WARMER HOMES - A Strategy for Affordable Energy in Ireland

WARMER HOMES - A Strategy for Affordable Energy in Ireland

WARMER HOMES A Strategy for Affordable Energy in Ireland

WARMER HOMES A Strategy for Affordable Energy in Ireland

2 Warmer Homes A Strategy for Affordable Energy in Ireland

Contents Foreword 7 Glossary of Terms and Abbreviations 9 Executive Summary 11 1 Introduction, Policy Context and Vision for Affordable Energy 15 1.1 Introduction 15 1.2 Approach to Formulation of this Strategy 15 1.3 Policy and Organisational Context 16 1.4 A Vision for Affordable Energy 17 1.5 Definitions and Nomenclature 19 2 Understanding and Measuring Energy Poverty 21 2.1 What is Energy Poverty? 21 2.2 What is Affordable Energy? 21 2.3 What are the Causes of Energy Poverty? 21 2.4 Defining and Measuring Energy Poverty 22 2.5 Individual Household-level Indicator of Energy Poverty 24 2.6 Non-Energy Benefits of Low-Income Housing Retrofits 32 2.7 Energy Prices and Affordability 33 3 The Challenge – Extent and Impact of Energy Poverty 37 3.1 Extent of Energy Poverty 37 3.2 Who is Affected and Most at Risk? 38 3.3 The Key Risk Factors for Energy Poverty 48 4 Existing Measures and Actions 51 4.1 Introduction 51 4.2 Improving Energy Efficiency of the Housing Stock 51 4.3 Income Supports 53 4.4 Energy Supply 56 4.5 Information Dissemination and Communication 57

4 Warmer Homes A Strategy for Affordable Energy in Ireland 5 Looking Forward 59 5.1 Introduction 59 5.2 Targeting Priority Households 59 5.3 Work Packages 60 5.4 Introducing an Area-based Approach to Energy Poverty Mitigation 62 5.5 Ensuring Greater Access to Energy Efficiency Measures 63 5.6 Reforming Eligibility Criteria for Energy Efficiency Schemes 63 5.7 Review of the National Fuel Scheme and Household Benefits Scheme 64 5.8 Other Activities 64 5.9 Conclusions 65 5.10 Key Actions 66 Annex 1 Membership of the Inter-Departmental/Agency Group on Affordable Energy 71 Annex 2 Respondees to Public Consultation Paper 72 Annex 3 Income Support Eligibility 73

List of Tables Table 1: Estimated Annual Running Costs for Typical Dwelling Types and BER Ratings based on 2010 Fuel Prices – € per annum 26 Table 2: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings – Annual Energy Expenditure as % of Household Disposable Income: Median Income Household 28 Table 3: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings – Annual Energy Expenditure as % of Household Disposable Income: Household with Income = 1/2 of Median Household Disposable Income 29 Table 4: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings – Annual Energy Expenditure as % of Household Disposable Income: Household with Income = 1/3 of Median Household Disposable Income 30 Table 5: Risk of Energy Poverty for Typical Dwelling Types and Energy Efficiency Ratings - Annual Energy Expenditure as % of Household Disposable Income: Household with Income = 1/4 of Median Household Disposable Income 31 Table 6: Movements in Energy Affordability 35 Table 7: Energy Poverty in Ireland – Number of Households Experiencing Energy Poverty 37 Table 8: Subjective Measures of Energy Poverty 38 Table 9: Energy Poverty and Income Poverty 39 Table 10: Risk Factors for Energy Poverty 48 Table 11: National Fuel Scheme payments 2004–2010 54 Table 12: Household Benefits payments 2004–2010 55

6 Warmer Homes A Strategy for Affordable Energy in Ireland List of Figures Figure 1: Composition of Retail Electricity Prices 33 Figure 2: Energy Poverty Rates by Income Group 40 Figure 3: Energy Poverty Rates by Household Composition 41 Figure 4: Energy Poverty Rates by Housing Tenure 42 Figure 5: Energy Poverty Rates by Marital Status of Household Chief Economic Supporter 43 Figure 6: Energy Poverty Rates by Accommodation Type 44 Figure 7: Energy Poverty Rates by Accommodation Age 45 Figure 8: Energy Poverty Rates by Type of Heating Systems Used 47

For those unable to afford to heat or light their home, the effects can be hugely detrimental to their ongoing health and wellbeing.

This document marks the first Government strategy aimed at specifically making energy more affordable for low-income households in Ireland. Up to now, efforts by government departments and agencies have focused on delivering on discrete policy remits; this strategy changes this approach, setting a clear framework for how we will measure, record and report on the numbers of households in difficulty and the actions necessary to improve the quality of life for such households.

The underlying factors that influence energy affordability are well understood and have been subject to extensive scrutiny as part of the development of this strategy. The complex interplay of energy prices, thermal efficiency and incomes mean that no one simple solution can be brought to bear. Each situation is unique, requiring a different set of policy interventions. The way in which Government responds needs to vary according to individual circumstances. We plan to tailor our response to ensure that resources are directed at those most in need.

There is only one long-term solution to making energy more affordable – using less of it.

Improving the thermal efficiency of homes is the most cost- effective way of increasing energy affordability and reducing energy poverty. While income supports such as the National Fuel Scheme and Household Benefits play an important role in reducing the financial burden of energy bills, they represent an expensive way of addressing the real problem – poor quality homes. Since 2004, over €2 billion has been spent on income supports. Over the same period €60 million has been provided for thermal efficiency measures in the private sector, with a further €183 million spent on central-heating upgrades and retrofits in public sector housing.

It is clear that we need to change our priorities if energy poverty is to be tackled in a meaningful way. Our starting point will be to assess whether it is possible to link thermal efficiency to energy-related income supports in a more effective manner, thereby taking into account a household’s need to spend on energy.

In addition to our ongoing commitment to improving energy efficiency in low-income homes, this Government will introduce, and progressively increase, minimum thermal efficiency standards for properties offered for rent. Our focus will be on progressively removing properties in the E, F and G bands from the rental market by 2020. We will also ensure that appropriate standards are set for the Rent Supplement and Rental Accommodation Schemes, for which Government provides financial support. We have looked at the experiences of other countries and taken note of efforts to fully eradicate energy poverty.

In our view this is not a realistic goal for this strategy, as energy poverty is not something that we can overcome today, tomorrow or even in the next few years. The factors that influence vulnerability are numerous and pervasive. What we must do is address each of the underlying causes of vulnerability and systematically remove the barriers that prevent people from benefiting from high quality accommodation. Without an improvement in the quality of homes, this strategy will not be effective.

This strategy will require a cross-departmental and agency response, with identified actions to be delivered in the short, medium and long term, depending on the nature of the change required and the level of analysis to be undertaken. While we have been actively engaged in retrofitting low-income homes since 2000, more recently we have redoubled our efforts. In 2010 close to 25,000 homes benefited from energy efficiency measures, representing an 11-fold increase in programme activity since 2006. However, this level of action will need to continue and will require the ongoing support of the Sustainable Energy Authority of Ireland, the Money Advice and Budgeting Foreword Minister for Communications, Energy and Natural Resources

8 Warmer Homes A Strategy for Affordable Energy in Ireland Service, the Society of St. Vincent de Paul, the Department of Social Protection, community-based organisations, state energy companies and others, if we want to address this problem substantively. We are publishing a technical annex in order to put into the public domain the data that has been generated as part of the strategy development process. We hope that this will be of assistance to those with an interest in the area. The publication of this document marks the delivery of an important Programme for Government commitment. I would like to thank the Inter- Departmental Group on Affordable Energy for its work in developing this strategy, along with the stakeholders who made valuable submissions to the consultation exercise.

Pat Rabbitte T.D. Minister for Communications, Energy and Natural Resources

Glossary of Terms and Abbreviations CER Commission for Energy Regulation DCENR  Department of Communications, Energy and Natural Resources DoECLG  Department of Environment, Community and Local Government DSP  Department of Social Protection EPBD Energy Performance of Buildings Directive EPSSU Energy Policy Statistical Support Unit (SEAI) IDGAE  Inter-Departmental/Agency Group on Affordable Energy IPH  Institute of Public Health in Ireland Mean  A measure of the average value of a set of numbers, whereby the average equates to the mathematical or arithmetic average of the values, or the sum of the values divided by the number of values.

A mean value is subject to greater influence from outlier (very high or low) values in a range of values.

Median  A measure of the average value of a set of numbers, which separates the higher half of a sample, a population, or a probability distribution from the lower half. SEAI  Sustainable Energy Authority of Ireland SVP  The Society of St. Vincent de Paul

10 Warmer Homes A Strategy for Affordable Energy in Ireland

Introduction Everybody should be able to afford to heat and power their home to adequate levels. This fundamental objective is the starting point for Warmer Homes – A Strategy for Affordable Energy in Ireland and acts as the guiding principle for everything that follows.

Much has been achieved in recent years through a combination of income supports, programmes to improve the energy efficiency of the housing stock and energy awareness initiatives, but it is timely to develop and implement an affordable energy strategy given the financial difficulties currently being experienced by many in society. This strategy presents a cohesive framework for achieving more affordable energy, ensuring that existing and future measures are targeted at households where the risk and adverse effects of energy poverty are greatest. The strategy has been developed by the Inter- Departmental/Agency Group on Affordable Energy (IDGAE), which was established in the summer of 2008 to serve as the key coordinating body in this area.1 To deliver this strategy will require an integrated approach, involving extensive coordination amongst a range of actors in both the public and private sectors.

This reflects the complex nature of the challenge, which necessitates government departments and agencies, local authorities, energy utilities, regulators, non-governmental organisations and community-based organisations all working together, each delivering a part of the solution. This spirit of collaboration is essential if we are to effectively implement actions that will have a lasting impact on the health and wellbeing of households in Ireland. 1  The IDGAE is chaired by the Department of Communications, Energy and Natural Resources and includes the Departments of Public Expenditure and Reform, Taoiseach, Environment, Community and Local Government, Social Protection, Health, and Children, in addition to the Commission for Energy Regulation, SEAI, ESB Electric Ireland, the Institute of Public Health in Ireland, the Energy Poverty Coalition and Bord Gáis.

A Vision for Affordable Energy It is important to set an overarching vision for energy affordability so that it is clear what we are trying to achieve with the development and future implementation of this strategy. Vision for Affordable Energy in Ireland The achievement of a standard of living whereby households are able to afford all of their energy needs and where individuals and families live in a warm and comfortable home that enhances the quality of their lives and supports good physical and mental health Associated with this vision are a number of guiding principles, which permeate the priorities, actions and delivery approaches set out in this strategy.

Specifically, this strategy will: •  Focus on improving the thermal efficiency of low- income homes.

•  Focus on maximising the quality of people’s lives through implementation of practical initiatives. •  Apply a partnership approach, entailing close coordination and alignment of policy levers between stakeholders, including government departments and agencies, local authorities, energy utilities, the health and social services providers, non-governmental organisations and community-based organisations. •  Promote social inclusion and target social need. •  Be integrated within emerging national anti- poverty policy.

•  Aim to deliver cost-effective approaches to addressing energy poverty.

•  Be consistent with the Government’s wider climate-change policy, thereby also benefiting the environment. Executive Summary

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