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Worth the risk - Energy Policy Revision V2.pdf (484.17 kB)

Worth the risk? An evaluation of alternative finance mechanisms for residential retrofit

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journal contribution
posted on 2023-06-09, 16:35 authored by Donal BrownDonal Brown, Steven SorrellSteven Sorrell, Paula Kivimaa
Improving energy efficiency, de-carbonising heating and cooling, and increasing renewable microgeneration in existing residential buildings, is crucial for meeting social and climate policy objectives. This paper explores the challenges of financing this ‘retrofit’ activity. First, it develops a typology of finance mechanisms for residential retrofit highlighting their key design features, including: the source of capital; the financial instrument(s); the project performance requirements; the point of sale; the nature of the security and underwriting the repayment channel and customer journey. Combining information from interviews and documentary sources, the paper explores how these design features influence the success of the finance mechanisms in different contexts. First, it is shown that a low cost of capital for retrofit finance is critical to the economic viability of whole-house retrofits. Second, by funding non-energy measures such as general improvement works, finance mechanisms can enable broader sources of value that are more highly prized by households. Thirdly, mechanisms that reduce complexity by simplifying the customer journey are likely to achieve much higher levels of uptake. Most importantly we discuss how finance alone is unlikely to be a driver of demand for whole-house retrofit, and so instead should be viewed as a necessary component of a much broader retrofit strategy.

Funding

Research Centre on Innovation and Energy Demand; G1020; RCUK-RESEARCH COUNCILS UK; EP/K011790/1

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Energy Policy

ISSN

0301-4215

Publisher

Elsevier

Volume

128

Page range

418-430

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Research groups affiliated with

  • Sussex European Institute Publications
  • The Sussex Energy Group Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2019-01-18

First Open Access (FOA) Date

2020-01-16

First Compliant Deposit (FCD) Date

2019-01-18

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