consumer and behavioural analysis to support its development. The new scheme is designed to be scalable and support the achievement of our ambitious targets. The SEAI works closely with contractors and homeowners to ensure their home energy upgrade journey is made even easier.
A key part of the OSS registration is for companies to demonstrate that they have the quality systems and capacity to deliver at scale. Currently, two companies are fully registered as OSSs, having completed due diligence and a further 17 are actively engaged in this process. There will be ample opportunity for smaller contractors, who may not be in a position to register as a OSS, to partner with registered OSSs. This is already happening extensively in the industry. Additionally, the €8 billion allocated in the national development plan to the national retrofit plan sends a clear signal to the market to prepare for increased opportunities and delivery at scale.
Our retrofitting targets represent a decade-long project, one which will build rapidly towards the goals set out. Many of the challenges are clear, such as supply chain capacity, material inflation, homeowner willingness, the rental market, governance and low-cost finance. In particular, I wish to advise that we are closely monitoring supply chains and inflation, and actively engaging with the construction industry, the Department of Further and Higher Education, Research, Innovation and Science, education and training boards, ETBs, and the wider retrofit landscape to increase retrofit-related training opportunities. In light of the Russian invasion of Ukraine, SEAI is collaborating with colleagues in our parent Department and other State agencies to mitigate impacts which will affect all of society. Further details on what we are doing to address these issues are included in the additional material provided.
The benefits of the national retrofit programme far outweigh the costs, particularly when the multiple benefits - financial, economic, employment, health, security of supply, and environmental - are considered. We passionately believe the clean energy transition must happen urgently, and we stand ready to support all of Irish society on this journey. Our approach is based on insights, research, and expertise from two decades of programme delivery. The challenges ahead require us to work at pace and to deliver ever greater results, learnings, and improvements in collaboration with key stakeholders.
I acknowledge the strategic leadership provided by the board of SEAI and pay tribute to the staff of SEAI for their commitment and dedication. In concluding, I thank our colleagues in the Department of the Environment, Climate and Communications for their ongoing support, particularly in the context of the actions assigned to SEAI under the Climate Action Plan 2021 and the national development plan. I welcome discussion with the committee, and I am happy to answer any questions members may wish to raise.
Many thanks to Mr Walsh for his opening statement. There is quite a lot in it. It is interesting. I invite members to indicate if they wish to ask questions. Could I get agreement, as we usually do, that we will have two minutes for questions and we will have second, third and fourth rounds if we have time? Is that okay? Okay. I thank members and invite them to indicate if they wish to ask a question. Those who are joining us online might indicate using the raise hand function. If witnesses who are joining us online wish to come in on any particular question, they should use the raise hand function as well.
I have one quick question for Mr. Walsh on his statement. I will come back in later with other questions. He mentioned that two companies are currently fully registered as one-stop shops, having completed due diligence, and a further 17 are actively engaged. I ask about this because it is something that was mentioned on the radio a short time ago. Is that what Mr. Walsh would have expected at this stage or would he have expected more? Is everything going to plan? That is just a quick question, but he can take all the time he needs to answer it.
Dr. Ciaran Byrne:
Yes, we have two through the gate and 17 more coming. It is pretty much broadly in line with what we expected. I will give some additional context on that. We are taking a very significant and deep focus on the capabilities of companies that are prospective OSSs in terms of their quality management systems and also their ability to scale. We have a pre-eligibility questionnaire piece and then we follow up with a strategic plan. While we have been working with the OSSs prior to the announcement of registrations, we have been quite fastidious in terms of looking at those applications and making sure they meet those relatively high bars. We are about where we need to be. Obviously, we would like to be a little bit quicker but we want to make sure that we get it right and have all of the bases covered than to get it done fast.
Mr. William Walsh:
If I can, I will add just one point to Dr. Byrne's comments. We opened the scheme on 9 February for applications and we are focused on processing those applications. As Dr. Byrne says, we have two through the gate now and we have 17 further applications on which we are working. Many of the one-stop shops are gathering a pipeline of prospective customers and we are engaged in ensuring that is expedited because from our perspective, delivery at pace is important.
I thank the witnesses very much for the presentation and for the work that has gone into getting this scheme up and running. I would like to pursue the Chairman's question a bit further. What spread do we need in terms of the number of one-stop shops to be able to say that they have a nationwide launch and people can go to somewhere within a reasonable distance? Specifically, at the time of the announcement I recall that some national organisations like An Post and the credit unions were involved. Are national organisations of that nature pushing through this process, so that we can expect to see a fairly wide coverage? I fear people may be delaying while they wait for this. I would like to hear the views of the witnesses on the supply chain challenges and also how this industry will grow by year five and year ten, to give us an idea of what scale of industry we will see grow. It will give confidence to people to enter the industry if they see the speed with which it can grow.
When will we see the loan scheme? That will be key if it is to be linked to savings in energy bills. There has been a suggestion at the committee by Friends of the Earth that we should step back from the BER B2 threshold for the OSS and that we should reduce it so that we quickly get the more easily accessible energy savings in the midst of this crisis. I invite the witnesses to comment on that.
Dr. Ciaran Byrne:
I will deal with the first couple of questions. On the spread of the one-stop shops, of the 19 companies, many of them have a national footprint and will be doing work right across the country. A number of them are also tied in to the large utility providers so, while they are separate companies in their own right, they are very much linked to utility providers and have that kind of national spread as well. The current target for OSS registration is approximately 20 for this year and we will be growing it further from there. As was mentioned in the opening remarks, from the point of view of OSSs, we are looking for relatively large companies that have the capacity and capability to deliver at scale.
The model for many of the one-stop shops, OSSs, will be that they will work very closely with the middle-sized and smaller contractors. The OSSs will be responsible for quality and project management delivery. They will work with the local contractors. That will allow them to enforce and support the national spread of OSSs and retrofit works. We believe we are in a reasonably good place in that regard.
I will comment on the supply chain before handing over to my colleague, Mr. O'Mahony, who has very much led on the matter. We are very much cognisant of the supply chain. We have done a lot of work on quantity surveying the OSSs and building in inflation in respect of the grant schemes. We are about six weeks into the war in Ukraine, which has supercharged things. Last year was a very difficult year for the supply chain. The committee will recall Ever Given, the ship that got stuck in the Suez Canal. That gave rise to significant global supply chain issues. We are seeing some restrictions on or some issues with the scheme, particularly in the context of the lead times for the likes of windows and doors. I ask my colleague, Mr. O'Mahony, to comment a little further on the supply chain.
Mr. Brian O'Mahony:
On the supply chain side, the SEAI has been building to this point for more than ten years and has done many shallow retrofits. In the past two years, our programmes have pivoted towards deeper interventions resulting in ratings of B2 and beyond, up to even A1. During Covid we have seen many of the supply chains cease to operate globally. They have had to be refilled in the past 12 months. We have seen that that has started to unwind from product and material availability. There has been a knock-on impact on costs. Last year, right after the lockdown in Ireland was lifted, we looked in detail at the cost side to see what the costs were in the marketplace, both in our schemes and externally. Then we noticed during the summer that we were getting reports that costs had increased even last year, so we went back out again in the autumn, and we plan to go out again this year. We are preparing to go out and to see what is happening with the costs because of recent inflation as a result of a number of geopolitical factors. That is looking just at the cost.
As for the supply side in Ireland, as Dr. Byrne said, there are 19 applications for registration as a one-stop shop. We aim by the end of 2022 to have 20 one-stop shops registered. Some of them will be companies that do national coverage and some may be focused more regionally or on particular types of building stock for homes. That is how we foresee this will go. The market will not be a homogenous one-size-fits-all one for everybody in Ireland, with many companies having the exact same business model and approach across the country. That is what we see coming through from our experience in the past two years on the development call. We will have to see how we move through the coming years, but if we had 20 one-stop shops operating by the end of the year, and the applications we have received to date give us comfort that we will achieve that easily, I think we would be able to meet the demand that we see at present and that we have seen grow in the past quarter. In 2021, some of our one-stop shops did more than 500 deeper renovations, resulting in ratings of B2 and beyond, so the one-stop shops have that capacity and we are confident about that and about the supply side.
Dr. Ciaran Byrne:
I will take the remaining couple of points arising from Deputy Bruton's questions. One of them, I think, had to do with the growth in the market in respect of B2 ratings. We are putting in the foundations for a multi-annual, decade-long plan in respect of building the pipeline, the market and the suppliers. We are starting off at this point with the first of the one-stop shops. We will be working on this right through to 2030. We have a significant target of B2 ratings to reach. We want to achieve approximately 65,000 to 70,000 B2 ratings per year from 2026 or 2027 onwards, towards the end of the decade. We are at the early stages of that. As Mr. O'Mahony mentioned, a significant amount of work has been done in preparation for these one-stop shops in developing the national retrofit plan and scaling the various parts of the market. From the launch in February, we have started officially and we are out at it, even though the SEAI has a 20-year history of delivering retrofits. We are starting to realise the step change in ambition in respect of delivery. The cruising altitude, if I may call it that, is about 60,000 to 65,000 B2 ratings per year.
As for the point about the loan scheme, we are working very closely with our colleagues in the Department on that. The Department is taking the lead role in that. A lot of the work will be done by quarter 3. We hope and anticipate that that will be available at the retail banks by quarter 4 of this year. We are supporting that work. We have some people on our team working on the energy finance side of supporting it. My understanding is that the European Investment Bank, EIB, is undertaking its due diligence on the scheme. Obviously, it will do that to its satisfaction.
I will make a final point about stepping away from the B2 ratings. That is a very interesting point and one we will keep abreast of as this crisis moves on. The committee should be aware that we have a number of other schemes. The one-stop shop scheme is focused on B2 ratings. We also have the better energy homes scheme, which consists of the individual measures for the can-pay sector. That scheme allows homeowners to carry out just one or two measures. It is not focused on achieving a B2 rating. The warmer homes scheme is the scheme for the energy-poor. We achieve a number of B2 ratings under that scheme but we also do some shallower retrofits under it. As this crisis matures, we are keeping a close eye on that. We may have to pivot back on the scheme to look at different measures so we encompass more people rather than carrying out more measures for fewer people. It is a live situation and we are keeping abreast of it.
I thank Mr. Walsh for his presentation. The retrofit scheme is fantastic, and I think everybody wants it to achieve, but I have some concerns from what I have heard and what I read earlier. I can sum up those concerns with some of the figures the witnesses have just presented. Dr. Byrne mentioned that the SEAI is aiming for 65,000 B2 ratings or thereabouts per annum once this is ramped up, but with the 19 one-stop shops, assuming they are capable of doing what Mr. O'Mahony has just said, which is about 500 ratings of B2 or higher per annum, we are looking at a shortfall of around 55,000 on the basis that 500 multiplied by 19 is just short of 10,000, so there is a significant gap there. While the witnesses have mentioned optimism and expectation, I am concerned from what I am hearing that perhaps we have been too ambitious about being able to achieve these targets on the basis of the size of the sector, notwithstanding any other concerns about supply chains. The aspect of delivering at pace and the geographic spread of these large-scale contractors is important. I stress that this is not a criticism of either the SEAI or the targets, but it seems to me that 19 firms large enough to do this at scale simply is not enough. I would like the witnesses to put my mind at ease in that regard.
The other issue I wish to touch on - and I am glad Mr. Walsh started his contribution with this very point - is the level of support offered to lower income families who may currently be in energy poverty. Between the SEAI, the Department of the Environment, Climate and Communications and the Department of Housing, Local Government and Heritage, my understanding is that about 58% of the overall budget is targeted at low-income families in social housing stock, among others. Within the public sector, and across the two Departments and the SEAI in co-ordination with local authorities, are the witnesses confident we will be able to achieve the targets and goals at local authority level in respect of those in local authority housing stock, among others, that are being set out for the SEAI?
Finally, I thank Dr. Byrne for the mention of the low-cost finance scheme being with the European Investment Bank. That was going to be one of my questions. Availability by quarter 4 of this year is to be welcomed, and I hope that goes well, but the witnesses might address the two major points I have made.
Dr. Ciaran Byrne:
I thank the Deputy for stating his concerns so clearly. There is no question but that these are ambitious targets. We have a target of 20 companies for this year. The funding we have between now and 2030 is €8 billion, fully half of which is for the energy-poor sector, so the B2 ratings will come from across all the SEAI programmes, not just the one-stop shops.
We are considerably ramping up our warmer homes scheme, which is the energy-poor scheme. We expect to deliver a lot of B2s from that. We also have the solar photovoltaic, PV, scheme, which we get a lot of B2s out of, and the better energy homes scheme. We are going to be strategically looking at our community scheme, from which we get B2s as well. The B2 target is not from the one-stop shops alone. It is from all the schemes across the SEAI.
We are in the process of growing the market and the Deputy articulated a very good concern. There are 20 companies right now. Experience, both in our previous history growing and developing schemes and generally, has taught us that we should grow the market in a balanced way. A clear policy direction is baked into statute. We also have significant finance. Those are two of the biggest concerns of the industry. We have been going back out to the industry and contractors and telling them they now have an ability to scale up their businesses. They now have assurance that we will be here for the long term, they have a good sense of the policy direction and they also have significant finance backing it up through demand from homeowners.
The other point about retrofitting, which will be significant in growing that market, is that retrofits will be required wherever there are homes in the country, in every constituency. We are seeing a lot of positivity from contractors who feel they have a rewarding and satisfying career and business opportunity in their local area, rather than heading to the larger urban centres where a lot of construction activity takes place. We believe it is very much a stretch target but it is achievable. We will continue to grow the one-stop shops but we have a relatively high bar because of the conditions I outlined earlier around quality, capability and scale. There is no upper limit to the number of one-stop shops. We will continue to grow that number.
On the lower-income families to which the Deputy alluded, exactly half of our €8 billion budget is going towards the warmer homes scheme, which we are in the process of scaling up. We have had significant interaction with the local authorities and on foot of the new scheme we have also been back in to our colleagues in the Department of Housing, Local Government and Heritage and local authorities. The committee will appreciate that I am not in a position to speak on their behalf about delivering their targets but it would be fair to say we have a shared vision. We already have a pilot programme in the midlands where we are working with local authorities. They can go into particular estates or areas and retrofit all the homes rather than just one group or the other. We are in the process of building another pilot programme with them to build this capability.
From a contractor's point of view, and they are the ones delivering this, they consistently say to us that aggregation is what is important for them to be able to do their business efficiently. In a housing estate, which might have formerly been a local authority housing estate entirely under the purview of the local authority and the Department, there are typically mixed homes now. Even in some private sector estates there are mixed homes because of the various parts of the rental sector and housing assistance programmes. This is about achieving the target. Those 500,000 B2s are the roadmap to the target. The target is ultimately CO2 emission reduction. We want to build a system where contractors can go into a housing estate and it does not really matter what type of home someone is in. It is about reducing the emissions. If it is a can-pay home, a home that can pay part of it right now, a fuel-poor home or anything in between, we will be able to get the contractors to aggregate. That is the basis of the pilot scheme that is currently running and will end this summer. We will take learnings from that and those will be used to build onto the next scheme with the local authorities.
I share the Deputy's views about the loan scheme. We are working hard with the Department. We have done a lot of work on our behavioural analysis and affordability is coming up as a significant factor. A lot of people are interested. The surveys we did late last year showed that approximately a third of people had not really thought about it, a third were interested but had not acted and a third were interested and had acted. I would be strongly of the view that that has changed radically in the last six or eight weeks, and certainly since the start of the year. The low-interest loan will be very significant for people getting on that journey, and that is coming.
Dr. Ciaran Byrne:
Yes, we anticipate that. The Central Bank has told us that over the course of Covid there has been a K-shaped economy, in the sense that some parts of the economy have done very well. There are a lot of pent-up savings so a lot of people have the funding to do it themselves but we are acutely aware that a lot of people do not. One of the key priorities of the retrofit plan is that it be equitable and a just transition. Even if somebody has some savings built up, a bit of money may be required for the retrofit and so the low-interest loans will be significant. With regard to the way they are priced, ultimately when the monthly payment is made they should be very close to the cost of a utility bill or lower. People will get a much improved living environment, a warmer home and a healthier place to live and will increase the value of their home for a relatively modest sum.
I thank the SEAI for the presentation. Retrofitting has become even more crucial in the current context. Of course the emissions reduction is our priority but we are also talking about safety, fuel poverty and energy security for families and households. I am a little concerned about the narrative around growing the market. As Dr. Byrne himself said, the ultimate goal is emissions reduction, so we need to make as much retrofitting as possible happen as soon as possible. Each year, two years or three years is time lost in terms of emissions and there are vulnerabilities there around fuel poverty.
At the moment, a lot of the emphasis is on low-income households but often that still is in a narrative of homeowners. Of the 500,000 homes to be retrofitted by 2030, 36,500 will be local authority housing stock. That is less than 10%. Dr. Byrne spoke about incentivising and encouraging people and making homeowners make the decision but the State and local authorities are the homeowners for a very large amount of housing stock in the State. Given the energy crisis and the fuel poverty that is likely to be acute in the time ahead, should we be changing that ambition? For example, that 36,500 could be the ambition for local authority housing for the next two years and then we could add to it and quadruple it, at a minimum, over the period ahead. These are the houses the State can access and is in a position to do that. I am concerned when I hear about pilots because it seems the commercial schemes and the underwriting of loans are moving ahead at scale. With local authorities, on the other hand, there has been a pilot and there might be another one, when we really need this to be the area where energy moves ahead at scale.
We have measures when it comes to landlords. We have sticks as well as carrots in this regard. I do not buy the split incentive idea. Is giving the same level of grants to commercial landlords who are renting out properties the best use of this, when we could also raise the BER requirements for properties? What are Dr. Byrne's thoughts on that harder measure being part of what we do? Perhaps it could be accompanied by incentives but-----
Can I ask one last question? It is about disability allowance as a category. The carer's allowance is one of the categories to qualify for the warmer homes scheme. I ask Dr. Byrne to address the backlog in the warmer homes scheme. Should disability allowance be one of the categories as well? Is there space for a joint product, that is, retrofitting combined with adaptive needs for persons with a disability? That could be a very attractive grant for older people, who are less incentivised.
Dr. Ciaran Byrne:
I have taken notes and will try to address as many of those questions as possible. The Senator referred to the emissions reduction. That is of course the ultimate target and we have to build the market. While we are putting the structures in place in SEAI, we do not do retrofits. Homeowners do not do retrofits. It is the market that does retrofits. In terms of that customer journey-----
Dr. Ciaran Byrne:
I will come to that in a moment. With regard to the customer journey, the demand-led schemes have to be right for the homeowners. They have to press the green button to go. Right beside them, they have to be right for the contractor to be able to do that work.
On the matter of the State and local authorities, I am sure the Senator will appreciate that I cannot comment on the local authority target of 36,500. There was a lot of discussion around it with the Department and that is the target that was set out and agreed.
I can say, from discussions with the authorities, that there is a real willingness between them and us to share information and examples of pricing to see how we can get better bang for our buck on costing. I take the point about pilots and having more pilots, but doing a €25,000 to €40,000 retrofit on a home is a complex piece of work and we need to get things right in terms of how we build that scale. There is an old phrase, and I hate to use it, but it is very difficult to retrofit a retrofit. It is about getting the quality and processes right. We are putting the building blocks down now for a ten-year, and probably longer, programme. That is why we are spending time getting things right so that when we get it right, we can scale up quite quickly.
On building energy rating, BER, requirements, landlords and the rental sector, I take the Senator's point on the split incentive but it is a very significant and complex policy area. There is a requirement under the Housing for All plan that there would be mandatory BERs brought in by 2025. Our schemes are open to what we term non-commercial landlords.
Mr. Brian O'Mahony:
This year we have two programmes where we are working with our colleagues in the HSE looking at where homes are getting adaptation works carried out or other refurbishment works to help people. We are doing a programme where we are helping to bring them on the retrofit journey. That would mean connecting them in to existing programmes we have in the SEAI depending on their eligibility criteria, whether those would be the warmer homes scheme, the better energy homes scheme or a community energy upgrade scheme. That is one programme. It is called the health age-friendly homes programme. There is another programme on which we are working with our colleagues in the Department of Housing, Local Government and Heritage to help Ava Housing. This is for homeowners aged over 65 years who are considering upgrading their homes by refurbishing them, perhaps to provide additional housing for other people. At the same time, we provide retrofit support for that. There are a number of programmes that are happening, cross-departmentally or cross-agency, to help people in these situations.
Mr. Brian O'Mahony:
Typically, when retrofit works are carried out in our programmes, tenants or homeowners do not have to leave. Many of the works can be carried out with the person living in situ. There are situations where the homeowner or tenant may need to move out where a complete refurbishment is occurring. The Residential Tenancies Board, RTB, regulates the sector for tenants. Under our programme for retrofitting, whether it is shallow or to B2 and beyond, it is possible to do most of those retrofits without the homeowner having to decant.
I thank the witnesses. I may pick up on some of the points made by Senator Higgins. The warmer homes backlog is in the region of 7,000. The Minister indicated in February that we would need to get to 400 a month to start clearing that between this year and next. Are we at 400 a month? How many did we do in the first quarter? If we are not at 400 a month, when will we reach that? How will we deal with that backlog if we are not there yet?
Will the SEAI give the committee a year by year and scheme by scheme target out to 2030? It would be helpful for the committee if that were available.
On attic and cavity walls, in a written reply to me, the Minister indicated he expected there might be a doubling of demand from 4,500 to 9,000. Where are we on that?
If I want to apply for the 80% scheme or the one-stop shop scheme today, are the schemes open and available for people to apply?
I refer to the key performance indicators, KPIs. These include 500,000 B2 ratings and 600,000 heat pumps. Are there any fuel poverty or social indicators in the KPIs, such as taking people out of fuel and energy poverty? There could be a scenario, and Mr. Byrne indicated this, where we could deliver a lot of B2 ratings by getting B3 ratings to B2 through small works, but it is a very different thing to say we have taken a certain cohort out of fuel poverty. I do not know what that would equate to and whether that would involve taking out of those E, F and G ratings and bringing them up to C or B2 ratings. I would like a comment from the SEAI on the indicators and incentives to deliver on B2 ratings and heat pumps versus taking people out of fuel poverty.
Dr. Ciaran Byrne:
On the warmer homes waiting list, as of the end of December last year, we had 7,500 on the waiting list. The plan for this year is to do approximately 400 homes a month. That would be a 4,800 turnout this year. As of this morning we have 865 homes delivered under the warmer homes schemes. We have not hit the 400 a month rate yet. We have 474 in March and slightly fewer than that in February. Obviously, a lot of that is to do with the timing. We have a contractor panel of about 30 contractors who have been working very closely with us to see all the pain points in terms of their delivery. Some of those are to do with inflation and some are to do with internal and external processes. I have been working directly with the contractors to remove those pain points to improve their delivery and outputs. We believe we will hit the 400 monthly target in the next two months and then we hope to exceed that so that we will come in at the average for the year.
On the figures year by year and scheme by scheme, we have targets we can provide to the committee. We have the figures on the B2 and non-B2 and so on. However, we anticipate the schemes will change in the coming years, so it is about the annual targets and how we package them.
The Deputy asked about the attic cavity; that is the 80% grant. To be clear, while we are registering the one-stop shops, the better energy homes programme is and has been active all the way along. At this exact time, we have received 9,116 applications across the solar PV programme. That is approximately 46% of the total number of applications received from last year. On the attic cavity grant, which is the 80% grant, we have been heading for a 350% increase between January and March - that is in the quarter 1 figures - which is a significant increase in uptake. They are the 80% grants. An important point for the committee is that the grant levels available in the one-stop shop scheme are the same grant levels available on the individual energy grants but the list of measures is not as extensive.
On KPIs around poverty and the fuel poor, half of our €8 billion budget is going to the warmer homes scheme. As of 8 February, we have changed the targeting of this scheme. We want to prioritise those in worse need, which would be as the Deputy identified, namely, those homes with BERs of E, F and G. It is a demand-led scheme. There are quite a range of eligibility criteria. It is not totally linked to the energy performance of the home. As a result of the Government decision in February, we are now prioritising the worst categories, those of E, F and G, to bring those up ostensibly to the B2 rating. This particular programme is in transition. It started as a relatively shallow -measures energy programme and it has transitioned to the much deeper measures of the B2.
Can people apply today through the SEAI website?
They will apply to the one-stop shops. It might be useful to outline the journey. We are talking about a very significant level of retrofit in someone's home. To all intents and purposes, it would be like building an extension. It is not a question of someone making an application on a Monday, which I know the Deputy is not suggesting, and somebody coming in the following day. Significant work is to be done. The first piece of work is talking to the homeowner. There is then a technical assessment, the home energy assessment, which is a specific technical report on the home. On the basis of that, the one-stop shop will sit down again with the homeowner to outline the options available and the homeowner will decide on them. The work is then programmed in. While a homeowner might make a phone call and have an initial consultation with a one-stop shop today, it could be six weeks before works are started on the ground.
Dr. Ciaran Byrne:
Absolutely. I apologise because I do not want to be evasive. We have two companies registered and we will wait until we have four, which will be midway through next week, to put their names up on our website. The reason for this is not to be uninformative or unhelpful but that the significant interest in this would swamp the two companies. We will put the names of four, five and then six companies up on the website. As soon as they are registered, I will revert to the Deputy to let him know.
This is a very timely session on retrofitting, especially given the findings of the recent report of the Intergovernmental Panel on Climate Change, IPCC. The IPCC cannot give enough warnings that we have only a certain amount of time to turn this around in order that we do not leave behind a disastrous situation for future generations. There is a considerable onus on us to turn this around and reduce emissions.
The IPCC report indicated that approximately 18 countries had demonstrated a consistent reduction in emissions. One was the UK, which is successfully reducing emissions, mainly through renewable energy. Another was Norway, where a measure has been the roll-out of electric vehicles, EVs, and the EV network. Where Ireland can begin to achieve a consistent reduction in emissions is through a significant roll-out of renewable energy, especially offshore wind, and the retrofitting scheme to save energy and reduce the use of fossil fuels in home heating. With that in mind, there has been significant debate recently around carbon tax.
It is amazing, considering the findings of the IPCC report and the consistent warnings, that there is still a debate around abandoning one of our key measures to tackle climate change. That measure is carbon pricing and using the revenue from carbon tax to roll out key schemes, such as agri-environment and retrofitting schemes. How important is the revenue from carbon tax in rolling out this retrofitting scheme? How would abandoning the carbon tax or delaying an increase in the rate of carbon tax impact on the acceleration and roll-out of the retrofitting and warmer home schemes and helping people in fuel poverty to create warmer homes?
I will speak on a parochial level. I know Dr. Byrne cannot give details on the two companies that are through the door in terms of the one-stop shop. Cork is the biggest county and I am from west Cork. Dr. Byrne mentioned that some one-stop shops would be national and others would be regional. Is it envisaged that Cork would have its own one-stop shop? Cork South-West, which I represent, is an approximately three-hour drive from one side to the other. Is it envisaged there would be one in that area? Can Dr. Byrne give that type of detail?
Mr. William Walsh:
The SEAI receives a chunk of the carbon tax and it is ring-fenced for a warmer homes scheme in our budget. It is ring-fenced and targeted at the fuel poverty sector. At a higher level, carbon tax has a considerable evidence base with regard to affecting behaviours. The higher the cost of energy as a result of carbon tax, the greater the reduction in energy people will use. It will make people focus and think about the energy they use. That is very important.
We see things in the energy crisis that we cannot control. We cannot control, from an Irish perspective, the wholesale cost of oil and gas. What we can do is look at where it is possible, and it is possible, for some people in society to use less. That will be very important in this energy crisis. Carbon tax and carbon pricing incentivise that effect and force people to think about how much energy they use and what they use it for.
We understand that. I will ask about retrofitting, warmer schemes and the 80% grant for attic and cavity wall insulation, in particular. If we abandon the carbon tax trajectory, does the SEAI have to completely remodel its forecast and reassess how many of these homes it can get retrofitted in the next couple of years?
Mr. William Walsh:
It would be at risk if the funding did not come from elsewhere. The funding has been ring-fenced into our budgets from the carbon tax. It absolutely would have an impact, from an SEAI perspective. I will not discuss the wider implications of the energy crisis, but from an SEAI perspective and our mandate, it would be a retrograde step.
Dr. Ciaran Byrne:
I will make a general comment and then invite my colleague from Cork to speak to the Deputy about Cork. There is no restriction on becoming a one-stop shop. Once a company meets the eligibility criteria, is of appropriate scale and has the appropriate capability, it can become a one-stop shop. What we in the SEAI have seen in the 20 years of the organisation is companies start off with small single measures and build their capabilities to the point where they can become successful contractors, in the normal way a business might scale up.
If there is a contractor in Cork that wants to get into this business, believes it has a future in this area and builds up its capabilities, it can apply. Once it meets the criteria, it can be a one-stop shop. That is contractor led. A point that pertains to places such as west Cork, in particular, which is a good three-hour drive across the county, is that the retrofit is happening in every community in the country. If a contractor is based in west Cork, it is much nicer for him or her to drive around west Cork doing the retrofitting than drive to Cork city, Dublin or wherever the work might be. There is considerable benefit for contractors and many of them look to this.
I will ask my colleague, Mr. O'Mahony, to comment on the listing. I do not have the geography of all the companies, but there may well be a Cork-based company on the list.
Mr. Brian O'Mahony:
One of the biggest companies providing one-stop services is headquartered in Cork but now provides a national service. I do not know if I should mention some company names and not others. What Dr. Byrne says is correct. We have worked with the company for more than ten years and it has expanded its services and capabilities. It is based in Cork but provides services throughout the country. In the past two years, a company in Dunmanway has provided one-stop shop services. There are companies in Waterford and Tipperary.
I can mention many counties in which people provide services but they also provide services in the counties around them, which is what we want to see. We want to see people build up their businesses, locally and regionally. Some may want to do it nationally as well. There are specific Cork examples, both big and small, but there are also a number of nationally prominent companies connected to utility companies that cover every county in Ireland.
My questions follow up on the witnesses' appearance at the Committee of Public Accounts.
The SEAI presented to the Committee of Public Accounts that it had an underspend of around 16%. That was attributed to the better energy homes scheme. The biggest chunk of the underspend related to the warmth and health well-being scheme. I can understand why the organisation was not going into homes during Covid, particularly those of people who have respiratory health issues. My question concerns what the SEAI decided to do with the underspend. The document that was presented to the Committee of Public Accounts showed that the reductions were partially offset by the increases in solar PV, EV, and deep retrofit schemes. Looking at the programmes, there was an underspend in the programmes that are directly targeting energy poverty. That underspend was then redirected to schemes that, let us say, do not affect those on low incomes. There is a lot of talk about reducing carbon emissions. That is absolutely essential. However, retrofitting should go hand in hand with reducing energy poverty. How did the SEAI factor in where it was shifting that underspend? What decision-making process was taken to direct the money?
Linked to that, the 2020 social impact assessment carried out by the Department of Public Expenditure and Reform found that it was impossible to conclude that SEAI schemes alleviated energy poverty or actually lifted people out of energy poverty. The reason for that is that the data was not being collected. Is SEAI now collecting that relevant data, including data on indicative household income, expenditure, energy usage and BER both before and after the retrofit? Is SEAI measuring that now, so that at least when the Department of Public Expenditure and Reform is assessing the new programmes, we are actually reducing energy poverty along with reducing carbon emissions?
Mr. William Walsh:
I will answer the Senator's first question and will refer to my colleague, Dr. Byrne, who can answer the Senator's second question on the social impact assessment. On our appearance before the Committee of Public Accounts and the numbers that we presented for 2020, I do not have the numbers to hand. From recollection, I can give the Senator a broad, general overview of where we were and how we operate as an organisation. Clearly, for us as an organisation, 2020 was a really difficult year to get into homes and to have people working. For a long time, our contractor base could not get into homes, nor did homeowners want them in homes, even after the lifting of restrictions. Momentum stalled, from that perspective. We were not in a position to fully expend the budget that we had over those two periods - more so in 2020 than in 2021. We work in cash-based accounting like many other public bodies. Effectively, it is a case of "use it or lose it" in-year. We look at where there might be opportunity or demand in areas. The Senator referenced the solar PV scheme. That scheme requires a visit that takes half a day in and out of a home. People are much more amenable to that than the four weeks, let us say, of a contractor coming in and out of their home for retrofitting. We found other opportunities to spread our funding around in-year.
Even on that, the EV programme got €3.5 million extra compared to the solar PV, which got €3.2 million. It was evenly balanced. In respect of EVs, I think we can all accept that anybody who is living in energy poverty is not buying himself or herself an electric vehicle.
Mr. William Walsh:
Okay. The thing with energy poverty and our energy poverty scheme is that was as much as we could deliver in 2020 and 2021. For 2022, we have a budget of €110 million to deliver the 4,800 homes that we can retrofit. That is contractor capacity. That is what we can do based on the industry right now. We are looking to grow that industry. Dr. Byrne has outlined some of those plans. From our perspective, we have been funded to do what is needed and deliverable in the fuel poverty sector. Dr. Byrne has referenced the numbers that we have delivered. Last year, we did an average of around 180 homes a month. We are getting up to a ramp rate of 400 now. We have faced costs relating to inflation. The procurement exercise was completed in 2019 for the warmer homes contractors. Clearly, we have been faced with construction inflation. We are facing off those challenges, but we are still delivering those numbers. To go back to the Senator's point about the EV and solar PV schemes, they are programmes that are there. There are grants available because there is market failure in them for the uptake levels that we need need from an "Ireland Inc." perspective to hit our 2030 targets. Where we see opportunity and there is underspend in conditions such as those we experienced in 2020 and 2021, we will look to do that.
Did SEAI approach local authorities? Local authorities were carrying out retrofit during Covid. Was it an option on the table for SEAI to go to local authorities and explain that it had an underspend and ask them to find a way to increase their capacity? Was that considered?
Mr. Brian O'Mahony:
In both 2020 and 2021, through Covid we worked with local authorities on two main schemes, including the better energy community scheme, our community energy grant scheme, which involves the upgrading of either a pure local authority housing estate or a mix of homes. Along with that, as part of the national home retrofit scheme, we carried out a pilot programme in the midlands. We focused on certain areas and took different approaches in different local authority areas to see if we can do both private and local authority homes that are co-located. As was mentioned earlier, the project will conclude in the summer and we will undertake a review of what worked and what did not work. That will be fed back into the programmes for the next few years.
Dr. Ciaran Byrne:
We are aware of that report. I mentioned earlier that the warmer homes programme, our flagship energy poverty programme, started off as a shallow measures programme. It involved very light measures. It started off back in around 2009. We would have seen large numbers of homes being visited but subject to relatively shallow measures. On foot of the report of the Department of Public Expenditure and Reform and also a different report to identify the efficacy of the programme, we have been pivoting it from an energy poverty to an energy efficiency programme. What that means is that we are taking much more significant measures on a per-home basis. We are now doing pre-BER assessments. We look at the BER rating of the home before we start, then we put significant levels of retrofit into the home, and we look at the BER level after completion. We are looking at that definite uplift. The average spend on the programme was around €2,500 to €3,000, which pivoted up to about €18,000 to €20,000 last year and up to €27,000 on the sub programme, the warmth and well-being programme. We are addressing those measures and concerns from the Department of Public Expenditure and Reform.
On the monitoring on an individual home level, we do not monitor every single home. I might refer to my colleague, Mr. O'Mahony to comment on that. We do a degree of monitoring.
Dr. Ciaran Byrne:
To be clear, there are a number of different eligibility criteria for households, including entitlement to social welfare allowance. Once a householder is eligible, they are on the programme. We do not look at that because we do not set the criteria. Living in energy poverty is one of the criteria. Once a householder meets the threshold criteria, they are on our programme. As a result of the Government decision made in February, what we are doing is pivoting down and looking at the worst performing homes, those with BERs of E, F and G. Typically, but not always, they are the people in most need. There are heritage homes and things like that. We are moving towards that. In terms of the criteria, we just have a list. Once a householder meets the threshold criteria, they are on the programme.
I am in my office on the premises. I have a few questions. The national retrofitting scheme, and the fact that it benefits people who are already comfortable financially and can put up the money to match the grant, is almost an economy of scale for warmer homes. The more money you have, the more money you will get. We are in the middle of a cost of living crisis that started well before the war in Ukraine. We are now in real danger of having a two-tier system, where one group of people are living in damp, cold homes and the others can put solar panels on the holiday homes that they drive to in their EVs. What is being done to avoid this damaging situation? Can the witnesses see the difficulties that this kind of economic apartheid approach will cause?
Regarding the waiting list for the warmer homes scheme, some people have been waiting 18 months for a survey. Those who applied in August 2021 are being told they will have to wait 18 months, which will mean that this will not be done until 2023. I obtained that information in response to a parliamentary question I tabled. Many optics are at work here, but meanwhile heating bills are rocketing. What does the SEAI intend to do to clear the backlog in the warmer homes scheme? When will that be completed?
One of my constituents owns a bog and he fills his garage full of turf. He does not have the same romantic notions about it as I do, such as the smell of turf, etc. He would love to get his home retrofitted, but he is on a low income. How are the one-stop shops being designed to specifically support lower-income households and the owners of rental properties? All the Deputies here will confirm we are being notified of eviction orders constantly. We would like to see the SEAI plan to ensure there is going to be an uptake of the scheme by those in lower-income homes and also that it can be availed of by landlords to allow their tenants to benefit. We do not, however, want to see tenants being evicted.
Dr. Ciaran Byrne:
Quite a few questions were posed by the Deputy. Regarding the schemes, a significant portion of the budget, half of it to 2030, is dedicated to the warmer homes scheme and the fuel poverty scheme. On the can-pay sector, if we want to call it that, we have two programmes. The one-stop shop deals with all the measures in one go. We also have individual measures schemes, where homeowners can choose to avail of individual measures depending on their resources. Additionally, in February, the Minister launched 80% grants for attic and cavity wall insulation. As part of our package when we launched that scheme, we carried out quantity surveys to determine how much the costs would be for the archetypal home and found it to be approximately €2,500. This means a project of this kind will be grant funded to the tune of approximately €2,000. The €500 it will cost to undertake a typical attic and wall cavity insulation project, when we price it out with credit union or An Post loans, is relatively affordable. Therefore, we are considering all parts of the can-pay sector. It is not really a case of "The more you have, the more you get". We have a fixed grant menu. That is not allocated on the basis of house size; we have done it by house archetype, namely, detached, semi-detached, bungalow, terraced or apartment.
On the waiting list for the warmer homes scheme, as I mentioned earlier, we have 5,700 homes on the list and a target to complete 4,800 homes this year. We have a legal framework in place and we must work within it, and that is somewhat restrictive. I am working with the contractors to deliver in this respect, including examining and understanding the impact of inflation and changing some of the operating models so we can improve their cash flow and delivery and outputs from the scheme. Ideally, we wish to increase the number of subcontractors working with the main contractor on the scheme to clear the backlog.
Deputy Cronin also mentioned the rental sector. To be clear, the one-stop shop grants and the better energy home grants are open to non-commercial landlords. Owners of a small number of properties can avail of the grants. Equally, retrofitting works do not require people to be evicted from their homes. We have not heard any reports directly of people having been evicted as the result of retrofitting works being carried out, but the RTB has many statutory powers in this area and it is putting processes in place in this regard.
Turning to the affordability aspect, we touched earlier on low-interest loans and these are going to be a significant contributor in this regard. We are talking about Government-backed loans. The key premise here is that the Government takes a share of the risk, and this means that the interest rate charged can be much less than normal market rates. We believe those low-interest loans will be a game changer for all parts of the can-pay sector in respect of retrofitting.
Dr. Ciaran Byrne:
Increasing a grant is a policy decision for our Department. The end point of a policy intervention is to have some outcome. In this case, it would be to have more people availing of attic and wall grants. At this stage, we do not believe that increasing this grant would deliver retrofitting of more homes, and it might just inflate prices in the sector. I ask my colleague, Mr. O'Mahony, to comment on this aspect as well.
Mr. Brian O'Mahony:
The change to the support for attic and cavity insulation only occurred in February. We have seen some homes where the support being provided has since gone up fourfold. Therefore, when we look at the marketplace, the first aspect to consider is if there is enough capacity in the supply chains to enable the installation of these two measures to cater for people's increased interest and appetite. It is great to see, because these technologies are easier and faster to install.
If we increase the grant rate, typically, to 100%, our concern is that some homes will cost more. That will also lead to cost inflation. We advise proceeding cautiously. Let us carry out our review and develop our understanding by doing a quantity survey of the costs across the country. When we have those data, then we can react. We are planning this process now. We will have the information early in the summer, and we can then provide it to the Government to allow it to make a decision. Our counsel is to proceed cautiously now, because there was a major intervention in February.
The presentation was excellent, and the programme we are embarking on is exciting. How many contractors are in the retrofitting market now? As the scheme kicks off, what do we expect the situation to be by the end of the year?
Dr. Ciaran Byrne:
On our better energy homes grant scheme, we have approximately 1,200 contractors registered to work on the individual measures. As we discussed, we have 19 companies involved in the one-stop shop initiative and then we have approximately 33 contractors on the warmer homes scheme, of which 30 are active. Additionally, we also have contractors registered for the better energy communities scheme, but I do not have that figure to hand. Many of the bigger contractors, of course, will work across all the schemes.
We have seen the risk of inflation when these grants are established. What key provision could we introduce to ensure that contractors will not greatly inflate their prices when the time comes? Is competition in the market enough to sustain a manageable level of prices?
Dr. Ciaran Byrne:
The Senator has answered his own question to a degree. Competition is how we can stave off inflation. We saw this, for example, when we originally launched the solar-PV scheme some years ago. Only about ten to 12 providers were active in the market at the time, but that has now increased to the point where there are 130 providers. The increase in competitiveness in the marketplace is one of the main measures we can leverage to try to counter inflation. This is, of course, all predicated on there being a normal environment. Unfortunately, other factors are in play here.
Deputy Christopher O'Sullivan mentioned the importance of the carbon tax. Some 55% of the money from that tax is ring-fenced to go to meeting the costs of the retrofitting scheme. Mr. Walsh mentioned this aspect earlier. Will he give a breakdown of the amount of carbon tax that is ring-fenced for the SEAI for this year and what that money is going to be used for? Mention was made as well of how many homes are going to be examined and the schemes involved. I would appreciate a brief breakdown of what the revenue from the carbon tax is going to be used for this year.
Brilliant. That information will be very useful, if we can get it. A debate is raging in my party now concerning carbon tax. Other people are saying we should scrap the tax altogether. My view is that it is an important measure and we must use it to work towards retrofitting homes. If people understood what it is being used for, then we could go a long way in doing that. This brings me to my next point. Sometimes the public understanding is that retrofitting homes is expensive and hassle-filled. That is not the case, however, because we are providing 100%, 80% and 50% loans. Alongside those 50% loans, as the witnesses will be aware, are low-cost loans, where the money is de-risked to enable people to get low-interest rates. What is the SEAI doing to try to promote this concept among the public more widely? I refer to letting people know that retrofitting is a hassle-free way of upgrading homes, that they will save a great deal of money on their bills if they undertake it and that this is something they should be seriously considering. Alongside the Government's endeavours, what is the SEAI doing to promote this message?
Dr. Ciaran Byrne:
We have a significant demand-generation scheme. Many of our generic advertisements on radio and television will have been seen over Christmas. We also have an active sustainable energy community network. We have 600 sustainable energy communities, and we are leaning into those communities. When we get the schemes up and running, we will be leaning into those communities and working with them to promote and develop retrofitting. We will be undertaking initiatives such as community-based marketing. This means going local. When advertisements appear in the newspaper, this means that people in communities can go down to their local parish hall and be introduced to one-stop shop contractors. We did a great deal of work on our various channels in respect of social media, podcasts, etc., and in the context of linking in homeowners in the context of the customer journey.
The Senator has hit the nail on the head.
For many people it can be technical, a hassle and where people are busy, etc. We bring the evidence forward of a homeowner who has done this, here is one who did not, but one of these is a happier person, has a better result and has a warmer home. There is a great deal going on. The Senator will have seen in the newspapers since the start of the year where a number of commentators have been discussing their own experience on retrofitting and are talking to people. We have also linked in with OSSs to have those kinds of joint approaches.
Unfortunately, as a result of the war in Ukraine, the interest in this area has ramped up greatly and has superseded the demand that it has generated. People are now looking at this when they see the spike in energy prices.
That leads me on to my other question. How much on average can an individual expect to save on energy costs for their home in a year, after an average retrofit, where he or she, perhaps, has cavity walls and attic insulation done? I am aware that there are many different ways of doing this and it depends on what one gets which I understand, but can Dr. Byrne give an average example where I have had a retrofit done, on what I expect to save, please?
Dr. Ciaran Byrne:
I will have to come back to the Senator on that question in respect of the average because it is such a variable. There are two parts here. One is saving on the energy and reducing the emissions but one is also transforming one’s home. This is part of the journey we are trying to get across to people. It is certainly about money but is also about the home that they want to live in. The examples in some of the results we have seen in the warmth and well-being scheme survey show that it is a much healthier, warmer and drier place, as a home, to live in. We have some quality standards, QS, information on some of the averages but it is very much dependent on people’s usage over the course of a year.
What is so important about the retrofitting programme is people are being allowed to live in much warmer homes that improve their health, save them money at the same time, and in a much wider sense, are also so much more beneficial for our environment. That is the key point that is sometimes forgotten behind this. I have time one final question. Perhaps I will come back in later on, if that is okay as there are other contributors, such as Senator O’Reilly, who wish to come in.
I thank our guests for their contributions and for their presentation, which was very interesting. They said the better energy homes scheme covers 4,800 homes annually. Many have a BER of B2 because the overall target is for 500,000 B2-rated homes. How many of the 4,800 homes this year will meet that B2 target?
Dr. Ciaran Byrne:
No. To be clear, we are in the process of pivoting that programme so that when we move from the shallower retrofit into the deeper retrofit, which is the B2, first, this costs considerably more. The average contribution for a home a number of years ago home was approximately €3,000. It is now up around €18,000, €20,000 and €27,000 for the warmth and well-being scheme. That is because we are doing significantly more and deeper measures that take longer. There is a fine line then between doing as many homes as possible and bringing as many to the B2 standard as we can. Over the coming period, the plan is to increase incrementally to the point where they will all ultimately be B2-rated.
Okay, and the target is an average of 45,000 homes a year.
I know that there is also a necessity to ramp up. Deputy O’Rourke requested and Dr. Byrne replied that he would give a projection on this to 2030. Is that projection on a quarter-by-quarter basis for B2-rated homes because ultimately, the 500,000 target is a B2 one and is not just attic insulations, for example? Will the SEAI be able to provide that projection to show the graph and the ramping up, where it believes it will meet that 500,000 target?
Dr. Ciaran Byrne:
We have done projections out to the end of the year and we have also looked at the B2s and the non-B2s, and there is a B2-equivalent because the target is actually a reduction in CO2 emissions. We have to move from approximately 7.5 megatonnes of CO2 emissions now to 3.5 megatonnes of such emissions. The B2 is a pathway to the target. Not all homes may get it to a B2 standard. For example, in the BER rating scale, if a home that is currently at the bottom of that scale has a G rating and it is brought up to a C3 rating, that will have abated quite a significant amount of carbon but it has not reached a B2 rating. We will be looking to blend those two together where we may not get every home up to a B2 standard, albeit that we have a B2 target, but we will be looking at the carbon saved. This is ultimately about the savings in CO2 emissions.
Dr. Ciaran Byrne:
That is potentially the case and I might ask my colleague, Ms McCarthy, to come in as this is where seminal policy documents such as the National Heat Study come in. We are not setting out our targets as carved in stone in saying this is our scheme and this is what we are doing. It has to be agile and we will adjust. We talk about pilot schemes, taking the learnings, adjusting and going to certain areas to target these to make our targets. I will ask my colleague to come in now as this might be a good juncture to give the committee a briefing on the National Heat Study, which informs us.
Mr. William Walsh:
I will just add one point before Ms McCarthy comes in. This is the largest infrastructure project ever undertaken in the State. It is important for the committee to understand the scale of this and that it is a very extensive project. Over the next number of years we intend to pivot, learn, improve and continue to build and the heat study has helped us with this. We will build that capacity to move from 8,000 this year to bigger numbers and to develop that capacity as a nation to start delivering the 50,000 or 60,000 homes that we need every year.
The other point there is that this is a very significantly important part of just transition. Jobs that are going to be lost in other sectors are going to be created within the retrofit sector. I am giving this information by way of high-level background before Ms McCarthy makes her contribution.
Ms Margie McCarthy:
I thank the Deputy and I ask the committee to excuse me as I am recovering from a bit of a cold. I refer to Deputy Christopher O’Sullivan’s points on the recent IPCC report.
The National Heat Study is a comprehensive analysis of how we use heat in Ireland. It looked at all of the technologies that are available to us and then modelled four scenarios to achieve net-zero carbon emissions from heating by 2050 in line with our national goals.
In particular, on the residential side, we are aware that this is the biggest demand piece within the heat sector. In the residential sector we know that particular types of housing, such as detached houses, for example, are responsible for two thirds of the emissions here, due, in particular, to oil usage.
On the Deputy’s question on the B2 target, as my colleague Dr. Byrne has explained, we are working very closely now with the Government. The heat study was launched back in February. One of the key, absolute findings of the study, and why I have mentioned Deputy O’Sullivan, is it is saying that we need to deploy technologies that are available at scale and at pace immediately to curb emissions and not to wait for technologies.
Part of that is the deployment of heat pumps and we have already heard about the targets for those. For example, one study we will be looking at and we are about to launch with our colleagues in the OSS and retrofit team examines the heat loss indicator in homes in trying to ensure, first, that the fabric upgrades are optimal to deliver in cost-effectiveness by not increasing running and electricity costs within homes but still delivering on comfort and health benefits, as outlined by my colleagues earlier. The heat loss indicator study will look at whether we are at the optimal level requirement in what is known as a heat loss indicator within the home, which is a measure to heat the home and to retain it to allow heat pump technology, or similar low-cost, low-carbon technologies, to be deployed.
That will play out and, as Dr. Byrne has said, that will be an evolution of the retrofit programme in respect of the requirements we have within grants programmes. These will obviously feed in to future climate action plans and through the Department for consideration of these targets.
What Mr. Walsh said is correct in that this is the largest infrastructure programme in the State and is probably the most important. We cannot afford to have any slippage as we have such a short timeframe now of less than eight years. To ensure that we are keeping on track and that there is not any slippage, it is going to be very important for that ramping up graph to be publicly available to show these targets. The documents refer to an average of 45,000 homes, but we cannot be looking at averages and we need to know now how many B2-rated homes, and not the other BER levels, that the SEAI will hit.
Next year, the SEAI hopes that there are more and then it will keep building up until it makes sure that it is achieved by 2030. That will be key. I would appreciate if Mr. Walsh could provide that graph.
I thank the witnesses for the contributions so far. A lot has been covered. Retrofitting is a bit of a political football. The 100% and the 80% often gets left to the side, but the majority of funding is going in to those measures around poverty reduction, in particular fuel poverty reduction. Mr. Walsh has said that. Six months ago, people would have been paying for almost 100% of the other types of retrofitting and now we are saying that the State is providing up to €25,000 of that, which is a significant increase. If we were to do as some suggest and to ensure that everybody gets it for free, do we know what the cost of that would be to the State if it was 100% free across the board for everyone?
The reality is that there is no other way to pay for that than to increase taxes. The money must come from somewhere. That means the taxpayers who are probably benefitting are also paying the tax in the first place. Nothing is free. Something has to be paid for, either through people's taxes or through somebody else's taxes. It would be useful if Mr. Walsh had costings on what it would be if it was 100% free, on top of the €8 billion. That would be useful to put it in perspective.
What is clear in the IPCC report is that it sets out what has to happen, and it must happen across all sectors. What tends to happen from a political point of view is that we say, let us not put money into electric vehicles because people who can afford EVs do not need to be supported. What I hear from Mr. Walsh, however, is that when certain things are maxed out and we are doing as much as we can in the warmer homes energy scheme based on all of the resources, we do need to still use our funding in order to try and put more things into the market that will help us to reduce our emissions. That is my understanding.
There is a cap on the grants the SEAI is providing for electric vehicles so that, as I understand it, those expensive models of cars are not getting the grant. Is it within the remit of the SEAI to look at electric bikes, for instance and to push for that? I come from a rural constituency and while it is all very well to say that people who can afford electric vehicles do not need support, that is not the case. We have 53% coverage of public transport, and we are trying to ramp that up to 70% with Connecting Ireland, but there are people who will always need cars. From what I have seen, there has been a significant reduction in the cost of lithium batteries, which has decreased the cost of electric vehicles but we still need to get more of them into the marketplace to reach our targets.
I want to be fair to the witnesses. We did invite them to speak about heating and they may not have prepared so much for the questions on transport asked by Senator Pauline O'Reilly. If Mr. Walsh wishes to respond, he may, but we understand that it is not within the remit of his appearance before the committee today.
Mr. William Walsh:
Absolutely. Thank you, Chairman. I will make some kind of response to the questions and I might ask Dr. Byrne or Mr. O'Mahony to respond. As part of the national development plan, we worked on the holistic concept of retrofitting Ireland so we may have some numbers, but we did not commission a report to estimate that.
The IPCC report is alarming and it does point to actions individuals and countries can take. On electric vehicles, we have seen the first quarter figures for 2022 versus 2021. Some 12% of cars sold in quarter one this year were electric vehicles compared to approximately 5% last year. We can see an increase in uptake of electric vehicles, which is welcome. In general, every electric vehicle that we sell is one internal combustion engine off the road. That is the main driver behind this. As an organisation, we run the electric vehicle scheme and the charging infrastructure schemes on behalf of the Department of Transport. We are able to provide policy advice on the challenges and changes that we see, such as the change in the scheme to address the fact that a lot of the higher-end vehicles were being supported through grants. There is only a limited amount of funding available for the conversion from internal combustion engines to electric vehicles over the next ten years and we want to make sure it is maximised. The Department made changes to address that.
In terms of retrofit, going forward we see technology will reduce the cost. In 2012, we sold eight electric vehicles. We were trying to increase the number we sold. We were up to 14,000 last year and given the demand at this point in time we believe we could sell as many as we could get into the country. It is because technology has switched. Electric vehicles have overcome issues such as range anxiety and they are a very enjoyable drive compared to what they may have been before. The cost of EVs is driven by some of the component parts. It is the same with solar PV, which now costs 80% of what it used to cost. We see demand increase on that basis. We see the same with retrofit. When we get better at doing retrofit, and when we can reduce costs as we move through the decade, it is the same concept, we see the capacity for us to start delivering at the levels we speak to when technology will allow us to do that. As Ms McCarthy outlined in relation to the national heat study, we see where we can target our interventions and start to really ramp things up.
Regarding Ireland's retrofit programme, we spoke last week to 20 countries at the International Energy Agency. All of those countries want to hear about what is happening in Ireland because what we are doing is class leading. That is feedback that we have got through the week in email after email asking questions about how they can do what we are doing. From that perspective, we are very happy that progress has been made, but we are not going to sit on our hands, we have got to get better at this because we must deliver the 500,000, an increase from 8,000 and onwards up to the numbers that Deputy Whitmore has asked about.
E-bikes are a policy issue for the Department of Transport. We see the value in e-bikes, in particular in the context of increased cycling infrastructure that has been put in place by many local authorities at the moment, which we welcome.
I have touched on the piece around technology. A lot of what is happening at the moment, and what will get us to 2030 and also 2050, will be technology. Ms McCarthy referenced that right now we do not have time to wait for certain technologies that people promised would arrive in 2029. They said that we should hold off until then, but we need to take action today based on the technology that we have and to push forward on that basis.
A question was not asked on research and development, but SEAI has a significant budget and we work with industry and academia to take technology and apply it in the Irish context. We are very different to many other parts of the world. We have a different reliance on fossil fuels and a different opportunity with offshore wind, onshore wind and onshore solar. Technology is an important part of what we are doing in SEAI.
I thank the SEAI for the presentation. I might go back and forth if that is okay. I will start with a big-picture question. Would it not make more sense to go about this in an entirely different way? I mean instead of providing grants, which introduce an element of regressiveness, in that those who can afford to match funding get the benefit of funding. Instead of relying on private companies to get involved - we know of only two so far that are one-stop shops - would it not be better to go about this an entirely different way and say that it is a crucial priority for us to retrofit all of these homes?
More than 1 million homes have been identified as being poorly insulated. Should we not establish a State-run company to do it? This would create tens of thousands of green jobs. It would be done at zero upfront cost to homeowners because the State will be able to borrow at a lower rate than any homeowner would. We could share out the costs between the State and homeowner over a period of 15 or 20 years. Would that not be a simpler, more direct way of doing it, as well as being more in line with the scale of the crisis, primarily the climate crisis but also the cost-of-living issues people are experiencing?
Dr. Ciaran Byrne:
I am sorry to be slightly uninformative but I do not think we are in a position to comment on that. The Deputy expressed a very fine view but this is a matter of Government policy. We have been working with our parent Department. I know there was a retrofit working group at Secretary General level, which made proposals that were accepted by the Government. This is, therefore, the route we are on at the moment. The Deputy will appreciate that we are not really in a position to comment directly on his suggestion.
Mr. William Walsh:
I thank Deputy Murphy very much for his question. From our perspective, as Mr. Byrne mentioned, the national retrofit task force commissioned a body of work which looked at different models adopted elsewhere in the world. It also engaged internally in Ireland Inc. with the Construction Industry Federation and a whole host of stakeholders. This is the model that was adopted.
To give one note of caution, which relates to Deputy Whitmore's comments, we do not have any time to lose here or to stop and think about what else we could do. It is crucially important that this retrofit plan drives forward. We believe we have ensured, insofar as possible, that this is effective and efficient from a value-for-money perspective in terms of Exchequer funding, carbon tax revenue, etc. It has taken us probably four years to get ourselves into the space we are now in, registering one-stop shops for a comprehensive scheme with the private sector on board and funding available in the NDP. Those wheels do not move fast but we are in a good space now to spring forward and deliver the homes we need to deliver the carbon savings provided for under the climate Act as well as our sectoral emissions.
What is powerful about this figure of 3.5 million tonnes is that is down to a citizen level. It is a matter of individuals. It is a matter of what people understand and about asking citizens of Ireland to do something. From that perspective, it is very much asking people to do their piece and control what is controllable within their environment.
I see where Mr. Walsh is coming from but that is precisely the problem. It is asking individuals to do this, as opposed to saying that as a society we need to do it and that if I, as an individual, cannot afford €25,000 and do not qualify for the warmer homes scheme because I do not receive any social welfare payments, I will be able to benefit from and participate in this transformative change that we need to happen rapidly.
Mr. Walsh made the point that there is no time to lose. I could not agree more. In that case, why has the €8 billion allocated been so dramatically backloaded? I can understand a certain lead-in time. I presume that is the explanation to get the scheme up and running and so on. However, it takes a long time to hit the high rates. Of the €8 billion, over €5 billion is due to be spent in the last three years of the scheme. It ramps up very slowly. In 2023, the sum provided is less than €300 million. In 2024, it is less than €400 million and in 2025, it is less than €500 million. Why is it so slow to reach the levels of the €2 billion a year, which will be hit by 2030?
Dr. Ciaran Byrne:
That is a very good question. It leans back into the point that Mr. Walsh made earlier about the precursor to this, the report by the national retrofit task force. The task force did significant work, not just consulting domestically with a whole range of sectors but also looking at a whole range of international examples to identify what might or might not work. It is on that basis that we are building targets and measures that we think are achievable. These take account of the capacity of the supply chain, labour market availability, inflation and how it has moved in, as well as the ability to generate demand. That was the basis on which targets were to build up slowly. Experience has shown that where you build them up slowly, even potentially too slowly, but in a way that means they are sustainable and deliverable and give people time to build up, you end up in a much more sustainable market.
The other important issue with retrofit is that we are going into people’s homes. As I mentioned, a retrofit cannot be retrofitted. It is therefore important that we build that quality piece and get the systems and processes right. We really do not want to go gangbusters at this and then find out we have done the wrong thing or are not doing it the right way or we end up with issues. That is why there is some degree of caution in building up and getting it right the first time. We are building the building blocks up to 2030. In reality, we are building the blocks for beyond that. We are really aiming at 2050.
There is very little here for private renters. In fact, for some private renters, this will mean they will get evicted. The landlords will decide to take advantage of this scheme and upgrade the home, which will allow them to say it is a renovation. On that basis, they can do what is known as a “renoviction” of tenants. Even if people get to stay in the property, the landlord will be able to hike up the rents. Landlords will not get the benefit of reduced heating costs so they will presumably take back that benefit in rent, that is, if they engage in this scheme in the first instance. Is it planned to give more to benefit those in private rented accommodation? Again, it seems to me that a more simple way of going about this would be to say that by a specific date - 2030 or whatever - the standards required to have private rented accommodation will include achieving a BER of B1 or higher. Is anything more planned for private renters?
Dr. Ciaran Byrne:
I might answer the first part of the question and then lean into my colleague, Mr. O'Mahony. In terms of the private rental market, the scheme is open to non-commercial landlords to upgrade their properties. We do not have direct evidence of people being evicted on foot of doing a retrofit. As we confirmed earlier, it is possible to do a significant level retrofit without having somebody move out. That does not mean it will not happen. We have other agencies, however. The Residential Tenancies Board, RTB, has statutory powers in that regard.
On the rental sector, our understanding from the Housing for All plan is that it is planned to introduce a minimum BER standard by 2025. That will generate activity in this area.
I ask Mr. O’Mahony to comment further on the rental sector and the split incentive issue.
Mr. Brian O'Mahony:
The Deputy is correct that the rental sector is a difficult sector to address. Everybody talks about the split incentive, whereby the landlord owns the property and gets the benefit of the capital improvement, but the tenant bears the operational cost.
On the issue of decanting, we typically have not seen that happening at large volume in our schemes to date. I recognise that we want to scale the numbers through this decade. That is because we need to build the supply chain with us, as my colleague just mentioned. The State is looking at minimum energy performance requirements for rental properties, as well as for all properties. This is a proposal contained within the Fit for 55 package that is being reviewed at the moment. That direction of travel is already being discussed at policy level, both nationally and within Europe.
I will revert to one issue, which would apply to all homeowners or people. We are trying to support the retrofit of homes, but every one of these homes has a person in it, where that person owns the property or rents it. We are very much aware of that. Over the last decade, we have acquired considerable experience. In the schemes we are deploying in 2022 and going forward, we spent a lot of work doing voice of the customer, VoC, surveys. We asked people beforehand what they understood about SEAI and then asked what their experience was going through the process with SEAI. We tried to profile the type of people who do upgrades. Traditionally, people would have said that solar PV would be younger people who are possibly in newer homes. What we found, however, was that older people concerned about their energy bills have been installing solar PV. People are also using it in homes that are already improved and have come through one of our schemes. We learned a lot like that.
Last year, we carried out a number of focus groups and surveys and visited individual houses when retrofit works were taking place. Homeowners agree that they need to do something but they believe Government needs to help. When we were developing the new schemes - the better energy homes scheme, shallower measures, the one-stop shops and the warmer homes scheme - homeowners told us that retrofitting was too expensive and they needed more supports.
That is why we came up with the recommended supports that are now in place. A deep retrofit will be about half the cost and it will cost 80% less for shallower measures. These are targeted correctly. We are trying to address the upfront costs through the grants. Homeowners also said that if there was a low-cost financing package available, they would consider taking action now. We all know these things but homeowners are coming back and telling us this.
Last year, the heat pump grant was €3,500. We have nearly doubled it to €6,500. Homeowners have said that they would be interested in a heat pump but it is too expensive and they would be interested in a heat pump if the costs was equivalent to the cost of an oil or gas boiler. That is what we did this year. We rearranged how the grant offering is presented. If homeowners upgrade their house and insulate it, they are left with the decision on whether to leave the heat pump behind, which they do not want to do because the cost is the same as installing a replacement oil or gas boiler. We are trying to drive people in this direction and support them. They are coming back saying this to us.
Homeowners have also said they like how the one-stop shop brings them from start to finish. They like that approach where the measures are taken using a stepped approach rather than all in one go. They may need to do their walls this year and their heating system next year. They see the benefit of the one-stop shop. We have listened to what people are saying both in and outside our schemes. We have also tried to structure the schemes to build for the future.
I refer to a point mentioned by my colleague, Ms McCarthy. The heat study is another piece of work that was carried out. It tells us that there are other ways in which we can help people reduce the carbon footprint of their home and help the State as well. We do not foresee that the supports we offer today will be fixed for the next decade. We foresee that we will be introducing new technologies, ramping down other technologies and finding solutions that meet homeowners' needs. We will be reacting to what the homeowner wants. That is why the heat study is really important because it raises these questions that challenge certain assumptions about heat pumps, solar PV panels or energy efficiency. In the next year or so, we will focus on, test and try to learn about some of those measures, such as the heat loss indicator.
Mr. William Walsh:
At a meeting of the Committee of Public Account some weeks ago and earlier today, I heard Deputies express this concern about evictions. The word "renoviction" is new to me. From an SEAI perspective, we have a social justice element to our work but we also need to protect our retrofit brands. We will keep this matter on our radar. We can certainly engage with the RTB to see what is happening there and to ensure we introduce any measures we can to avoid that scenario and incentivise the landlord market in an appropriate fashion.
As we have reached the end of the first round, I will ask a few questions. It would not be fair to members to spend all the time I would need to go through all the questions I have, so I will put only a few of them to the witnesses. I am very happy to hear about the national heat study that was just mentioned by Mr. O'Mahony and referred to earlier in the session. I had a good read of the report on the train this morning but I did not get all the way through it. It looks like a very good study and I commend the SEAI, in the first instance, on it. It is a significant piece of work that will help the SEAI charge forward. I think we will be leaning on it for some years to come. Of course, it will evolve and I am sure there will be reviews of it in time.
One issue that jumped out at me was the four scenarios that are posited for reducing emissions and reducing energy use in buildings through to 2050. There is a baseline but there are also the balanced, high electrification, decarbonised gas and rapid progress scenarios. In the cumulative graph, there is a significant gap between the rapid progress scenario and the other scenarios in terms of cumulative emissions. It is 60 or 70 megatonnes over the course of the programme, through to 2050, which amounts to about one full year of Ireland's total emissions. I am interested to hear more about that. Everybody has correctly spoken about the urgency of this. Is the rapid progress path one that we can achieve and is it what the SEAI is aiming to achieve?
The study also mentions district heating, which is an area we are way behind on in this country. There is some good work being done. Will the SEAI tell us more about the potential for district heating? I am curious to know whether it has engaged with local authorities on the issue. The development plans will be finalised in the coming months and it seems to me that if district heating is not built into local authority development plans, progress on district heating might be stalled for a few years.
Will the witnesses talk about the legislative barriers to prevent further installation of fossil fuel boilers? What are those barriers? Can they be removed and when should they be removed? I will come back with more questions in the second round.
Ms Margie McCarthy:
To respond to the Chairman's first question, I will explain the context. As he said, there are four scenarios considered in the heat study, one looking at decarbonised gas, another concentrating on the deployment of electrification, another being a balanced view of that, and, as the Chair mentioned, a rapid progress scenario, which sees fast and large-scale deployment of readily available technologies. The rapid progress scenario is ambitious in exceeding current climate action plan actions. That has been recognised within the ambitious climate action plan, which called out the national heat study in a number of actions as it would inform the future 2022 climate action plan. Those discussions are already in place. We have been working closely with our colleagues within our parent Department and other Departments, such as the Departments of Enterprise, Trade and Employment, Transport, and Housing, Local Government and Heritage, on the outcomes from the heat study.
I refer to the point made about the rapid progress scenario. The key recommendation for action coming from the heat study, and this goes back to points made by Mr. Walsh and a number of Deputies and Senators, is that we cannot afford to lose time. The rapid progress scenario is essentially based on the deployment of technologies that are available today and can be rolled out at scale and at pace. These include heat pumps. One can already see a significant target within the climate action plan to deliver those and the strong potential of district heating to deliver to the residential sector across the country.
On the second question, the study has identified strong potential, much more than previously identified, for district heating. The national heat study took almost two years to complete and more than 50 experts contributed to the delivery of the report. There was significant engagement with stakeholders across the heat and energy sectors and the report provides a comprehensive view. The district heating piece looked at the geospatial identification of where the potential might be at an initial stage. It has identified where there is very high potential, medium potential and where there are areas that need to be investigated more. District heating is an obvious no-regrets policy movement forward in terms of urban centres and even some of the larger towns around the country. It has fed directly into the Department of Enterprise, Trade and Employment's co-ordinated steering group with all stakeholders in the area, which is examining what the barriers are and what requirements are needed to deploy district heating at a faster pace than previously.
That includes all elements from financial to planning and regulatory to the actual utility around installation of pipelines etc. I cannot emphasise enough how much district heating is strongly supported by the national heat study. There are actions in play, however, and it is expected those actions will be very clearly delineated. Obviously, it is not for me to say and, as my colleagues said, policy is set through the Department, but I believe it is more than likely the intention is to identify these actions in the next action plan.
In terms of the legislative barrier, to go back to my earlier point of the heat study and the B2 target, the heat study is saying that it is very important to have efficiency measures rolled out at scale. Reducing our energy demands is of significant importance but we continue to grow our emissions due to economic recovery, population growth and a range of factors. We also need to consider how to eliminate fossil fuels out of our heating sector to reach net zero by 2050. There is a strong recommendation from the heat study effectively to announce or state a timetable for the removal of fossil fuels from the different sectors such as residential, industry, commercial, public buildings etc. Different levels of timelines are identified in the heat study. Obviously, this is a study to inform policy, so different levels of timelines are identified, but in the rapid progress, they are fairly imminent.
Again, that is something for discussion and consideration in the Department. It is taking into consideration the timelines that have been identified through the heat study and considering how those can be borne out through a timetable for the elimination of fossil fuels. Obviously, however, there are things to consider such as, if there is a timetable, what the market lag would be in areas that are identified for district heating. Can we eliminate fossil fuel oil and gas boilers within a timeframe that allows people to be able to avail of district heating zones or else will they be given significant lag time to be able to install heat pumps, for example? All of that will be taken into consideration as policy decisions emerge in terms of that timetable.
I thank Ms McCarthy for that. I will finish reading the report on the train home on Thursday and will probably get some answers to my own questions. We will move to the second round of questioning. Senator Boylan is first up.
Two of my questions relate to the heat study, one of which is about evolving existing policy supports to focus on existing fossil fuels in buildings. That quote can have a more significant and immediate emissions reduction impact than a fabric-first approach. Maybe it is one for Ms McCarthy to address. Will she tease out for us what exactly she means? Is that taking out the oil boiler and just replacing it with more efficient heating and not retrofitting?
The other question is around the Energiesprong model. It might be said we are where we are so we cannot go back and do it that way. I think the Energiesprong approach, however, which uses the prefabrication of retrofitting material, has shown it is more efficient in terms of assembly lines. It is also more attractive to female workers because it is not on-site work; it is factory work. Has the SEAI considered that Energiesprong prefabrication off-site retrofitting model? If so, what changes would we need in regulation to bring that into play?
My final question is on the deep retrofit scheme. The previous iteration of retrofit saw hundreds of thousands of euro going to very wealthy individuals. It was flagged by certain people that there needed to be a cap on how much was available. My understanding is it was disbanded. Is the SEAI still paying out grants on the deep retrofit scheme?
Mr. William Walsh:
I might answer the Senator's last question and then hand back to Ms McCarthy. Our deep retrofit scheme was a pilot scheme we ran over two to three years. With that scheme we developed and piloted a model. We learned lessons from that scheme, which informed the one-stop shop. That scheme was to push homeowners to upgrade to an A2 BER. The pilot itself looked at people who could pay a significant amount of money to get that upgrade. The learnings from it have informed our one-stop shop programme and informed us with regard to the archetypes in the Irish system, that is, the types of houses, which are very different from many other countries in terms of the uniqueness of some of those houses. I will ask Dr. Byrne if he has anything further to add, then I might just-----
Ms Margie McCarthy:
I will answer the Senator's first question on the findings from the heat study about evolving the supports. As I said, the heat study strongly supports fabric efficiency to ensure homes are insulated in terms of health and well-being and in reducing people's energy demand to heat their homes.
One thing the study points to is the use of the word "evolution". The elimination of fossil fuels has to become very much a key feature of the upgrade conversation with homeowners. We need to look at the optimal level of upgrade to ensure that if a person gets to a stage of investment in his or her home and is debating between replacing his or her gas boiler or continuing with some of the deeper retrofit upgrades, he or she strongly considers the heat pump installation at a level that is appropriate. In other words, he or she is putting a heat pump into a home that can operate well and keep his or her energy bills low. Therefore, its upgrade has been to that level.
I mentioned earlier the heat loss indicator study we are about to launch into, which will look at the optimal level in terms of the indicators from a home to be able to manage installing a heat pump while working within cost-effective ways so that energy costs are not going up and people are still living in comfortable homes. That will play out. We are just going through the approval process at the moment. That will influence the requirements and criteria we roll out through the grants programme in terms of being able to support people on a grant to install a heat pump. That is just one example.
Mr. William Walsh:
I will just add a point on heat pumps. The technology is advancing at a rapid pace. We had our energy show last week at which all the heat pump manufacturers took stalls. From speaking to them, there is significant interest and much commercial investment going into heat pumps, both commercial and residential. The technology is similar to other technology; it is getting better. We are very much seeing a move towards that. As Ms. McCarthy and Mr. O'Mahony pointed out, our heat loss indicator will help us to establish exactly the right point at which a heat pump will work efficiently to keep bills low and provide heat in the home from an Irish perspective and establish what measures we have to take to get us there with a view potentially to lowering the figure we have at the moment.
I have some follow-up questions. Is the SEAI of the opinion that planning permission is needed for external installation or is it exempt?
On what basis would it be exempt? Some masters students went to the effort of contacting every local authority throughout the State and there was a mixture of opinions from various planning departments. I would like to have the SEAI's perspective on that. With regard to engagement with the Department of Further and Higher Education, Research, Innovation and Science, I have had reason to be in contact with the Laois and Offaly Education and Training Board, ETB, and there is much work going on there. How quickly is a scaling up of courses expected to be available?
Will the SEAI comment on the sustainable energy communities, SECs, in regard to the opportunity it sees there? I certainly see an opportunity. Every time I meet the SECs they reference a new grant or support that is to be available to them to support good work. They refer to it as LEAF funding but I do not know how the SEAI refers to it. When might we see that?
There are concerns in terms of the equity test. A number of members have made the point about lifting people out of energy poverty. It is interesting to hear from the SEAI representatives about the evolving nature of the schemes, the pivot from energy poverty to energy efficiency, the various studies including the heat loss indicator study which then maybe points towards a different metric for assessing the appropriate intervention. I refer to a stage where a heat pump might not be the way forward. We might project ourselves forward post the heat loss indicator study to say there might be significant emissions reductions in a poorly insulated house to take it from BER rating G to C and a heat pump might not be the answer there. What might the alternative system be in such houses? Are they likely to be supported in the time ahead?
Mr. Brian O'Mahony:
That is dependent upon the competent authority which is the local authority responsible where that house is located. Typically full planning permission is not needed. It is necessary to go for derogation. In general this applies to areas where there may be conservation requirements on particular homes in those areas. The masters student is correct, it does vary depending on where the house is and upon the local requirements therein. In general, we have not come across challenges for people to do this but there are challenges where people say that red-brick homes around Dublin or some of the urban centres could be more of a challenge because the aesthetic is being changed, with a newer front compared with neighbouring houses.
The last Senator to speak mentioned Energiesprong. We are aware of that. That is suited to where there are homes of the exact same typology constructed together. We are going to be looking at that. We have previously worked closely with the local authorities in retrofitting homes and we think there is an opportunity for innovation in this sector going forward. The last couple of years have been focused on getting everything up and running and getting the programme moving but there will be opportunities for that type of approach and other approaches. We are aware of them. We are considering them in our future work programme.
I will answer this last question and if I have missed anything I will come back. There was a question regarding what if I do not put in a heat pump. Our programmes are focused on a B2 target. If you do shallow measures you do not have to get to the B2 target, so you go to a C3 or a G home I think was mentioned. That can happen and that homeowner may continue to use his or her oil or gas boiler. They will have captured the comfort benefits for themselves and the reduced energy costs and they will have a healthier home. However, as Ms McCarthy mentioned, we look at this as a whole throughout the State and our long-term goal is to decarbonise all of these homes for society. We are aware of that and that is why we want to put those homes on this pathway to B2 or zero emission homes as discussed in Fit for 55 and other European directives in which we are participating. We are cognisant of that but some of those homeowners may retain their existing heating appliance or if it is near end-of-life, they may replace it and there are going to be other solutions that we mentioned. There are going to be biofuels that could potentially be used. There are Irish companies looking at this sector as well. We do not see the solution being homogenous, that it will only be heat pumps for everybody. There will be solutions required depending on the home and the location.
Dr. Ciaran Byrne:
I will take the other two points in regard to linking with the ETB sector and the Department of Further and Higher Education, Research, Innovation and Science. We have an active context with the ETB sector. Five of them are prioritised, they are specialists in the green economy, the nearly zero emissions building, NZEB, and retrofit area. The Deputy mentioned the Laois and Offaly ETB. We have actively engaged with Laois and Offaly ETB in our training centre in Mount Lucas. We have linked in some of our contractors with the ETBs because they are bringing the students and the people coming to upskill or reskill and we are linking those in with our contractors on the actual programmes. I have engaged directly also with Limerick and Clare ETB recently in regard to its centre, understanding its needs and making sure it is aware of our programmes and scales of ambition and I am aware of what it is doing in order that we can join the two together. Once we get through the registration process with the one-stop shops, one of our key deliverables will be effectively to have networking sessions between the ETBs and the one-stop shops in order to join them together. We have done that already in the warmer homes scheme.
On the LEAF,as the Deputy called it, in respect of sustainable energy communities, that is the local energy activation fund and we are currently working on that. That is another policy area. Ultimately it will be decided by the Government and the Minister. It is a small-scale grant. The whole thesis there is really the catalyst-type grant for sustainable communities. We did a significant piece of work on it which we hope to complete very soon. It is about getting those smaller grants to communities to allow them effectively catalyse people moving into the one-stop shops and other energy schemes as well.
Unfortunately I had to miss the start of the session today so forgive me if this question has already been answered. It relates to the risks to meeting the targets. Dr. Byrne mentioned supply chain capacity as a concern or a challenge in the current market. I have been through the retrofitting process recently and it is very difficult to get workers and materials. Has the SEAI done a risk analysis of the current inflationary rates or the current supply chain constraints? Has scenario modelling on the risks to meeting the targets been carried out? This would include such as things as likelihood of longer timeframes. Has that piece of work been done?
The Chair mentioned that this session is not about EVs but the SEAI mentioned the budget for technology. One of the things with EVs that many of us have concerns about is the significant investment, I believe it is €10 billion,that is being put into this sector. Many people cannot afford a new EV. There are options to retrofit cars. This is a much cheaper way of doing it as it would mean that people who cannot afford brand new cars can still transition to a zero-carbon transport model. It is also the most environmentally-friendly if it uses the existing car structure. Has the SEAI considered EV retrofitting? Some work has been done. Some people in my constituency of Wicklow have done it and are working on it. I understand that it is done to a much greater degree in other countries such as the Netherlands. Has the SEAI examined that as a potential?
Dr. Ciaran Byrne:
I will take the first question. I will break it down into two parts, what I describe as a before and after. Before is before the war in Ukraine and after is the last 40 days. In launching the one-stop shops we had a significant amount of market and behavioural analysis and also quantity surveying of our schemes and looking at that, as well as discussing with the contractors, the prospective OSSs, their capability and capacity to deliver, looking at the market ability and looking at the schemes in existence. We mentioned the national home retrofit pilot scheme, which would have given us many lessons. We built all of that into the schemes. We built inflation at a certain level into the scheme as was. It would be fair and reasonable to say that the world has shifted in the last 40 days. There were already concerns about inflation and the supply chain prior to the start of February and they have absolutely accelerated. We are looking again at the schemes in terms of quantity surveying and understanding where we are now, having built them in. It is moving very fast so we are in that space at present.
I will ask Mr. Walsh to comment on the EV scheme. I can do retrofitting buildings, but not retrofitting EVs.
Mr. William Walsh:
Regarding EVs, we have been approached about the concept of retrofitting and we have looked at it, but I do not have the answer to that. We can certainly come back with a response to that.
As regards electric vehicles generally, the technology is expensive at present and there is a host of very good people internally in SEAI who are fascinating to listen to about the technology that is developing and evolving for electric vehicles. One common piece that we hear, even speaking to the suppliers or the importers, which is what they are called because they import from different parts of the world depending on where the manufacturer is, is cost parity by mid-decade or shortly afterwards, primarily driven by the production levels. At present, most manufacturers are producing internal combustion engines. Once that switches and the electric vehicles are built in the bigger factories, as there is a requirement for economies of scale, that is where there is a real opportunity to reduce costs. Clearly, as Dr. Byrne mentioned, the Russian invasion of Ukraine has not helped with materials and minerals that are required to build batteries and so forth. Also, some of the supply chain in certain brands is in both Ukraine and Russia, so that will certainly have an impact on particular manufacturers.
The piece with electric vehicles is that we all are focused on electric vehicles; my mind is pivoted on this. It is cars and internal combustion engines we are taking off the road. If a two-car family becomes a one-car family with an electric bicycle or whatever might be the case, that is really where the sweet spot will be. I realise that is a generic remark to make in the context of homeowners, but it is the concept of what we are taking off the road and what we have to put back on the road to address transport concerns for people, whether that transport is a service or is using another form that is not an electric vehicle. They are the highlights.
With regard to the concept of retrofitting existing vehicles on the road to an electric vehicle, we will revert to the committee with the research we have done on that in the Irish context.
It is good to hear the comments on mobility and that it is not necessarily about just replacing internal combustion vehicles with electric vehicles. The committee has been hearing that frequently and it is good to hear that SEAI is thinking along the same lines. Ms McCarthy wants to respond to some of the questions.
Ms Margie McCarthy:
I will be brief. In a general sense, the SEAI research, development and deployment programme is our annual competitive call and support for research. We do quite an amount of consultation across Departments, State agencies and internally with our own experts across delivery programmes to identify topics where there are gaps in the knowledge and in the way we can deploy and deliver in-market but also around technologies for the longer term. Within the same call we also have an open topic, so ideas can be proposed by the applicant. That is open to both industry and universities. Collaborations are what we are really looking for across those groups. That will open in the coming days for this year but, unfortunately, I do not have to hand what research we have in play currently or what awards are out there, but it is certainly an opportunity where we look at topics such as the one the Deputy raised and support them through that scheme.
I had a few things in mind and I wonder if they have been clarified yet. One is what the interest rate will be on the low-interest loan. I saw different numbers suggested.
Second, what is the SEAI's estimate of the number of attic and cavity homes which have not yet reached an acceptable standard and could be supported by the 80% grant? That is certainly low-hanging fruit in terms of immediate response in the present environment. In addition, what is its view on moving estate by estate? In my constituency, some estates have very bad insulation standards. They are known from when they were built. Often, they are older estates. Rather than waiting for the individuals to approach the one-stop shop, there is clearly an opportunity to take some of the estates with the worst standards and go in with a package for them and the authority could get a lot of people doing it together. Is that feasible or is the authority depending on sustainable energy communities to pull those together or the one-stop shop? How might that lower-hanging opportunity be achieved?
Is there potential to accelerate solar installation? The committee heard about barriers because of lack of guidelines, but can we accelerate that?
Finally, there are 90,000 vacant homes that are deemed accessible to coming back into use in some shape or form. Has the authority looked at that cohort of homes as potentially a win-win to combine what the authority is doing with, for example, the repair and lease scheme or some of the other schemes that are available, and go with an enhanced package?
Dr. Ciaran Byrne:
I will take some of those questions and also bring in my colleague, Mr. O'Mahony. Regarding a low-interest rate loan, I cannot specify a rate at present but what we are talking about is a significant discount to that available in the current market. There are figures being kicked around and I have seen them, but it is not appropriate for me to mention a figure because nothing is validated as yet. However, it is considered to be at a significant discount to the rates available in the current market from the pillar institutions.
I will ask Mr. O'Mahony to comment on the attic and cavity question. In terms of estate by estate, that is exactly the principle of what we are doing. The Deputy spoke about aggregation. When one speaks to a contractor, the contractor wants to make business efficient for it, so it has to go into an estate and rather than going to number 1, number 7 and number 13 and then trying to find another couple of customers, the contractor wants to build the schemes and link them in a way whereby they go through the estate. From the customer's point of view, one does the whole lot. The other piece is where people get their information. They trust scientists and certain places. They trust their community organisations, the sustainable energy communities, SECs, and community-based marketing. Some of the community-based marketing that will happen through the SECs will link the one-stop shops to those types of estates, but we are making sure the structures are in place and the schemes are developed in a way that they can do that. In other words, what we are about is retrofitting homes, and how they are paid for and who pays for them is nearly a secondary consideration. Once we retrofit the homes we get the carbon emissions down, and it is to make it as efficient as possible to do that work.
Regarding the acceleration of the solar scheme, we believe there is capacity to accelerate that scheme. It is going particularly well at present. We have seen almost a trebling of applications in the scheme between January and March. Obviously, the current crisis has improved that even further and we believe there is potential to scale that. However, we have to be careful. It was a €10 million to €12 million business last year so within that one has to be careful. One can scale it to a point, but one does not want to scale it to a point where one breaks it.
We have commenced our engagement with the local authorities on the retrofit package. They have been doing retrofit, we have been doing retrofit and we have had the midlands pilot scheme. We have engaged again in talking about the aggregation piece. Certainly, the vacant homes is an area that we can look at with them in terms of how we join up. Again, it goes back to the end point, which is about ensuring that we retrofit as much as possible to reduce emissions.
To some extent, we nearly have to supersede, insofar as we can, various silos, budgets and thought processes where we do our bit and you do your bit. We have commenced that engagement with the local authorities. Looking at the so-called low-hanging fruit, the vacant homes could be a very useful discussion.
I will ask my colleague, Mr. O'Mahony, to comment on the potential number of cavity-insulated walls out there.
Mr. Brian O'Mahony:
I apologise I do not have those figures to hand. Only a couple of months ago, we updated them based upon the 80% grant. We will provide them afterwards.
The second point is on solar. A further point to note is the issues that might constrain the deployment of that. People talk about our planning. The planning requirement is that up to 12 sq m can be installed on a roof, which covers most homes and provides at least a 2 kW system to people's houses, which is probably the appropriately sized system people want. Some people want larger ones than that, for which planning permission is required at present. The Department of Housing, Local Government and Heritage is looking at that but that change is requiring strategic environmental assessment to be carried out, which I understand is under way at present.
The other element is on the grid side. ESB Networks has done an analysis on that and people can deploy solar photovoltaic, PV, on residential properties without any issue. It has scaled up its administration side with regard to people applying for grid connections through the NC6 process, and that has happened already.
Connected to that, smart meter roll-out is progressing. In excess of 700,000 smart meters are deployed at this stage and the figure is growing year on year to support people who are interested in generating their own energy.
Mr. William Walsh:
I want to add one or two pieces to both Dr. Byrne's and Mr. O'Mahony's comments regarding estate by estate. The solar PV scheme has been good for us in terms of our one-stop shop model. We have 800,000 building energy ratings, BERs. As an organisation, we have a geographic information system, GIS, map that shows where the low-hanging fruit is for many of these one-stop shops, and we will be able to provide them with intelligence-based information where they can go and knock on doors.
I will come back quickly to the solar PV scheme, where we have seen the installers who are working with us have been excellent at delivering this scheme and ensuring that when they go into an estate, they put up the sign locally that they are doing the work and their pipeline is driven by referral on the spot. The solar PV scheme was set up in recent years. We have had the opportunity to get some of the learnings we will implement with the one-stop shop.
There is a secret sauce, as it were, with solar PV. People are very interested in it. If we could get people as interested in retrofit as they are in solar PV, we would be absolutely flying. Those are merely some further comments I wanted to add to those of my colleagues.
To follow-up on Deputy Bruton's point, we were mentioning how it makes more sense for communities to come together to try to get a retrofit done, whether that is a street, an estate or a cul-de-sac. Where that is not happening, and Mr. Walsh touched on this, not because there is not community buy-in but because there are strangers living on the street, there is no residents' association and there is no group, what happens then? If I am at No. 1, do these guys come along and physically knock on the doors of Nos. 2, 3 and 4 stating they are doing this work down the road and it would be beneficial and cost-effective for them to do it? How does the SEAI do that outreach where there is no community group coming together to say it wants to retrofit ten of these houses all at once?
Dr. Ciaran Byrne:
That will be done by the one-stop shops. They are engaged in it. Most of them have a sales and marketing outfit for doing that. As Mr. Walsh mentioned, we can help them target them using the building energy rating, BER, database, on which we have nearly 1 million BERs. In a weird kind of way, their success is our success. From a business perspective, every time someone is walking the streets or driving into an estate, it is cost. The more we can target them, the better.
There will be an element of the communities. Within the communities, typically in towns and villages, not every estate is linked in to it but they can be pushed in the right direction. We are also talking about supplying leaflets to local authorities so that when they do local authority homes, they can drop a leaflet in to neighbouring houses stating what is being done next door to the local authority home and giving contact details for the local one-stop shop or the one-stop shop programme so that neighbouring houses can get it done too. It will be a combination of all of those.
The experience, anecdotally, in the solar scheme Mr. Walsh mentioned and as referenced in the media previously is that when people see it being done in their neighbours' homes, a good example of which is external wall insulation, which is visible, as well as insulating the home it has a nice aesthetic effect on the home in terms of changing the entire frontage of the home. Many of the referrals from one come from the other. One will see contractors going up through estates, maybe not doing every house in a street, but certainly one begets another one. The push is to try to get as many people as possible.
We were talking about how we do not expect the market to be flooded but that we do want many new contractors. We see the ambitious plans we have with apprenticeships and getting people into the market who can do these retrofits. What has the SEAI in place in terms of quality of standard and quality of care for contractors who are registered with it? Will the witnesses outline what safeguards the SEAI has in place to make sure the quality of work is top standard so that we can reduce the chances of a cowboy builder or someone who is not up to scratch getting involved in this?
Mr. Brian O'Mahony:
The contractors could be stratified into two: installers who are doing single measures through our schemes and people who are doing the whole home retrofit. We deal with them slightly differently.
On the installers who are doing the individual measures, it is basically driven by competency. One has to be registered with the SEAI to participate in our schemes. That ensures an installer has the right level of competency and it is also a business that is paying tax, is insured etc. Also, as part of that agreement in registration, when works are complete, we carry out inspections of them. We feed that information back to the homeowner and to the contractor. Primarily, it is important the contractor or the installer understands our technical requirements. We get involved on an individual basis by going on site to do an accompanied inspection with them and by doing workshops with them.
At the one-stop shop level, our engagement is at a slightly different level because we are dealing with somebody who is doing everything from a technical design all the way through to the quality as well. We engage with them, both on that individual inspection level but also on how their business is working with regard to delivering all those services. Therefore, there is another layer on top of it. It is how the one-stop shop is working and how it is delivering the quality to the homeowner - everything from how the business is run to the customer interface, the quality on the ground and the handover to the homeowner.
Something that would be useful in that respect, and I do not know whether we have considered it, is if the homeowner could rate the contractor that has done the work. If I am a homeowner new to this and I must work alongside the SEAI to pick a contractor, it would be useful and would provide a level of guidance if there was a standard table or feedback in the same way as is seen with a restaurant. It would state the number of contractors in County Louth and give the top ten based on reviews of works that had been carried out in the past ten or 12 months. People can be quite overwhelmed when they see so many contractors, and it can be difficult to decide who to go with if there is not a level of local knowledge about who is the best.
When this was first announced, it was said this would be used as an excuse for evil landlords to evict renters. The point is the vast majority of retrofitting does not require the individual to move out of his or her home. It is not a red herring but maybe a misunderstanding of what retrofitting is by individuals who stated this would be an excuse for landlords to evict people. That absolutely will not be the case. I am fairly sure that in the small number of situations where somebody may have to move out for a retrofit on a rented property, the Department will be keeping a strong eye on that. What would Dr. Byrne's comments be on that? Will he outline a situation where an individual would have to move out of a home? I assume these would be a small percentage of people who would be getting a total and utter retrofit done. Will Dr. Byrne give a breakdown of how a situation would occur that someone would have to vacate a home to have a retrofit carried out?
Dr. Ciaran Byrne:
I thank Senator McGahon for those comments. Mr. Walsh mentioned the social justice element of our work. It is incumbent on us to make sure that does not happen. We do not have information on it but we will be keeping a close eye on it and linking in to the other State agencies and services in this regard.
For the vast majority of retrofits, people do not need to move out. What sometimes happens in retrofits, not necessarily on the rental market side, is that somebody decides to do a retrofit as part of a bigger, wider renovation of the home. For example, they might pull out the kitchen and do the whole thing. That may be a situation where someone needs to move out of his or her home. However, if someone is in a home and doing the broad B2 level retrofit, there are very few situations where he or she has to move out. We see it sometimes in warmer homes scheme. Again, much of it is for health reasons and things such as that, more so than actually having to move out of the home.
We do not have information on the schemes yet that this is happening or has happened. We are alert and aware of them. We have a social justice side as well and it is very important for us because reputational damage could occur quickly, which could have significant impacts as well. We will be keeping very close watch on this. If it materialises and becomes a problem, we will be prepared to look at and work on our schemes. We have levers we could probably put in place in terms of the eligibility for grants and what must happen. However, it is around doing that massive renovation in which one might be pulling out the entire home or building an extension. In some cases, people do move out. However, for the retrofit piece, by and large, people do not have to move out.
Just for a point of information on the regulations that would allow people to put more solar panels on their roofs and to allow schools, public buildings, farms and so on to do so, the appropriate assessment finished last week, so it actually happened within a matter of weeks. The same will happen for the strategic environmental assessment, SEA. The problem was getting to that point. The appropriate assessments are not the difficulty. I believe it is important to put that on the record. We should see that soon if the Department of Housing, Local Government and Heritage moves on it, which was something I was concerned about in the first place.
On a personal note, I now have solar panels. There is an app and it shows me how much I am gaining, which is then shared widely with everybody I know. It is not just the people on my street. That kind of shareable information is having a knock-on impact because it can be seen what the gains are. Are there opportunities to do that across the board, not just with solar but to think innovatively about how we share and use digital and social media to share what the benefits are? Senator McGahon raised the question of how much a person actually saves from attic insulation and these things. Is there more the SEAI could be doing around that? Those are my main comments on it.
To go back to one other point around electric vehicles, EVs, absolutely modal shift has to be number one, but we also need to be very aware that modal shift is only one thing that has to happen. We also need to be very honest with ourselves that there needs to be a shift across the board in every form of transport.
Dr. Ciaran Byrne:
I might just respond. I thank the Senator for the clarification on the appropriate assessment and moving that on. That has been in the pipeline for a while, so it is very positive to hear.
In terms of the broad piece around digital technologies, we are in the middle of kind of a retrofit revolution, but it is also a digital revolution because what we will be doing in ten years’ time in terms of building control maintenance and controls and things like that is still evolving. The idea of using an app to control one's solar panels and see and share among others is one of the technologies. There is some very good, interesting stuff around heating controls in buildings. Now, you can look at them remotely and it can help you calculate your savings and things such as that.
On savings, I was a little bit obtuse with the Deputy because it is very hard to pick a single figure. Again, what people use and how people use homes is different. There can be two people in the exact same home who use it in a different way. You can see, for example, from solar panels, very quickly with those types of apps how much energy you are getting from that source, which can be very valuable. That space is something we are working toward in the future. When one thinks about the iPhone, for example, which was only launched in 2007, and where it has come to now in 2022, it must be asked what we will be doing in 2030. It is a very important space to be in.
There was a study UCC and, I believe, the Money Advice & Budgeting Service, MABS, conducted that showed that 9% of those who were eligible for the warmer homes scheme took it up. Speaking to the outreach piece again, how are we reaching those communities and cohorts that are eligible but perhaps do not know they are and are missing out on a very good scheme and the potential to upgrade their homes?
Dr. Byrne already touched on the landlord sector and how non-commercial landlords are eligible for all of the schemes. However, for whatever reason, a landlord may be interested in doing his or her own home but may not be so interested in doing his or her rental property. How does Dr. Byrne look at that? Does he look at that differently? Are there incentives, perhaps, to landlords to retrofit their rental properties so that, obviously, the benefits pass on then to the tenants?
The last question is taking a big step back from all of this. The European Commission’s energy performance of buildings directive, EPBD, has driven much of the change we have seen over the past 20 years in the built environment sector. However, as I understand it, that is being reviewed now. Has the SEAI been involved in any discussions with the Commission? How would Dr. Byrne see a review of the EPBD impacting on the SEAI’s current plans?
Dr. Ciaran Byrne:
I might take the first question. The UCC study was very important. Dr. McCarthy was the primary author of it and I reached out to her to inquire about it. The Chair is right; it was co-authored with some personnel from MABS. One of the issues is, broadly speaking, that at the point of engaging with MABS, people have a lot of things going on in their lives. Therefore, the ability to go forward to start thinking about retrofitting and the next steps forward is not really there. I took the learnings from that on board and we are looking at our energy poverty schemes. We have the can-pay scheme and the cannot-pay scheme, which is the warmer homes scheme. Within the can-pay, it is quite a broad church. There are people with plenty of money to do it and there are people who do not and who are struggling. We are constantly evolving our model and looking at what we can do it make it easier. In terms of what we are talking about now, with leaning in to our sustainable energy communities, we are having more targeted workshops with the likes of MABS, the Peter McVerry Trust, and things such as that. We then ask, within those frames, how we specifically look at those groups of people rather than leaving it totally as demand-led? In that cohort of people, there are many things going on in their lives and retrofit is not typically top of the pile.
On landlords, we have touched on it and it is a policy area that we will have to address at a societal level. There provision for minimum BERs by 2025. On the question of how to incentivise the landlord, the Chair will appreciate I am being a bit reticent to get into that space, but there is also benefit to the landlord in retrofitting a property he or she owns. We have demonstrated evidence that moving up the BERs increases the value of the home. Therefore, there is a capital gains piece. It may not be the biggest, but in the current housing market it is probably bigger than it was for landlords to do this work. As we are migrating and going back to that kind of key learning from the heat study, which is to grab the ball, run with it and do it now, we will have to lean back in and look at the policy incentives, what we are doing and whether we are doing enough. One of the key principles of what we are about in retrofit is trying to be agile. We are talking here today and I have no doubt that if we come back next year or the year after, we will be saying we are targeting a slightly different sector because we are doing okay in one sector and need to do more in another sector. We will be at that.
Can the SEAI monitor that sector quite well so that, if the SEAI is agile, it can respond and know exactly what is going on in regard to take-up? Does the SEAI's data show if a property is a rental property versus privately owned? Can it say that, if at the end of the year landlords are not taking the opportunities that are in place, it needs to change its approach?
Dr. Ciaran Byrne:
Yes, we monitor in that way. That is exactly the point. We launch the schemes, take information and look at what happened. Did what we want happen? Did enough of it happen? Do we need to tweak the offering or focus on a different one? Yes, absolutely, that was a great point.
On EPBD, we are definitely involved at a European level. I might ask my colleague, Mr. O’Mahony, to come in on that point.
Mr. Brian O'Mahony:
The Chair is correct. The energy performance building directive is being recast and it is actually connected into the Fit for 55 discussions that are happening at the moment. They are primarily led through our parent Department and the Department of Housing, Local Government and Heritage.
There are several proposals on the table and also some things that are going to happen. There is talk of having zero-emission buildings by 2050. The definition needs to be tied down but it effectively means that each building will have an A rating. We have to get to a position where every building in Ireland or throughout Europe has an A rating. Taking a step back from that, and based on some of the current proposals, it is a question of ensuring there are no G-rated buildings, which are the worst-performing buildings and comprise about 15% of the building stock. Another proposal is to focus on removing all the F-rated buildings. What we are starting to see is an effort to incentivise people and businesses to act and address the worst-performing buildings, namely those with G and F ratings, and eventually those with E ratings. That is coming down the tracks. In the other direction, we are trying to build the industry and supply chain at scale to address these matters.
Also at play when we talk about the energy performance building directives are two main directives of interest to us, namely the energy efficiency directive and the renewable energy directive. We talked about how microgeneration and renewables could contribute to large-scale decarbonisation, but also decarbonisation at home level. The energy performance of buildings directive will be seeking to boost renewables that are on-site or to achieve zero emissions on-site while having electricity coming in as well. We are very much aware of the interplay between the directives. We are working with our parent department with regard to them. This is our long-term goal for the State, but we are now focused on building the supply chain. Let us build momentum among homeowners and the public and commercial sectors so they will want to go on the journey of renovating homes by 2030.
I have a question on the energy performance of buildings directive. The building energy ratings we now have came from the original energy performance of buildings directive. Is there talk of it being reviewed, or are we happy with the system?
Mr. Willie Walsh:
May I revert to a point on the warmer homes scheme and those who can apply for it? I am not fully aware of the report referred to. Much of the information is usually on the leaflets of, say, local Deputies. We have done mailshots. There was a period in which we found it very difficult to get people to apply for the scheme. We worked with the Department of Social Protection, which, due to GDPR considerations, could not give us the names and addresses of people, but it could mailshot leaflets for us. We have taken measures like that. Dr. Byrne said half of the €8 billion we have is to address the cohort in question, so we will have to find the other 91%.
I have a few questions on the same theme, that is, on the models and data of the SEAI. Several Deputies and Senators touched on this subject. Mr. Walsh mentioned that there was a BER map, a GIS map. How well populated is that? Various groups I have met, including even the likes of Codema in Dublin, are saying they are building from the bottom up but are not there yet. Does the SEAI have something different? Is it specifically about BERs? Are there assumptions on houses built at a certain time or are there assessments?
Mr. Willie Walsh:
We have a mountain of data on BERs. The old deep software took about 40 measures from a home whereas the new software takes 140 measures. We are very conscious of this. We have evidence and data based on the housing stock. We have this deep information and are working with the likes of Codema-----
Dr. Byrne talked about targeting and stated there is to be a specific focus this year and probably in the years ahead on the retrofitting effort. Is this specifically in relation to the warmer homes scheme? Are the SEAI’s systems sophisticated enough to capture what is required? Some people eligible for the warmer homes scheme may be financially better off and in a warmer home than some on low incomes and in colder homes but who are ineligible. Is there information to differentiate between these cohorts at this point? Is this something the SEAI is examining?
Dr. Ciaran Byrne:
There are two parts to it. With regard to the BER, which relates to the energy performance of the home, we have the biggest database in the country. Therefore, we know about the home. The issue is that it is difficult to get full listings of those in income poverty from the Department of Social Protection, for various reasons. To get the full picture, it would ideally be a matter of matching the income poverty listing with the listing on homes to get the full picture. You can work by proxy to a degree and examine cohorts and BER data, based on the view that if you stratify by region, area and cohort, you might get close. I understand the Department of Social Protection would have quite significant listings of the people on the various types of allowances, but this is not information that can be shared adequately.
On the other point, the BER database exists. Several companies are working to utilise it. Companies such as Codema and BERWOW are building packages to get more intelligence from the database to feed back into the market to help with targeting.
Dr. Byrne referred to matching the data of the Department of Social Protection with BER data. Would that capture someone on a low income who is in work but living in a colder home? That is another area, I suppose.
Dr. Ciaran Byrne:
It is a matter of whether we have a BER rating for the home. We have a million BERs in the database but one triggers a BER if one is renting a home, buying or upgrading. There is still a cohort who have lived in the same home for the past 39.24 years and have never obtained a BER for it. There are various levels of data. It is a matter of using technology insofar as possible and predictive analytics. This is an area that my colleagues look into. There are calls put out and funding for this kind of stuff. It is about getting the best information we can relatively simply.
Dr. Ciaran Byrne:
The pre-BER component is being rolled into the warmer homes programme so you will know what you started from. You get the BER advisory work, do the work and know what you end up with. That effectively gives both a quantitative and qualitative assessment of what is done and the impact on the home.
Dr. Ciaran Byrne:
It is a matter of the building energy rating. The BER is the energy performance of the home. In some cases, or for some of the pilot projects, we have monitoring in place. With the HLI pilot that we mentioned, we will have monitoring equipment in place. For a typical warmer homes house, the pre-BER and post-BER analyses will show the energy performance at the level in question.
On the amount of income spent, that is very much a behaviour factor. Without actual monitoring in the home-----
Mr. Brian O'Mahony:
We monitor a number of programmes in more detail. We will do it in the forthcoming HRLI research call. We are doing it in the midlands programme through a call that was funded with NUIG. Before doing the retrofit, the homes were identified. It is done with the local authorities in the midlands. There were surveys of the homeowners to ascertain their experience of their home and details of their energy bills. Then the retrofit occurs. In the next year or so it will be interesting to see their experience now of a warmer house post occupancy and what their energy bills are. Comfort and indoor air quality will also be monitored. We do that on a more targeted basis in our programmes.
That is three hours on the dot. We were more time efficient today than we have been recently. I thank Mr. Walsh, Dr. Byrne, Ms McCarthy and Mr. O'Mahony. We really enjoyed this session. I know the members are very interested in this topic and the answers we got to our questions were very thorough and complete. We look forward to having them joining us again some time because we have a particular remit with respect to the SEAI.