Using Whole-life Costing Analysis for retrofits of low and high rise flats

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1 Technical Insight November 2015 Whole-life costs for EnerPHit: Using Whole-life Costing Analysis for retrofits of low and high rise flats Dr Sarah Price The Passivhaus certification criteria for retrofitted buildings is known as the EnerPHit standard. There is no doubt that achieving EnerPHit certification is a challenge. It was launched in 2012 and it is still relatively uncommon to find EnerPHit certified properties in the UK. However, as with Passivhaus it is sparking some interest, particularly amongst social landlords who recognise that with high demolition and decanting costs, retrofit is the only option for some of their properties. The question we often hear is: Is it economically viable to retrofit to the EnerPHit standard? This depends on the scale of the retrofit. This Technical Insight looks at two scenarios where whole life costing can be useful, the retrofit of a low and high-rise block of flats. The high rise block has a solid business case for EnerPHit retrofit so we look specifically at how whole life costing can help determine the type of heating system that could be installed in an all-electric building. On a smaller scale, there are still challenges with reducing whole life costs of EnerPHit retrofits. The low-rise block is a more complex case, where the whole life costs of the EnerPHit retrofit can vary from +22% and -1% compared with the whole life costs of the more traditional approaches to retrofit. In collaboration with Bridgewater & Coulton Ltd

2 WLCA: Whole-life Costing Analysis for Passivhaus Retrofit Introduction In our previous Technical Insight Whole-life costs of a Passivhaus, February 2014, we introduced the concept of Whole-Life Costing Analysis (WLCA) and how it could be applied to new-build Passivhaus projects. This paper takes that analysis one step further and looks at how WLCA can be used in Passivhaus retrofit (EnerPHit) projects. We shall assume the reader has the background knowledge of WLCA as described in Whole-life costs of a Passivhaus which is available to download on our website at This paper is split into two sections. The first section looks at how WLCA can be used to analyse heating options in an EnerPHit retrofit of a high-rise block of flats. The second section compares the EnerPHIt retrofit of a low-rise block of flats to some more traditional retrofit approaches. EnerPHit EnerPHit is the Passivhaus certification criteria for retrofitted buildings. It is slightly relaxed from the Passivhaus criteria recognising the physical challenges faced in retrofitting. There are now two ways of achieving EnerPHit certification, either by meeting targets on space heating, primary energy and air tightness (similar to Passivhaus) or by achieving thermal targets for different components of the retrofit. High-rise retrofit Introduction The EnerPHit criteria can be achieved in two different ways as described in the information box on the right. Both routes have a requirement to improve the energy efficiency of the building fabric to a certain standard, but they also have a requirement to meet a specific primary The components route does not rely on PHPP modelling and there are exemptions in certain circumstances, making this a more attractive route for smaller and more challenging retrofits. energy usage. This means that it is not just the building fabric that needs to be upgraded, but potentially anything in the building that uses energy. In a domestic property this includes the appliances, the lighting system, the heating system and the ventilation system. In this Technical Insight we look at a real life situation where there is strong business case for retrofitting the building fabric of a high rise block of flats to the EnerPHit standard. All residents will remain in situ so the internal works must be kept to a minimum. The flats all have electric space heating and installing gas is not possible due to the risk of disproportionate collapse. The building however does not achieve the primary energy target of EnerPHit due to the use of all electric heating. The Passivhaus Institute recognise that reducing the primary energy in EnerPHit projects may not be economically viable. In this case, an argument can be made to this effect and certification may be awarded without meeting the Primary Energy target. Whole Life Costing Analysis is essential to understand the options that can be taken and in presenting the evidence to both the building owner and the Passivhaus Institute. 2 encraft.co.uk

3 WLCA: Whole-life Costing Analysis for Passivhaus Retrofit Heating options The building we shall model is 11 stories with 34 maisonettes. It was constructed in the 1960s using a Bison REEMA construction and has a treated floor area of 3,120 sqm post retrofit. Three heating options have been modelled using WLCA, these are summarised in the table below. Case Type Description of works 1 All electric storage heaters 2 Air Source Heat Pump 3 Gas district heating Keep the existing storage heaters until end of their lifetime; then replace with newer models. Remove existing hot water cylinders and install new models with immersion heaters; replace at end of life with new models including immersion heaters. Space heating and Domestic Hot Water (DHW) supplied by an Air Source Heat Pump (ASHP) installed in each apartment. Remove existing storage heaters Use ASHP unit to provide space heating via air ducts and DHW 3-yearly specialist maintenance and service for ASHP Regular part replacements and maintenance over lifetime of ASHP Replace at end of life with updated model Condensing gas boilers situated in an external plant room which would be connected to a heating loop for each block. This external loop is then connected to an internal loop inside each block, which distributes the hot water inside pipes to each apartment. A heat interface unit would be placed between each apartment and the internal loop. Remove existing storage heaters Construction and installation of gas plant room on site to provide heat in form of hot water Installation of external pipework up to each block Installation of internal pipework inside each block up to each flat Installation of wet heating system inside each flat Installation of heat interface unit for provision of DHW and space heating 3 encraft.co.uk

4 Thousands Thousands WLCA: Whole-life Costing Analysis for Passivhaus Retrofit Results The total whole life costs (net present value) for the three heating options are shown in Figure 1. These include capital costs of installation, maintenance of the heating system and energy costs over the lifetime of the model, which in this instance is 30 years. District heating has the lowest whole life costs at approximately 138,000 less than keeping the existing storage heaters. Installing ASHPs is only 23,000 less over 30 years than keeping exsiting strorage heaters Total Whole Life Costs over 30 years Case 1 - Storage Heaters Case 2 - ASHP Case 3 - District Heating As with any WLC analysis we must look at the sensitivity of these results to some of the inputs chosen. Varying the 600 Figure 1: Total whole-life-costing analysis result for three different heating options over 30 years. time period of the model from 15 to 60 years changes the magnitude of the whole life costs of each option, but does not change the overall result that the district heating option has the lowest WLCs of the three options. Similarly, using different energy price forecasts (similar to those used in our Previous Technical Insight), did not have an effect on the overall results. The total whole life costs have been split into their three components and their Net Present Value (NPV) calculated separately: capital costs, maintenance and repair costs and energy (fuel) costs. The results for a 30 year analysis period are shown in the graph below. 700 Split Whole Life Costs over 30 Year Period Case 1 Storage Heaters Case 2 ASHP Case 3 District Heating Capital cost NPV Maintenance & repairs NPV Energy bills Figure 2: Split of WLC components into capital costs, maintenance & repairs and energy bills (for Case 1 and 2 electricity only; for Case 3 electricity and gas) 4 encraft.co.uk

5 Thousands WLCA: Whole-life Costing Analysis for Passivhaus Retrofit The capital costs and maintenance and repair costs are, as expected, higher for district heating than keeping the existing storage heaters. However, the energy bills are so much lower for district heating giving it a lower total whole life cost. This is interesting since it is the flat tenants who gain from the lower energy bills, but it is not usually the tenants who pay for the installation or maintenance and repair of the heating system as buildings like this tend to be managed and owned by a third party. For a social landlord, the whole life costs without energy bills is far more useful information as it can be very difficult to recoup any energy bills savings from their tenants. Unfortunately the Passivhaus Institute don t see this as a barrier and require energy bills to be part of any Whole Life Costing Analysis. Taking the fuel costs out of the results and just comparing the capital costs and maintenance and repair costs for all cases over thirty years changes the outcome as shown in Figure 3. Total WLC excluding fuel Case 1 Storage Heaters Case 2 ASHP Case 3 District Heating Figure 3 Whole life costs excluding fuel Low-rise retrofit Introduction He we look at the case for an EnerPHit retrofit as opposed to a more traditional approach to retrofit for a low-rise block of flats. The existing building The existing building is a flat-roof, three-story block of six flats, with 70m 2 floor area for each two bedroomed flats. The flats were built in the 1960s using the Bryant wall frame system and the windows were replaced in the 1990s, these components are estimated to have the following U- values: Component Description U-value (W/m 2 K) Roof Reinforced concrete, 25mm EPS 1.2 Walls (front and back façade) Concrete, 25mm EPS, Brickwork 1.0 Walls (gable ends) Brickwork 2.0 Floor Concrete 3.6 Windows 1990 upvc Double Glazed 2.9 (installed) Retrofit levels EnerPHit is considered an extreme retrofit and is well defined by the Passivhaus Institute, although there are different methods of achieving this standard (see information box on page 2). We have chosen two other retrofit levels: Retrofit Plus which assumes retrofit of the roof, walls and windows all at the same time, and a more typical peicemeal retrofit with different building elements upgraded at different times over the buildings lifetime. For the last two, the energy efficiency of the retrofits will be to current building regulations (to part L1b). 5 encraft.co.uk

6 WLCA: Whole-life Costing Analysis for Passivhaus Retrofit Case Type Description 1 EnerPHit Timber frame wrap around solution, Mechanical Ventilation with Heat Recovery, Triple glazed upvc windows (all replaced in year 0), existing gas heating system. 2 Retrofit Plus 3 Piecemeal Retrofit External wall insulation system, flat roof insulation system, double glazed upvc windows (all replaced in year 0), trickle/extract ventilation, existing gas heating system External wall insulation system (year 0), glazed upvc windows (year 5), flat roof insulation system (year 10), trickle/extract ventilation and existing gas heating system Maintenance and repair Each retrofit has a different maintenance and repair profile depending on the technologies used in the building (see summary table above). As with any Whole Life Costing exercise, only those maintenance and repair costs that differ between each case were modelled. The replacement or repair intervals are summarised below for each technology. MVHR filter change - 6 months MVHR replacement parts years Extract fan replacement - 10 years Boiler replacement years Window replacement - 30 years General assumptions and notes Boilers in an EnerPHit retrofit will only need to be replaced every 15 years on average with much lower use, compared with the CIBSE quoted lifetime of 10 years for a conventional retrofit. Window replacement is the same interval for all retrofits, however the costs of the latest low-energy triple glazing units will always be higher than the equivalent building regulations units. The time period over which Whole Life Costs are analysed is 60 years. This is considered to be the expected additional lifetime of the building once retrofit. Tax has been excluded on all costs since tax rates are not known for the next 60 years 6 encraft.co.uk

7 Whole life costs (Net Present Value) Thousands WLCA: Whole-life Costing Analysis for Passivhaus Retrofit DECCs central fuel price forecast has been used for the next 15 years, with a similar annual % rise for the remaining 45 years. Results The results depend on the assumptions made about the different types of retrofit. We shall look in more detail at two scenarios where the whole life costs for the EnerPHit retrofit are the most and least favourable compared with other two retrofits (cases 2 and 3). Scenario 1: EnerPHit best case WLC CASE 1 EnerPHit retrofit NPV Energy bills CASE 2 Retrofit Plus NPV Maintenance & repairs Capital cost Figure 4 EnerPHit best case WLC compared with traditional retrofit approaches CASE 3 Piecemeal retrofit Scenario 1: EnerPHit retrofit has a WLC that is 3% more than the Retrofit Plus and 4% more than the Piecemeal retrofit as can be seen in Figure 4. Using the DECC high fuel price forecast (and extrapolating to 60 years) brings the whole life cost of the EnerPHit retrofit slightly under the other two more traditional approaches. Two major assumptions have been made in this scenario. Firstly, Building fabric maintenance and repair is an annual cost which is only applied to the non EnerpHit retrofits (Cases 2 and 3). These extra costs will include the management of residents complaints regarding mould and condensation, poor air quality and cold spots (caused by thermal bridges), and the treatment of any of these problems. A well designed and constructed EnerPHit retrofit will focus on the comfort of the residents and the quality of the build, so these problems are a lot less likely to occur. Secondly, a performance gap of 30% has been applied to the non-enerphit retrofits (Cases 2 and 3). This is the in-use performance factor for solid wall insulation on domestic retrofits taken from the Low Carbon Routemap for the UK Built Environment, 2013, Green Construction Board. Solid wall insulation is the retrofit element that contributes to the majority of the energy savings in the block of flats (compared with the new roof and windows). Scenario 2: In the worst case, the EnerPHit retrofit is around 21-22% more expensive over the 60 year lifetime than the traditional retrofits as can be seen in Figure 5. In this scenario there is no performance gap and no additional building fabric maintenance and repair costs for cases 2 and 3. 7 encraft.co.uk

8 Whole life costs (Net Present Value) Thousands WLCA: Whole-life Costing Analysis for Passivhaus Retrofit As expected, the results show that the energy bills are vastly reduced in the EnerPHit retrofit, even excluding the performance gap of 30%. For this block of 6 flats we would expect energy bills to be reduced by around 1000 per year per flat with an EnerPHit retrofit. Scenario 2: EnerPHit worst case WLC The whole-life maintenance and repair costs don t vary hugely between the EnerPHit retrofit and Case 2, Retrofit Plus, particularly when including the increased building fabric maintenance and repair costs as described in Scenario 1. The Piecemeal retrofit has far higher maintenance and repair costs as they include the window and roof replacement in years 5 and 10. Capital costs are significantly higher for the EnerPHit retrofit. This is because these type of extreme retrofits are treated like new-build projects. They require management by a main contractor, site prelims and management, and perhaps some element of architectural design work. The capital costs for the other two retrofits have assumed that a completely independent (and usually specialist) contractor will install each of the three insulating elements windows, roof and wall insulation. There is therefore little or no design work and coordination of the installation of the three elements. This type of approach can lead to a poorly performing building with insufficient ventilation and no treatment of cold bridges CASE 1 EnerPHit retrofit NPV Energy bills CASE 2 Retrofit Plus NPV Maintenance & repairs Capital cost CASE 3 Piecemeal retrofit Conclusion Extreme retrofits like EnerPHit can easily have a lower whole life cost for a high rise blocks of flats compared with more traditional retrofits. For low-rise flats this is not yet the case. More needs to be done to reduce the capital cost of EnerPHit retrofits, which is where projects funded by the Innovate UK Scaling Up Retrofit competition can help. Encraft s OWLs projects is one of these and our blog on the EnerPHit retrofit of a low-rise block of flats can be found at We also need to understand more about the scale performance gap in our traditional retrofits, as it is well documented that this is simply not present in the majority of Passivhaus and EnerPHit projects. This is perhaps due to the quality of build onsite, which can only be Figure 5 EnerPHit worst case WLC compared with traditional retrofit approaches 8 encraft.co.uk

9 WLCA: Whole-life Costing Analysis for Passivhaus Retrofit achieved with good design and management on site, neither of which are usually considered important in the UK when installing external wall insulation on a block of flats. Whole life costs can be of a huge benefit when trying to understand which elements of a retrofit will produce the highest savings. We have demonstrated an example where the type of heating system was in question for a high rise block of flats. It can easily be used to compare the whole life costs of any retrofit elements, helping landlords to understand where best to spend limited capital for maximum gain. Taking a step back from these specific examples of whole life-costs, it is clear that there are many other factors that will effect whether an extreme retrofit, like EnerPHit, is going to be appropriate in any given situation. For example: Is it really useful to include energy bill savings in whole life costs? A very business oriented attitude would simply ask if these savings could be recouped directly by the landlord. A more social attitude might look at the reduction in fuel poverty, the reduced cost of winter illness to the NHS, increased tenant satisfaction and the additional money released to in the local economy as a result of the retrofit. Some of these are easier to cost than others, and priorities must always clearly be set by each landlord. It may prove useful for landlords to think carefully about the type of data they are collecting (if any) on past retrofits to make this kind of analysis more relevant for future retrofit decisions. About the author Dr Sarah Price is a senior consultant at Encraft and Certified Passivhaus Consultant 9 encraft.co.uk