The government’s target of an 80% reduction in carbon emissions by 2050 means that housebuilders need to implement changes, starting now. But with so many ways to reduce emissions in new and existing homes, how do you decide which regulations to follow?

How to green the existing housing stock has become a hot topic within the past few years. Much ink has been spilled on the merits of Passivhaus standards, whether the Decent Homes initiative was a missed opportunity and whether the Green Deal can really work. But the big question remains: how much should be spent on improving an existing home? Should we restrict ourselves to a few “quick wins” such as topping up roof insulation and putting in some low-energy light bulbs or go the whole hog with a Passivhaus refurbishment? How much do these two approaches really cost and how long does it take to recoup the capital expenditure?

Marion Baeli, architect associate at Paul Davis + Partners, is someone who can answer this question. She has carried out a study that compares two identical houses in Princedale Road in London’s Holland Park. These are Victorian terraced homes with hard-to-treat solid brick walls. Finding out the best way to improve the 4.8 million like these in the UK is important if the country is to meet its target of reducing carbon emissions by 80% by 2050.

Owner Octavia Housing Association has brought number 100 up to Passivhaus standards and next door, number 102, up to the far less onerous Decent Homes standard. But what was done to each home, how much did it cost and how long will it take to recoup the money?

The Passivhaus refurbishment

The four-storey house had not been touched for more than 50 years and was in need of extensive repairs. It comprises three bedrooms, a kitchen and a sitting room. The house needed rewiring, replumbing, new kitchens and bathrooms and associated drainage as part of the works.

The strategy for the retrofit put together by Octavia Housing, architect Paul Davis + Partners, Ryder strategies, Green Tomato and Eight Associates is based on the introduction of new material and technologies within the external skin of the existing building.

All internal elements were stripped out and the building envelope internally insulated with an unbroken layer of 200 mm of polyurethane insulation boards. This layer also extended under the lower ground floor. The airtight barrier consists of OSB board sandwiched between the two layers of insulation.

In order to deal with problems of airtightness connections, thermal bridging and condensation at floor junctions, the timber floor joists were hung inside the thermal envelope and are now supported by new steel beams, which themselves rest in insulated pockets within the party walls. Because the steel beams were integral to the energy efficiency strategy, these will be included in the costs in the same way as new joist hangers will be included in the other project costs analysis.

Windows and external doors are all replaced with new triple-glazed sash windows and new insulated timber doors. The prototype nature of these items is reflected in the price figure.

Measures on the services include: mechanical ventilation with heat recovery unit (MVHR) and corresponding extract and fresh air supply ductwork. This particular MVHR unit also incorporates a 200-litre hot water cylinder, an immersion heater and a small air source heat pump all in one unit, three solar thermal panels connected to an additional 300 litre hot water cylinder and the MVHR. The special feature of this project is the inclusion of a labyrinthine underground heat exchanger below the lower ground floor slab. The stable temperature of the ground will pre-cool fresh air in the summer and pre-heat it in the winter.

Passivhaus refurbishment

How much did the work cost?

  • Wall insulation: £10,892 + new steels: £12,785 = £23,676
  • Roof insulation: £1,554
  • Windows and doors: £32,007
  • Services: £30,240.

Total for energy saving measures: £87,477
Total cost of refurbishment: £178,290

Effect of intervention

Bills before refurbishment:

  • Energy needed: 21,410kWh/yr
  • Heating: £1,860
  • Appliances: £220

Total: £2,080

Bills after refurbishment:

  • Energy needed: 1,700kWh/wyr (92% reduction)
  • Heating: £177
  • Appliances: £220

Total: £397

Payback period

  • If energy prices don’t increase (based on 2005 prices): 59 years
  • Energy prices increase by 5% a year: 26 years
  • Energy prices increase by 10% a year: 18 year

The Decent Homes refurbishment

This home was nearly identical to its neighbour, except it was refurbished less than 10 years ago, so the internal fabric was in good condition. Octavia Housing worked with Mears on the advice of Pellings.

The strategy for the Decent Home refurbishment is a modest enhancement of the energy efficiency of the building fabric and the renewal of the services. The internal fabric of the house in this case was entirely retained in place. None of the cold bridges (joists into external walls) were addressed and no airtight layers were installed.

The measures on the building fabric included: new roof insulation; new minimal internal wall insulation using plasterboard with 50 mm of insulation; new secondary glazing to all windows; draught-proofing and repairs to all existing windows.

Ventilation is taken care of by existing extract fans. A new boiler was installed.

Decent Homes refurbishment

How much did the work cost?

  • Roof insulation: £405
  • Internal wall insulation with insulated plasterboards: £1,308
  • Secondary glazing to all windows: £7,476
  • Draught proofing and repairs to all existing windows: £331
  • Improving existing extract fans: £114
  • Install energy saving lamps: £22
  • Boiler: £3,418
  • Energy saving measures: £13,074

Total cost of refurbishment: £45,382

Effect of intervention

Bills before refurbishment

  • Energy needed: 21,110kWh/yr
  • Heating: £1,860
  • Appliances: £220

Total: £2,080

Bills after refurbishment

  • n Energy needed: 16,363kWh/yr(23% reduction)
  • n Heating: £1,432
  • n Appliances: £220

Total: £1,652

Payback period

  • If energy prices don’t increase (based on 2005 prices): 30 years
  • Energy prices increase by 5% a year: 18 years
  • Energy prices increase by 10% a year: 12 years

What does this mean for green refurbishment decision making?

In economic terms the case for both levels of refurbishment is weak, assuming energy prices stay static. However, this is unlikely given the 9.4% hike in gas prices at the end of last year and similar price leaps in 2008. The key question is: how much prices will go up long term? This is difficult to call. Energy regulator Ofgem modelled four different energy demand scenarios and predicted prices could rise by between 13% and 26% by 2020 with the possibility of price spikes of up to 60%, so 5% a year increase in the medium term isn’t an unrealistic assumption.

Based on these figures, the case for the Decent Homes refurbishment becomes more compelling, although a 26-year payback for the Passivhaus measures is on the cusp of viability. Once annual increases go beyond 5% - which they could do after 2020 - the case becomes stronger. Factor in other issues such as increased comfort and the case becomes more compelling still. But the strongest argument of all, the government’s 80% reduction in carbon emissions by 2050 aim, means there is only one option and that is deep green refurbishment along the lines of Passivhaus rather than Decent Homes.