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Insulation scheme in doubt

An estimated 750,000 Kiwi houses lack adequate insulation. Yet the future of a popular scheme that helps homeowners install ceiling and under-floor insulation remains in doubt.

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Prime Minister John Key calls the Warm Up New Zealand scheme a success but isn't giving "any guarantees" that it will continue.

A review of the scheme estimates it's delivered small but "statistically significant" reductions in electricity use. The review, by researchers at Otago and Victoria universities and the consultancy firms Motu and Covec, estimates insulated houses use about 0.96 percent less electricity than uninsulated dwellings.

Saving on energy

Nationwide, the savings look more impressive. Insulation upgrades are estimated to have saved around $23 million in energy costs. However, these gains are partly offset by an increase in electricity use in households that installed a heat pump. On average, these households increased their electricity use by 1.9 percent a year.

Other research by BRANZ and the Centre for Research, Evaluation and Social Assessment has also found heat pumps increase electricity use because they're often replacing non-electric heat sources. The upside is that homes with these appliances are reported to have healthier living temperatures.

Lack of monitoring data meant the Warm Up New Zealand review wasn't able to conclude whether there were net benefits or net costs from subsidies to homeowners to install efficient heating. These subsidies were cut back earlier this year.

Health benefits

The review’s authors concluded the main benefits from the scheme were health-related. Small but "statistically significant" reductions were detected in hospitalisation and pharmaceutical costs in homes that had retrofitted insulation. A statistically significant reduction was also found in the mortality rate for those aged 65 or over who had previously been hospitalised with a circulatory-related illness. However, the review wasn't able to control for all variables that may have influenced these results.

The authors suggest greater gains may be achievable by targeting at-risk groups and low- and middle-income households. We've previously called for the government to place greater priority on improving insulation and heating in households most at risk from fuel poverty.

Given many at-risk households are likely to be renters, there's a strong case for targeting this sector. So far, only 11 percent of available insulation grants have gone to landlords.

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