What does value for money (VFM) look like when it comes to energy efficiency measures?

30 September 2024

Warm Homes: Social Housing Fund (WH:SHF) and under floor insulation from Q-Bot

Registered social landlords have the opportunity to apply for funding from the ‘Warm Homes: Social Housing Fund’ (WH:SHF) in Wave 3 of the scheme, launched on September 30th 2024. .

There are many criteria that need to be met for an application to be successful and a full breakdown of the detail is available in the updated WH:SHF Final Guidance published on September 23rd.

The document makes 20 references to the term ‘Value for Money’ (VFM), so how can this be assessed in the context of energy efficiency measures?

Firstly, the guidance states, ‘value for money justification will be required at various stages of the application process, under both application routes, including comparison against cost benchmarks’

The guidance then goes on to say, ‘A retrofit coordinator will advise on suitable measures to be installed in properties, ensuring there are no negative impacts, no unneeded installations and that good value for money is maintained’ and of equal importance ‘least regrets approach to retrofit’ and ‘shouldn’t need to be replaced’ are terms which are also included.

Price Waterhouse Cooper (PWC) define VFM in the public sector in the following way: 

Value for money has been defined as a utility derived from every purchase or every sum of money spent. Value for money is based not only on the minimum purchase price (economy) but also on the maximum efficiency and effectiveness of the purchase.

Therefore, VFM can be defined in the context of publicly procured WH:SHF projects as:

  • Necessary measures, with least regrets
  • Measures that shouldn’t need to be replaced
  • Cost effective against cost benchmarks
  • Measures with maximum efficiency and effectiveness

That’s simple then. Those clear criteria must make it straightforward to compare energy efficiency measures and make informed decisions about ensuring tax-payers money is being spend in an effective way.

But is that really the case?

Energy efficiency has many facets. Primarily you would assume that whatever provides the best EPC uplift, for the lowest cost, must offer the best value for money, right? However, is it really that simple? And are improvements in the EPC rating a good indicator of energy savings or Value for Money? The answer has to be ‘No’, many people struggle to afford to adequately and safely heat their homes. Homes have different physical challenges, older homes, especially those constructed with suspended timber floors are draughty, by design. Energy Performance Certificate (EPCs) scores have frequently been proven to be of no relevance to energy efficiency or actual consumption.

Thankfully some of this is being recognised, and value for money is being considered alongside actual fuel bills, indoor air quality, resident health, and the condition of a property. These additional considerations further complicate matters, especially when an energy efficiency measure has more than a single (energy saving) benefit, or impacts energy use in multiple ways (which may be harder to model or measure).

Energy efficiency is closely related to airtightness. The majority of our heating sources (Gas Boilers & Heat pumps, connected to ‘wet’ central heating systems, or storage heaters) heat through convection. The heat emitter warms up the air around it, which then circulates around the room through convection warming us and objects and surfaces in turn, this way we keep out properties and ourselves warm. The less airtight (and leakier) our homes are, the larger proportion of that warm air escapes, and the more energy we spend reheating the cold air that is drawn in (or infiltrates, via a draught) to replace it. We are all familiar with hot air rising (creating a stack effect), and therefore it has always made sense to insulate lofts to stop that heat escaping.

However, we have continued to overlook insulating floors. Where cold air that is constantly being drawn up through our uninsulated suspended timber floors, driven by the stack effect and temperature differences, makes heating systems less efficient, making inhabitants uncomfortable, and bringing with it moisture, and contaminants like microbial volatile organic compounds (MVOCs) and radon gas, from the floor void.

Importantly damp or humid homes are harder to heat, and a floor void below the uninsulated suspended timber floor can be a source of considerable moisture ingress.

So, when we think about the value of the ideal underfloor insulation, which is both air tight and vapour impermeable, which brings the floor structure into the insulated envelope, isolating it for the moisture risk below, then we should be able to see a much broader range of benefits, physical, and financial, than most other energy efficiency measures. Q-Bot spent years developing such Underfloor Insulation (UFI) which has been installed in over 5,000 homes so far without any negative consequences (and in fact with many unexpected benefits beyond ‘just’ energy savings).

Value of Q-Bot Underfloor Insulation (UFI)

  • Reduced heat loss of up to 24% (validated by Leeds Beckett University)
  • Measured energy savings, significantly greater than those recorded for traditional underfloor insulation (and other measures, such as Loft insulation and cavity wall insulation), evidence in Leeds Beckett University DEEP study.
  • Increased airtightness and comfort through reduced drafts
  • Effective Radon Barrier
  • Reduced internal relative humidity levels, reducing the risks of damp and mould growth
  • Improved indoor air quality, reducing contaminant levels, (such as MVOCs) and therefore reduced health risks
  • Improved het pump performance (by up to 30%)
  • Reduced risk of damage and structural failure in floor timbers
  • Long product life, no requirement to replace
  • Additional SAP points, resulting in increased EPC score
  • Typical install cost for an average 3-Bed Semi Detached home (c.30m2) £3,000 - £4,000

With all that in mind, how do we ‘benchmark’ the cost, to assess true VFM?

  • Measured energy savings & reduced heat loss – up to 24% energy reduction, for a typical home is £230 annually (based on 12,000kwh, the Ofgem average at £0.08 per kwh). With a life expectancy of 42 years, and no accounting for energy inflation, a saving of £9,660 could be achieved, compared with a projected saving of just £70 per year for traditional UFI measures (which could require replacement 3-4 times for a similar time span)
  • Increased airtightness – Comparable cost to improve airtightness through conventional means by 20-40% (new windows and doors) £4,000 - £7,000
  • Effective Radon Barrier – Typical radon barrier installation cost is approximately £2,500
  • Reduced internal relative humidity levels, reducing the risks of damp and mould growth – Cost of ‘Damp & Mould’ wash down £200, twice a year for same period (42 years) £16,800
  • Improved indoor air quality, reducing contaminant levels, (MVOCs) and health risks – Cost of non-elective hospital emission, for respiratory illness is c.£2,500 per night
  • Reduced risk of damage and structural failure in floor timbers – Cost of replacing a suspended timber floor (with Concrete back fill as ‘final solution’) can be as high as £20,000
  • Long product life, no requirement to replace – Single installation cost
  • Additional SAP points, resulting in increased EPC score – varied by property, but comparable, or less cost per point than External Wall insulation, Internal wall insulation, windows, doors and most other Fabric measures

In summary, benchmarking is difficult, due to differences between property archetypes and a broad range of benefits associated with Q-Bot’s UFI measure that may, or may not, all be applicable, depending on the specific property. However, conservatively, without any energy price inflation, the initial installation cost of £3,000 - £4,000 compares very favourably to a replacement with solid concrete (£20,000), or any combination of benefits relating to the other features of airtight, vapour impermeable underfloor insulation, which could easily exceed £20,000 over the expected lifespan of the product.

To find out more please book a RIBA approved CPD session on the subject of floor voids, associated retrofit risks and floor insulation using this link: Book here - Tackling the risks of damp & mould - Q-Bot RIBA CPD (or email us at cpd@q-bot.co)