Retrofit for Purpose? A Transaction Cost Analysis of Policy Delivery Constraints in the Home-Energy Retrofit Sector

A considerable body of literature argues that energy efficiency upgrades through the retrofit of dwellings have the potential to reduce the environmental impact of the residential built environment. Several countries have set policy objectives targeting energy efficiency improvements across their housing stock, with European Union member states at the forefront of such commitments. However, many national contexts present a particularly challenging pathway to fulfilling such retrofit targets. Ireland represents such a case, where several constraints to delivering 500,000 deep energy retrofits in the residential sector by 2030 are evident. Furthermore, existing programmes incentivising retrofit in Ireland, as in other jurisdictions, have experienced disappointing levels of uptake thus far. For homeowners, a range of barriers are evident that may discourage their engagement with such programmes, including transaction costs. However, consideration for the links between scheme compliance criteria and specific transaction costs, as well as such costs acting as a barrier for the supply-side and contractor engagement, appear sparse. This thesis synthesises international evidence for transaction costs as barriers to retrofit uptake. It then builds on this evidence through a national case study of transaction costs in Irish home-energy retrofit programmes, including field research, that emphasises the under-researched perspective of contractors and their engagement to support ambitious retrofit targets. Perspectives on transaction costs associated with engagement in the Irish home-energy retrofit market are analysed. Results indicate that a significant constraint on the delivery of long-term retrofit targets is presented by transaction costs. In particular, the impact of these costs on market capacity for retrofit services supply appears poorly considered from a policy context. Strikingly, strong indications are provided that the costs of conducting home-energy retrofits through publicly administered schemes for contractors far outweigh those associated with alternative renovation works. From a commercial value perspective of scaled-up retrofit delivery this appears to suggest that, without targeted intervention to reduce the transaction costs associated with contractor engagement, Ireland’s policy objectives for retrofit are unlikely to be delivered in a timely and cost-effective manner.