The role of low energy housing in public policy

ACCORDING TO E.ON, my home uses 12% of the energy of similar "efficient" homes in my area. In fact, our homes aren't similar at all. That's because mine is built to the Passivhaus standard [1].

It's a very simple approach: excellent thermal performance, exceptional airtightness, and a forced air ventilation system. The structure is a partially buried, timber frame construction. Walls, ceiling, and floors are thickly insulated. Windows are tripled glazed. Doors, windows, joints, and service penetrations are constructed to minimise thermal bridging and prevent air leakage.

Construction requires meticulous attention to detail, but the performance is startling. For example, airtightness - how 'leaky' the house is, measured in airchanges per hour - is 0.34. The modern UK building code allows a leakiness of 10 airchanges an hour.

Living in a passive house

The most noticeable aspect of the house is its air quality. The mechanical ventilation system draws air from outside, filters traffic pollution and pollen, warms it with heat extracted from the exhausting stale air, draws it in through the bedrooms, and removes it from the bathrooms and kitchen. It's completely silent, and the whole house changes its air 17 times per hour. There is no build up of the carbon dioxide that makes interiors feel stuffy[2], especially in winter when we tend to keep doors and windows tightly shut.

The house has no heating system. Unoccupied, insolation keeps the indoor temperature above 16 degrees even in winter. Occupied, it maintains  21 degrees, with any excess heat rejected by the ventilation system. The unexpected benefit of the house's radiantly neutral surfaces (especially the windows) is the absence of the chilling effect that happens when exposed skin (especially when wet) radiates to cold surfaces.

Passivehaus has a reputation for creating dark, boxy houses, with small windows that don't open. In fact, through careful design and orientation, my house proves that the standard can be met with full height, sliding windows, creating a very airy interior.

As well as being very comfortable, the house is very economic. Cooking is by induction, and lighting is with LEDs. A high efficiency gas combi boiler provides hot water. In the first three months of operation, energy costs have been 6% of nearby 'efficient' homes and 3% of 'conventional' homes (as defined by my energy supplier) [3].

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Passive houses use radically less energy than even 'efficient' houses

The potential role of passive housing in public policy

The radical destruction of energy demand, the beneficial lifecycle economics, and the sophistication of the construction methods, have important implications for a range of public policies.

Energy / Environment policy

The Institute of Mechanical Engineers forecast a 40% shortfall in UK energy supply by 2025, with no mitigating investments in place [4]. [Doubt is rapidly growing]({% post_url 2016-07-12-lies-damn-lies %}) about the ability of commonly promoted renewable energy technologies to replace fossil fuels [5], and whether lifestyle changes required to live within their eye watering limits are politically achievable.  If we can't maintain supply, we have to cut demand, and in a politically acceptable way.

Passive housing makes cutting demand in a politically acceptable way achievable. Our home is the largest non-discretionary use of energy in our lives, at least in chilly Northern latitudes. Median annual domestic energy consumption in Scotland is 2,600 kWh, of which 85% is space heating[ref]. A passive house provides a level of comfort that a conventional house, over its lifetime, needs a colossal amount of energy to provide.

A kWh of supply technology must be mined, transported, refined, assembled, maintained, repaired, operated, decommissioned, and replaced. A passive house, once constructed, requires a fraction of the capital maintenance cost of an equivalent unit of supply, for multiples of its working life.

Assume 20% of Scotland's 2.5 million homes are built to passive house standard, and each house reduces domestic energy consumption 70%. Then 2,500 mWh of demand would be eliminated, equivalent to Scotland's entire wind generating capacity in 2015. Further assume that a 475 mWh wind farm costs £2bn to install[ref]. Then £10bn of capital expenditure could have been allocated to constructing x gas power stations, which have to be built even if renewables were built to address intermittency.

Financial policy

By calculating the annuity needed to generate the money to pay for the energy saved by the house's passive design, the value of its design can be priced.

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Average energy bills are doubling every 9 years

The average annual energy bill in 2014 was around £1,344, and has risen at an average of 8% per year for the last decade (a ten year doubling time) [6]. The house relieves me today of (£1,344 x 85%) c. £1,100 of that bill. Assuming energy cost inflation remains 8%, I'd need an annuity of £150,000 to fund that in retirement for a conventional house [7].

Put another way, whatever the passive house's value on the market, it is £150,000 higher when future energy cost reduction is accounted for, and significantly higher still if future annual energy prices increase faster than 8% (wholesale electricity prices increased 15% in 2016/2017). This exceeds by a significant margin the additional amount I spent to achieve the passive house specification.

Moreover, PricewaterhouseCooper estimates the combined deficit of UK pension companies is now £1.54 trillion [9]. The solvency of the pension system is beyond the scope of this article. But the value of this element of my pension is realised now, not at some uncertain future date.

Back to the target of 20% (500,000) of Scottish homes built to passive house standard, each saving £1,100 a year in energy costs. That's an extra £500 million per year in household income, available to be spent on goods and services in the Scottish economy, saved in pensions, or used to fund the escalating care and medical expenses of Scotland's ageing citizens.

Housing policy

The UK faces a housing crisis. Real house prices have risen 150% since 1996, while earnings have risen only a quarter of that. 6 million people face tenure insecurity, with no prospect of buying their own home. 9 million people face soaring rent from private landlords, for homes one third of which fail to meet the Decent Home Standard. The burden of meeting the demand for low cost housing falls on local authorities, just as their funding is falling under various 'austerity' measures. The UK requires a major house building program to address these issues, of houses that are low cost to construct and to run.

Passive House construction is currently more expensive than conventional construction, due to the higher specification of materials and additional labour. However, this cost is falling rapidly as construction ramps up.

Employment policy

One of the biggest problems I faced was finding sufficiently skilled labour. Achieving airtightness requires a level of skill that is not currently taught in vocational training courses.

Putting it all together...

Imagine the following. The Government announces that it is adopting Passivehaus construction methods as the basis for the UK's Building Regulations. Enabling Legislation is brought forward authorising specially licensed Not For Profit Housing Associations to construct up to 20 million ultra low energy Affordable Homes on Green Belt sites throughout the UK. Further Enabling Legislation provides mechanisms for Pension Funds to partner with energy firms and Housing Associations to construct pension vehicles exploiting forward energy contracts to provide pension incomes, simultaneously providing construction capital and tackling pension system deficits. Local Authorities exploit reduced lifecycle costs to slash subsidised housing costs, releasing funds to relieve pressure on other vital services. Vocational Colleges retool courses to supply the skilled workers, providing well paid rewarding work for a generation of young unemployed school leavers, and the income to purchase the homes. The construction industry retools to provide prefabrication workshops, slashing manufacturing costs. The energy gap is closed, one of the gravest misallocations of capital in modern times [9] is abandoned, and the Happiness Index goes up a bit.

Footnotes

[1] For more information about the Passivhaus Standard, see for example http://www.passivhaus.org.uk.

[2] Air feels stuffy when carbon dioxide levels rise above 40 parts per million.

[3] The house has been 50% occupied in the period. I expect these figures to rise to 12% and 6% respectively.

[4] Source: 26 Jan 2016. "Engineering the UK Electricity Gap." IMechE. Download (pdf)

[5] See, for example, Ferroni, Ferruccio, and Robert J Hopkirk. 2016. “Energy Return on Energy Invested (ERoEI) for Photovoltaic Solar Systems in Regions of Moderate Insolation.” Energy Policy.

[6] Source: OvoEnergy.com.

[7] Source: Legal and General Pension Annuity Calculator

[8] Source: PwC. September 2016. "Pension deficit grows by £100bn in a month, according to PwC’s Skyval Index"

[9] i.e. attempting to power industrial societies with an energy source that cannot boil an egg without the assistance of concentration devices requiring a hydrocarbon powered global industrial manufacturing system to manufacture.

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