SAP Targets and Affordability in Social Housing

SAP targets and affordability in social housing

Dr Bill Wilkinson of The Energy Audit Company and David Pickles OBE of Newark & Sherwood Energy Agency describe some of the conclusions from their European co-funded project “Awareness Programme for Policymakers of Energy Efficiency in Low Income Housing”

A valuable opportunity was lost to set minimum energy standards for social housing in England through Decent Homes, although Wales and Scotland now have minimum SAP targets. NEA have suggested that a SAP of 65 is reasonable and that a SAP of 70 is desirable for England. Warm Front 2 now has a SAP target of 65 ‘where practicable’.

Energy Audit Company has used a SAP of 50, with local authorities and housing associations, as a basic minimum target for affordability for over 5 years. As part of the APPEEL project we have developed a SAP based approach to affordability for other social landlords, as a tool for targeting improvements.

But what are the effects of setting SAP targets in terms of affordable warmth and how they might be used to evaluate future affordability at a time when both the rate of energy improvements and fuel prices are rising ?

Although figures are slightly out of date, it has been suggested that only 12% of local authority homes achieve a SAP of 65. SAP ratings are increasing year on year however. 74% of Newark and Sherwood housing stock achieves this level. Building Regulations now ensure that many homes automatically meet the standard when the heating or glazing is replaced. In addition any remaining unfilled cavity walls will be treated in the next year or so, since this is now mostly 100% funded under EEC2. Loft insulation levels are being increased at the same time, and the effect of increased funding through ALMOs and Large Scale Voluntary Stock Transfers has been to accelerate the fitting of much better double glazing and high efficiency central heating.

Essentially semi detached houses have the largest heat losses in social housing, since there are very few detached properties (only 1% in Newark and Sherwood, mainly smaller bungalows). Terraced houses and flats built to the same insulation and heating standards will have higher SAP ratings.

In the example below the NHER Evaluator program has been used to calculate SAP ratings and running costs for a semi with 80 m2 total floor area, single glazing, and some heating and insulation variants. A small percentage of homes will have lower SAP ratings than this, for instance where the upper storey is built partly in the roof space and the roof cannot be insulated easily and will require one off solutions.

SAP Rating

Old gas

New gas

This standard house type with an older gas central heating system and inadequate controls but with good roof insulation (U-value 0.16) and cavity fill will meet the standard (SAP of 67). Eventually a condensing boiler and new glazing will result in the SAP increasing from 67 to 91.

For solid walled houses with gas heating a condensing boiler is needed to reach the SAP target of 65 if the house is single glazed. For non gas properties where the walls are not insulated (hard to treat) the SAP of 65 could only be achieved in houses by having efficient oil heating or a community heating scheme where appropriate. However electrically heated flats with solid walls and double glazing may have SAP ratings above 65 .

Can we use SAP as a proxy for fuel bills and affordability?

The SAP label is related to the cost of space and water heating only, and is not intended as a guide to overall running costs. However the BREDEM 12 calculation as used in the NHER and several other commercial programs can be used to calculate total running costs and there is good correlation between SAP and overall running costs if we fix the property size, location, and occupancy.

Newark and Sherwood District Council have for many years used the concept of classifying homes as capable of delivering affordable energy (CODAE). The definition of affordability is based on a household of one person aged over 60 on minimum income with 16 hours heating. Each year Energy Audit Company update the UNO energy database and recalculate running costs for all 6,000 homes using up to date fuel prices. The running costs are compared with 10% of minimum income of a vulnerable household to identify where properties are not affordable.

It should be noted that the level of energy data used here is considerably better than usually found (Level ‘0’) in housing stock analysis and includes dimensional data and boiler efficiencies for instance. Our experience suggests that using Level ‘0’ data only, underestimates the SAP ratings by 5 or 6 points where modern boilers are fitted.

We have now simplified this approach using SAP targets correlated to running costs as part of our work on the EU funded APPEEL project, and suggest that it could be applied relatively easily to other housing providers.

What about under occupancy?

The effect of one person occupying a house that is too large (under occupied) is often cited as a cause of fuel poverty. However in social housing the upper range of property size is generally restricted compared to higher income owner occupied houses. For Newark and Sherwood the average floor area is 71 m2, with only 2.3% having a floor area over 100 m2. The mean floor area for 3 bed and larger houses is 87 m2.

The 80m2 floor area assumed in our calculation may seem on the large side for a single person, but would not be uncommon where one person remains in what was formerly the family home, and increasing it by another 10 m2 would drive up the target SAP by only one point.

Fuel costs

We use a typical “best deal” tariff for both gas and electricity with a low standing charge. Several other suppliers’ tariffs give results that are within £30 a year of this for a medium user (20,000 kWh for gas and 2500 kWh for electricity).

Location factors (region of England or Wales) obviously affect running costs and to accurately reflect this the minimum SAP would have to vary over the country. A SAP of 60 would be adequate for most of the country although the North East would need a SAP of 65. If 60 were adopted as a national target the North East and Borders would have running costs that were around 10% higher than the affordable target. The warmer South West would have running costs more than 10% under.

Running costs for

1 Home counties

2 South East

Applying the SAP target to Newark and Sherwood housing shows that the

percentage CODAE in 2004 was 88.4%, rising to 90.6% in 2005.

Effect of fuel price increases vs improvements

The SAP calculation is normally changed every 3 years, and at this point relative fuel prices will affect the result. For instance the price of heating oil has increased much more rapidly in the last year than gas prices. Fuel prices overall now seem likely to increase relative to benefits, although in the past few years falling fuel prices have contributed to the reported fall in the numbers in fuel poverty. Some degree of future proofing is obviously needed to cope with the uncertainty although improvements in the energy efficiency of the housing stock may offset some or all of the price rises.

For Newark and Sherwood the cavity wall insulation programme was completed some years ago, with the main improvements carried out now being Grade A boilers and high performance double glazing. Lofts are being topped up under EEC2. As a result of additional finance available for the ALMO, Sherwood Homes, plans are also being drawn up to insulate the remaining system built and solid walls. As a result SAP ratings increase to a minimum of 80 and an average of 94. Up to 30% of the housing will then meet the current Building Regulations in terms of thermal performance.

Currently around 9% of the housing stock would not be affordable for a single person over 60 household on minimum income. If prices of gas and electricity rose by 10% relative to benefits, with no increase in energy efficiency, the minimum SAP would need to rise to 66. The SAP needed to cope with fuel price increases (relative to minimum incomes) is shown in the Table below, compared to the percentage of the housing stock that meets the target now, and when the energy efficiency improvements have been completed.

Even with an increase of 50% in fuel prices the 2020 standard will ensure that 99% of homes would still be affordable on the CODAE definition.

SAP needed to cope with fuel price increases

Setting a basic SAP target of 60 for social housing is therefore a straightforward way to ensure affordability on current fuel prices on the CODAE definition. Adjusting for Degree Day region and if necessary for larger floor areas, would also be straightforward.

Average SAP ratings are already used for performance measurement (BVPI 63), and similar profiles to the above are produced from a number of commercial energy database programs. Reporting on the number of homes below the target could therefore become a local or national performance indicator for affordability without requiring much additional work.

Accurate SAP data will be needed for each home when the Energy Performance of Building Directive (EPBD) comes into force in any case. However the accuracy of the information needed for the SAP calculation may well need to be improved on in many cases.

Dr Bill Wilkinson, Energy Audit Company.

David Pickles OBE, Newark & Sherwood Energy Agency.