State should consider fund to cover the costs of retro-fitting homes in energy efficiency drive
THE Government should consider a special investment fund to cover the cost of homeowners 'retro-fitting' their houses to make them more energy efficient.
Former Irish ambassador and head of the IIEA European thinktank Daithi O Ceallaigh urged the idea at a conference on the retro-fitting plan in Croke Park yesterday.
"Options to encourage the creation of a funding stream from savings, or indeed to encourage direct retro-fit investment in one's own building, should be explored," Mr O Ceallaigh said.
"This may be the key to driving take-up of deep retro-fit among the crucial group of early adopters and thus get things moving in the market."
Older people might well use their own savings to insulate their homes, especially with some financial incentive from the State, he said.
"The 55-plus age group has the highest level of private savings and the lowest rate of borrowings. Spending on home improvements seems to be a priority for this group and survey data shows they tend to invest more in retro-fitting their homes."
Mr O Ceallaigh said the 2001 Special Savings Incentive Account (SSIA), which attracted €16bn in deposits over a five-year period, topped up with a tax credit, could provide an example.
"The success of the scheme illustrates two important principles in creating a fund from savings: a capital guarantee and an attractive rate of return," he said.
"Research conducted for the Thinking Deeper report on the project shows that the idea of creating a fund for home retro-fit created from private savings has support from homeowners.
"A key advantage of this type of proposal is that it provides access to a significant pool of capital without recourse to international money markets.
"The cost to government of seeding such a fund might be offset, to some degree, by increased DIRT and increased Exchequer returns."
The report says work to improve the energy efficiency of buildings through retro-fit has been a rare source of growth for the construction industry, with some 3,000 jobs being created.
The Home Energy Savings scheme run by the Sustainable Energy Authority of Ireland (SEAI) has worked on 115,000 households, at a cost of €400m.
Grants for retro-fitting are due to be phased out by 2014 and the search is on for alternatives to Exchequer funding.
The joint report, by the IIEA (Institute of International and European Affairs) and the SEAI, says banks and institutional investors are uncomfortable with lending for extensive residential retrofit in the absence of an established track record demonstrating the value of these investments.
Householders are also reluctant to invest, due to issues around length of tenure, financing and lack of information regarding suitable energy saving measures, and financing issues.They generally do not consider borrowing to invest in home retrofit and nearly all upgrades are funded from savings, the report finds.