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Warm Homes Technical Report: Social Drivers

Executive Summary

1 Introduction

2 Home Heating and Energy Efficiency in New Zealand

3 Home Heating Social Drivers

4 Energy Efficiency Social Drivers

5 Programme Participation Social Drivers

Appendix: List of Key Informant Interviews

References

2 Home Heating and Energy Efficiency in New Zealand

2.1 Overview

Residential energy supply and use

Traditionally, home heating has been provided by burning things - initially using self-collected wood and other bio-fuels and waste, then expanding to commercial fuels, primarily coal. Individual room heating was the norm, using open fires. The introduction of coal ranges enabled room heating, cooking and hot water in a single unit, and coal ranges provided the primary form of home heating in many New Zealand homes for decades.

Solid fuels predominated as the source for home heating through the first half of the 20th century. Change occurred largely through the commercialisation and application of new technology that made new energy sources available.

• Manufactured gas became available in most urban centres by the early part of the century, although it was used mainly for cooking rather than heating.
• Electricity started to become more widely available from the 1930s, coinciding with the development of major hydro-electric schemes in the North and South Islands, and expansion of supply networks. But it was not until the completion of large new stations in the late 1950s (eg, the Roxburgh and Waikato River stations) that electricity became available with reliability and at a price that saw it making inroads into the home heating market.
• By the end of the 1960s natural gas was available, primarily from the Kapuni field, and the reticulation network was expanded through the North Island. Gas distribution was further boosted from the 1980s by supplies from the Maui field.

Hence, by the late 1960s the predominance of solid fuels for home heating was being challenged by the much greater availability of alternatives - alternatives that offered flexibility, flick-of-the-switch responsiveness, convenience and cleanliness. By 1971/72, for example, while about 70% of houses were still using solid fuels for all or some of their heating, electricity was being used in 54% of homes for all or some household heating, with 30% being heated by electricity alone (New Zealand Department of Statistics, 1973).

The prominence of electricity for home heating in New Zealand - unique when compared with other countries - was initially driven by early power station development and expansion of the distribution network. Thus began the cycle of surplus/promotion of electricity for home heating, followed by shortages and pleas for restraint as demand outstripped supply, which has continued more or less to the present day. Also, electricity prices fell in real terms over the 1950s and 1960s, further encouraging growth in use. In part, low electricity prices were due to a tendency to price electricity for domestic consumers lower than for other users - a feature that lasted until the pricing re-adjustments of the 1990s. Even so, average residential electricity prices in New Zealand are still some of the lowest in the industrialised world - comparable with Australia and the US, and about 60% of the price paid by European consumers (MED, 2004).

House design

House design was also changing. Turn-of-the century Victorian villas, many of which still exist today, were generally closed against the sun (both for architectural style and to protect the furniture), and were oriented towards the street frontage (Lloyd-Jenkins, 2004). Inherently they were cold houses. By the middle of the century, under the influences of international design and local architects/designers seeking an indigenous New Zealand identity, lightweight timber designs predominated. Houses were designed with more windows, greater light and sun access, indoor–outdoor flow, etc. This allowed the sun (and heat) in, but did nothing towards retaining heat: houses were still inherently poorly insulated.

Insulation was incorporated into houses for the first time from the late 1950s. When local manufacturing of glass fibre began in the early 1960s, increased marketing and promotional effort by the manufacturer led to much greater interest in using insulation both for new houses and for retrofitting into existing houses (Isaacs, 1993). However, it was not until 1978 that insulation was made mandatory for all new homes.

Over one-third of the current housing stock has been constructed since insulation standards were introduced, with a further 40% of houses having some insulation retrofitted, primarily in ceilings. [The national survey reported by Ministry for the Environment (2005) indicated that 71% of homes had ceiling insulation, while a further 7% of respondents didn't know whether there was any insulation installed. As expected, the survey indicated a lower incidence of other forms of insulation: 50% for walls, 22% for floors (this number is difficult to interpret because in theory all post-1978 houses, about 35% of the total, should meet an insulation standard for floors, but it is likely that many householders with slab-on-ground concrete floors would not classify them as being insulated) and 10% for double glazing.] This suggests that at least 0.5 million houses still have no, or only partial/sub-standard, ceiling insulation, with higher numbers lacking wall and floor insulation. Note that quite a lot of the current insulation retrofit market caters for re-insulating over the top of old/ ineffectual existing insulation.

2.2 Recent home heating trends

Heating appliance availability

This section outlines a high-level trends analysis of home heating over the past 20 years. The main source of information is the Household Economic Surveys (previously known as the Household Expenditure Survey); the latest data are from the 2003/04 survey. The core information provided is a tally of the heating appliances available for use in the household - currently collected under 10 categories. The survey cannot provide information on whether any appliance was actually used in the last year, or the extent of that use. Supplementary information sources have been used to help interpret the survey trends. [Other key sources are: (a) New Zealand Population Census - the latest information available is from the 2001 Census. The core information provided is thetype of fuel used to heat the dwelling. Seven fuel types are specified, but the Census cannot provide information on the extent of fuel use, or the relative importance of one fuel type over another (when multiple fuels are used); (b) Survey of home heating methods and fuels 2004 (Ministry for the Environment, 2005). This survey was undertaken as part of the Warm Homes project, and is a one-off 'snapshot' of heating appliance and fuel use in themain living areasof homes; (c) BRANZ - various reports of the Household Energy End-use Project (HEEP).]

Appliance numbers and percent of households, covering a two-decade period, are shown in Table 2.1. Based on comparison with other surveys, the main area of divergence between availability and use of appliances is:

• open fires - only about half the households having open fires available appear to use them on any regular basis
• portable gas heaters - up to a quarter of households have a portable gas heater only for emergencies or as back-up.

Table 2.1: Heating appliance availability

View heating appliance availability (large table).

Key observations from these trends, categorised by heating type, are as follows.

Solid-fuel burning

Over the past two decades the number of households with solid-fuel appliances available has remained virtually unchanged. The decline in open fires has been largely compensated for by an increased number of houses with wood/multi-fuel burners, which are now available in almost 500,000 households across the country.

There are a number of reasons why solid-fuel heating continues to be attractive to householders, including a love affair with burning / the flame effect and feelings of cosiness, the ability to gather one's own wood, wetbacks used for water heating, perceptions of the high cost and unreliability of electricity and gas, and the ability of wood burners to heat large areas of the house (and to higher temperatures). The introduction of pellet-fuel burners potentially represents a new generation of solid-fuel heating by providing convenience and controllability that begin to match those of electricity and gas appliances.

There are large regional differences in solid-fuel burning throughout the country, ranging from 32% in Auckland to over 75% on the West Coast of the South Island (Figure 2.1). [Note that wood is used here as a proxy for all solid fuels (including coal), because virtually all households that burn coal also burn wood.] However, a better explanation is provided by segregating urban from rural, and North Island from South Island (Figure 2.2). Solid-fuel burning also confers benefits for the electricity system in that New Zealand would experience much higher winter peak loads on the network if there were not the extent of solid-fuel burning there currently is.

Electricity

Although the number of households using portable electric heaters is still growing, the trends suggest a declining market share since the mid-1980s. Many portable electric heaters are used for instant/spot heating, and portable gas heaters have captured some of this market.

Fixed-in-place electric systems have continued to increase, however. Night-store heaters were originally promoted as a means of utilising cheaper, off-peak electricity (ie, supplier push), but suffer from lack of flexibility and control. Also, night-rate tariffs are generally not as low (relative to day rates) as they were. Most of the appliance growth over the last 5 to 10 years has been in heat pumps, now estimated to be in about 12% of houses (Ministry for the Environment, 2005). This represents a very rapid growth rate.

The 2001 Census indicated that 25% of households used electricity as the sole form of heating. This is lower than in 1971/72, when it was found that 30% of households used electricity alone for heating (New Zealand Department of Statistics, 1973).

Gas

There has been a very large increase in the availability and use of portable gas heaters over the past 15 years. This type of heater has largely replaced kerosene heaters; as noted, they also appear to have moved into the market previously occupied by portable electric heaters. Much of the use of portable gas heaters is for spot heating, heat boosting or emergency use, and in conjunction with other sources (mainly electricity and wood). In 2001 portable gas heaters were the only heating method in 71,000 (about 5%) households. [Population Census 2001, Statistics New Zealand.]

Fixed-in-place gas heaters showed a small increase over the past few years, but their market share appears to be levelling off or in decline. The previous increase in mains gas connections also appears to have levelled off. Possible reasons for this include cost (because of the level of fixed charges, gas can be relatively costly for home heating if not also used for water heating and cooking), a perception of gas supply unreliability, and because of industry restructuring and splitting of incentives between industry players. [Key informant (KI) interview: Gas Industry Association.]

Central heating

Despite decades of availability, central heating is installed in only a minority of homes. Although central heating has typically not been the New Zealand way, industry sources suggest that it may be a significant growth area over the next decade as increasing numbers of people determine to heat their homes to the levels experienced in their working conditions (eg, in offices), and in their exposure to home heating levels in the northern hemisphere.

The influence of tenure

Tenure is one reason for observed differences in heating characteristics (Table 2.2).

Table 2.2: Appliance availability, by tenure, 2003/04

Source: Household Economic Survey 2003/04, Statistics New Zealand.

Following are the key points to note from Table 2.2.

• Rental houses show a consistently lower availability of heating appliances, especially more capital-intensive fixed-in-place appliances such as fixed electric heating, fixed gas heaters, wood burners and central heating.
• Rental houses have the highest proportion of open fire availability.
• The two categories of owner–occupier houses show similar patterns of appliance availability, the largest difference being the higher ownership of electric heating for those without a mortgage. This may largely reflect a strong weighting of elderly/retired people in these houses, where electricity is often the preferred heating source because of lifestyle, convenience and safety factors.

2.3 Warmth and temperatures

Overview

Two reasonably comprehensive national snapshots of indoor temperatures exist: the 1971/72 Household Electricity Survey, and the Household Energy End-use Project (HEEP) monitoring over the past seven years. Other measurement has been carried out through the Housing Insulation and Health Study (Howden-Chapman, 2004), monitoring of public housing upgrades in Dunedin, Invercargill and Gore (Shen and Lloyd, 2004), and a survey of private rental housing in Dunedin in 2004 (Povey, 2005), which help to complement the national picture. Comparison of the early 1970s survey and the latest HEEP monitoring suggests there has not been much change in average temperatures over that time (Table 2.3).

Table 2.3: Comparative living-room temperatures, August–September period, 1971/72 and 1990s–2003

Source: BRANZ, 2003.

The monitoring of public housing in the south of the South Island in 2003 showed average living-room temperature in the coldest month (July) to be about 13°C, representing a temperature differential between the outside ambient temperature of about 6.5°C. Monitoring of bedrooms shows average temperatures consistently 2.5–3°C lower than in living areas (and typically only 3–4°C above ambient) (Shen and Lloyd, 2004; BRANZ, 2003).

Effect of heating appliance

HEEP monitoring has found that the type of heater used has a marked effect on temperatures in the main living area. Solid-fuel and centrally heated rooms on average were 1.5–2°C warmer than rooms heated by portable electric or LPG heaters (Table 2.4).

Table 2.4: Winter living-room evening temperatures, by main heater type

Source: BRANZ 2003, Year 7 HEEP Report.

These results also provide insights into why many households might be reluctant to relinquish wood burners: wood burners on average provide higher levels of home heating compared to electric or gas appliances. The reasons for this are likely to be mostly a combination of lower costs for wood heating and higher appliance heat outputs.

Effect of insulation

Several recent studies present reasonably consistent findings on the effect of insulation on warmth and temperatures in homes.

• In the HEEP study, post-1978 houses (all meeting the insulation code for ceiling, walls and floor) were on average 1°C warmer than pre-1978 houses (which are insulated to various levels) (BRANZ, 2003).
• Insulation provided about a 1–1.5°C lift in average temperatures in monitoring carried out as part of the Housing Insulation and Health study. In addition, first-year energy savings averaged about 19%. [Data provided by the WSMHS study team.]
• Insulation provided about a 0.5°C lift in living rooms and about a 0.7 °C lift in bedrooms in the southern South Island public housing study, while first-year electricity use was reduced by about 13% (Shen and Lloyd, 2004).

Overall, these results indicate that:

• better insulation yields benefits in indoor temperatures
• people appear to realise the benefits of insulation through a combination of warmer homes and energy savings
• although insulation provides health benefits, the temperature lift from retrofit insulation alone is generally insufficient to meet indoor temperatures prescribed by the WHO.

2.4 Energy affordability

Average expenditure on fuel and power by households (in 2003/04) [From the Household Economic Survey 2003/04. Note that 'fuel and power' expenditure relates to all energy expenditure for operating the household and so includes energy used for hot water, lighting, cooking, etc. The data do not account for non-commercial energy sources such as self-collected wood.] indicated reasonable consistency across all income groupings (eg, increasing by less than 50% from decile 1 though to 9) (Figure 2.3). This provides an indication of the basic needs for energy services across all household types.

In relation to income, fuel and power expenditure averaged over 8% of income for the lowest decile group, and 1–2% of income for the higher decile groups. The main implication of these numbers is the likely severe lack of disposable income in low-income households that would be available to be invested in new heating appliances or energy upgrades. Note, though, that the HEEP study suggests it is not always the case that low expenditure on home heating is associated with low household income: some high-income families choose to live in cold conditions.

2.5 Key points

Following are some key points relating to the framework used in this study.

Influences within the individual's immediate, day-to-day circumstances

• There is a strong retention of solid-fuel burning among New Zealanders, driven by a variety of reasons, including retaining access to local fuel sources, concerns about the cost and reliability of gas, and the attraction of the flame effect. Also, houses with wood burners are warmer overall.
• Life style and convenience factors have seen a steady movement towards heating systems that provide instant heat, flick-of-the-switch, availability, etc.
• There is still a strong retention of electrical heating in certain market segments, and strong growth in the use of heat pumps.
• The very large increase in portable gas heater availability reflects home heating behaviours by large groups of New Zealanders: avoiding the risk of relying on a single heating source, and preferring heating that is cheap to purchase, has single room capability, is capable of quick heating, is easy to control, and has low running costs.
• A very strong tradition of individual room heating continues to this day, although expectations are developing for a greater level of home heating based on people's exposure to warmer conditions experienced elsewhere.
• Proximity to energy sources is a major driver for many households, including access to gas from the North Island piped network, access to 'free' or self-collected wood (more available in rural centres and rural areas), and access to local coal supplies (West Coast and Southland). Proximity is often an attractive driver because of cost considerations (eg, perception of low cost if the wood is self-collected).

Influences from the public policy environment

• Low electricity prices encouraged high levels of electric heating changeovers during the 1960s and 1970s.

The orientation of home heating and related commercial services

• New technology advances and product commercialisation have been (and continue to be) major drivers of change within the home heating market.

2.6 Conclusions

Many New Zealand homes are not 'warm homes'. Despite advances in technology, housing improvements, etc., indoor temperatures in houses today on average do not appear to be noticeably warmer than 30 years ago. Insulation has been shown to provide measurable benefits, but on its own does not provide sufficient temperature rise to guarantee a 'warm home'.