Leveraging Private Household investment in energy efficient retrofit: a systematic evidence review of the policy options

Niall Kerr, University of Edinburgh

Home energy retrofit is distinctive as a low carbon policy option due to its requirement for collaboration between private households and public policy in the deeply personal environment of home. While there is an irrefutable case for public investment in retrofit, there is also a strong private case and as a result there is often a joint contribution to the cost of retrofit. This paper presents a systematic evidence review of policy effectiveness with respect to private household investment in retrofit. The review considered how policy can be used to efficiently leverage private household investment in energy efficient retrofit across three key areas: demand-side, supply-side and the overall ‘policy mix’. On the demand-side, while private funding levels range from well below 100% of public funding to several multiples of available public funds, levels of policy additionality, positive spill-over and market effects complicate leverage calculations. While subsidised loans offer the greatest example of private to public leverage they are much less widely implemented and are perceived to be less attractive to households than one-off payment grants and tax incentives. There is a lack of policy focus on the role of the supply-side within retrofit policy making, with supply actors offering opportunities for improved performance and sales. The variables associated with householder interest in retrofit tend to be context-specific are not consistent across different studies. Finally, the paper considers evidence on the effectiveness of the overall policy mix, in terms of whether a stable policy framework is desirable, whether a flexible policy framework is possible and how policy simplicity can be achieved.