Should we invest in retrofitting our home as pensioners?

Do you know if it is open to the over-70s to apply for the SEAI retrofit programme and the loan interest loans to pay for it? We are the ones most likely to need retrofits because we are living in the older houses.

Ms AO’G

Clearly, anyone can retrofit their homes if they choose to, but there are a number of factors to consider. Broadly, these fall into three separate areas: funding, access to incentives and is it worth your while in terms of how long it will take to see a return on your investment.

You are, of course, quite correct that old homes are the ones most likely to benefit from energy-related retrofits, but that still does not automatically mean this is the right decision for you.

Funding is fairly straightforward. Either you have the financial resources yourself, or you will have to borrow.

If it’s the latter, the first port of call would be PTSB which, for now, is the only one of the main Irish banks to have signed up for the low cost retrofit loan scheme.

It is offering loans at rates ranging from 4.55 per cent on sums up to €14,999 to 3.55 per cent for those borrowing between €50,000 and €75,000. That compares with a best rate of 6.4 per cent APR in the general market for personal loans up to €20,000 although An Post does offer a green loan rate of 4.9 per cent APR on sums of €20,000 to €75,000.

The big question, of course, is whether anyone will lend to a couple in their seventies.

PTSB say all the right things. “We assess all applications on a case-by-case basis to ensure customer affordability,” a spokeswoman told me, adding that a customer’s age or pension income would not preclude them from approval under the Strategic Banking Corporation of Ireland Home Energy Upgrade Loan Scheme.

Personally, I would not be counting my chickens – or commissioning work – until you were sure that PTSB looked favourably enough on your financial position to confirm a loan.

To be fair to them, at least they are in the market. Over two years after energy minister Éamon Ryan announced the low cost loan scheme, and six weeks after we were assured other lenders would be joining them in offering finance, PTSB remain the only bank offering low cost funding for retrofits.

How much you will save on the installation of solar panels is determined by a number of factors

Then there are the incentives. The Sustainable Energy Authority of Ireland (SEAI) offers a range of grant supports for people considering undertaking retrofit works – either a deep whole-of-house retrofit through a one-stop shop, or a step by step approach chosen by homeowners.

The benefits of the deep retrofit are that you get everything done at the same time through a registered contractor, and additional grant support is available over and above what you might qualify for under the step-by-step approach. It is not that the grants are higher for the same work, but just that other grants are available – for window replacement (up to €4,000) and rafter insulation (up to €3,000) among others. Full details are available on the SEAI website.

In each case, you need to make sure you have got grant approval for the work before starting, and be aware that grant offers are valid only for eight months from date of notification. By and large, your home will have to have been built before 2011 to qualify for grant-aided energy efficiency retrofitting though for heat pumps and solar thermal grants, it will qualify as long as it was built before 2021.

None of the SEAI schemes has an age cut-off, so that is certainly not a factor.

Solar

How much you will save on the installation of solar panels is determined by a number of factors – the amount of electricity you use, how much it costs, the cost of installing the panels minus any grant you can get and how much energy your panels will produce.

According to switcher.ie, a family of two or fewer people would be looking at installing around 3KW of solar panel. On the basis of a general rule of thumb that you can expect to pay between €1,500 and €2,000 per kilowatt installed, this will cost between €4,500 and €6,000 before grants.

Depending on panel size, which way your roof is facing and general weather conditions, it is estimated to save 2,600 kilowatt hours of energy, or roughly 60 per cent of a typical Irish family’s energy costs over a year.

Crunching the numbers on the SEAI on the basis that you are Dublin-based, placing the panels on a south-facing roof and where someone would be in the house most of the time (as is likely in our older years), it would take around nine years to make the money you have invested back. If those panels were on a north-facing roof, it would take 11 years.

The switcher.ie numbers suggest it could be less.

The SEAI will pay a grant of €800 per kilowatt up to two kilowatts and €250 per kilowatt thereafter. That means €1,600 for a 2kW install, €1,850 if you go for 3kW, and €2,100 for 4Kw or above. For reasons best known to themselves, this grant was cut from a previous maximum of €2,400 despite the Government policy of encouraging energy efficient investment by homeowners.

Those SEAI payback numbers do not include either the cost or the benefit to you of installing batteries for storage of the electricity you generate. The cost can vary from €4,000 to €8,000, I am told, a figure that could significantly change the payback time, not least as industry sources suggest you will likely need to replace your batter at least once during the lifespan of your panels.

On the flipside, if you have a smart meter, you can apply to sell any excess power back to the national grid, though you will doubtless not be surprised to learn that they will pay you noticeably less for your power than you are paying for theirs – around 60 per cent.

The more practical issue for you is whether you will benefit from any money you put into upgrading you home, given the payback periods

The good news is that you will not be taxed on the first €400 on money you make by selling power back to the grid after the Government doubled the tax free threshold in the last budget.

Most installers will guarantee panels for 25 years, and I am told they can reasonably be expected to last close to 30, so younger families certainly would have time to enjoy the savings. Whether a couple in their 70s would is more open to debate.

I should mention that you can also go the route of solar thermal, which uses the sunlight just to heat your water. It is less expensive to install but, I am told, it can be more finicky thereafter. Anyway, the SEAI will offer €1,200 toward the cost of installing it if you decide to go that way.

Attic insulation

Not everything takes as long to reward your investment. Increasing your attic insulation will cost between €1,700 and €2,500 for a fairly standard three or four-bedroom two-storey house. And you can expect to see a return on that within three years, experts say.

Bungalow owners can expect to pay more.

In terms of SEAI grants, you will get a grant of €1,500 for a detached house, €1,300 for a semi-detached or end of terrace home and €1,200 for a mid-terrace property. If relevant, apartment owners can get €800.

Wall insulation

How much it will cost to insulate your walls depends on the type of walls and the choices you make. Cavity block construction, which is more likely to be the case in modern homes, is the cheapest – costing anywhere from €600 to €1,700, I am told.

However, older homes are more likely to be solid block or hollow brick. Cavity insulation is not an option for such homes, and you are stuck with the option to dry line the walls internally or apply insulation to the external walls. This can multiply the cost of the same size property to somewhere between €6,000 and €10,000, or even more.

Which option you go for – or are limited to – will clearly affect the payback period.

Before you even start there, you need to consider a couple of other things: the state of the windows and any other spaces undermining energy efficiency (and therefore lower bills) such as chimneys which, again, will be more prevalent in older homes. Newer homes are now expected to be air-tight, which can bring its own problems, but that will not apply to you.

If you need to replace windows, it will generally involve a significant investment – how much depends on the number and style or windows you have and the type of replacement window technology you go for – and you can expect a long payback period.

On grant assistance, SEAI will pay €1,700 for a cavity wall insulation on a detached home, €1,200 for a semi-detached property, €800 for mid-terrace and €700 for an apartment.

For dry lining of inside walls, the maximum available is €4,500 for a detached home, moving down to €3,500, €2,000 and €1,500 for the other three property types.

If you are opting instead for external wall insulation, the relevant figures are €8,000, €6,000, €3,500 and €3,000.

Heat pump

Heat pumps essentially extract heat from outside your home – either from the air, from the ground or from nearby lakes or rivers – and use it to heat the air or the water inside your home.

In Ireland, pumps drawing heat from the air are more popular even though they are not as efficient as ground or water-based options in part because you need a sizeable garden for a ground pump and a large body of water nearby for a water pump. However, air-source pumps can still cut your energy bills in half, switcher.ie says. The alternatives will cut costs by about three-quarters.

Those savings come from the fact that you will no longer need to pay for gas or oil. Your electricity charge will actually increase slightly, as the cost of running these pumps can apparently run from €500 to €1,500 a year.

The pumps will be attached to the outside of your home, and you can expect to pay between €12,000 and €18,000 for an air source heat pump in an average three-bedroom home, compared to €17,000 to €28,000 for pumps sourcing heat from the ground or from water.

In terms of SEAI grant aid, you will get €3,500 if you are going for an air-sourced heat pump to heat your home. Any other heat pump will be in line for a grant of €6,500 for a house, or €4,500 for an apartment.

They will also pay €200 towards a technical assessment that is required for any property built before 2007 and elective for more recently-built homes.

The big question, of course, is whether anyone will lend to a couple in their seventies.

Even if you are not going down the heat pump route, you can get a grant of €700 to help defray the cost of updating your heating controls to a more efficient system.

The bottom line is that investing to make your home more energy efficient is clearly a “good thing” in these times where emissions are a pressing concern. It is also true that, apart from the savings on bills, improving the energy efficiency of your home will add to its value – though that is only an issue if you are looking to sell.

A somewhat dated ESRI report from 2014 found that a property would see its value increase by 1.3 per cent for every step of improvement along the BER chart. More recently, architect and housing policy analyst Mel Reynolds estimated that every euro spent in improving the energy efficiency of your home will add €2 to its value.

There is nothing in any of the eligibility criteria either for the programmes and related grants, or for the low cost loan that limits it to people of a certain age. But, as I mentioned, I expect people who are not still working might find it more difficult to secure loan support.

However, unless you are investing altruistically, the more practical issue for you is whether you will benefit from any money you put into upgrading your home given the payback periods. Or should you leave that exercise to the next owners?

Most people in their seventies still feel energetic and full of life, but the figures say that Irish men do not, on average, live beyond their early 80s or women beyond their mid-80s.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice