Tuesday, September 26, 2017

How to calculate economic return on loft insulation and energy consumption in developed world

    When we bought out house loft insulation had only 25 mm loft insulation thickness, with recommended 275-300 mm of fiberglass.  I decided to do put some more, while also use it as an opportunity to clean up the dusty loft (no storage there).
With the current insulation in winter our second floor was colder than first floor due to roof loft heating losses. Additionally, I was encouraged by perceived saving due to improved insulation.
      How to calculate economic effect from insulating your loft and any potential energy savings?
Previous insulation – 25 mm, new – 275 mm.  I decided to use mineral fiberglass insulation, although if I do it again I would use more expensive natural wool. Advantages of natural wool: it absorbs condensed water and then evaporates it, traps any gases and contamination (i.e. breathes), does not loses thickness when gets wet with condensed water.  Disadvantage: more expensive, perhaps more flammable.

Materials I used for the loft insulation:
Diall Loft insulation – 23 rolls - 290 GBP -3m2 per pack, coverage - 68m2.
Gardman Bubble Greenhouse Insulation - 6 rolls - 99 GBP (as a vapour barrier).
Knauf Eko Roll Loft Insulation – 14 rolls - 280 GBP – 5.5m2 per pack – coverage - 77m2.
Loft Vent Trays (plastic) – 40 pieces – 60 GBP.
Total cost:  730 GBP or 10.2 GBP/m2

      Additionally, I used this as an opportunity to apply some teak oil to the joists and the roof beams, to preserve and protect them - 20 L at 160 GBP. No installer will do that for you, unless you specifically ask and pay.
All together it took 5 days ~ 7-8 hrs each or 40 hrs.
 How I calculated the economic effect and return on the loft insulation:

Knauf Eko Roll Loft Insulation: thermal conductivity (W/m*K) – 0.044, thermal resistance (m2*K/W) – 4.83
Diall Loft insulation: thermal resistance (m2*K/W) – 2.27 (also known as R-value)

Roof area covered with insulation is 9m by 8m = 72 m2. 
Original U-value (W/m2*K). Thermal transmittance, also known as U-value, is the rate of transfer of heat (in watts) through one square meter of a structure, divided by the difference in temperature across the structure.
For poorly insulated roof U-value is 1 W/m2*K. Maximum U-value which cannot be exceeded required under current Building Regulations is 0.2 W/m2*K, aim is to go 0.13 W/m2*K (this requires 300mm of the fiberglass insulation).
For our house heat loss through the poorly insulated rood is:  72m2*1W/m2*K = 72W/K.

Additional R-value (thermal resistance for 250mm of added insulation) for the loft = 0.250m/0.044 W/m*K= 5.68 m2*K/W
Overall thermal resistance 5.68 m2*K/W+1 (what it was before) = 6.68 m2*K/W
Overall thermal conductivity (new U-value) 1/6.68 m2*K/W = 0.15 W/m2*K  

Heat loss through the Insulated Roof = 72m2*0.15 W/m2*K= 10.8 W/K (6-fold reduction).

In 2016-2017 we spent 972 GBP on natural gas (heating, hot water and cooking). Although exact hot water consumption could be verified using summer months, when heating is not required, let’s assume 30% goes to hot water.  Remaining 680 GBP is heating bill, another 10% is loss due to ventilation and cold air entering the house, remaining 600 GBP is heating loss.
Approximately 15-20% of heat losses are going through the poorly insulated roof.  600*20% = 120 GBP a year.
The new heating cost is proportional to the improved U-value 120 GBP*10.8/72 = 18 GBP a year, or approximately 100 GBP a year in heating consumption.

As energy prices are raising, I should calculate the savings in the fuel consumption:  1,884 m3 of natural gas for 972 GBP, 100 GBP reduction in cost, should give annual consumption of 1,690 m3 of  natural gas next year.

If the insulation will last 20 years at the current energy prices and inflation of 3% it will take me 8 years to get my money back, after which I paid myself at 30 GBP/hr for the 40 hrs spent on the loft or 1,200 GBP.  
I will be able to confirm that actual energy savings next year.  Many people after insulating houses spending more money on the heating by keeping the house warmer and/or badly down insulation. In our case I could tell that insulation is working, as for the first-time upstairs is warmer than downstairs.

Our actual energy consumption in 2016-2017
We consumed 162 kWh/m2 a year of energy (140kWh/m2 is heating and hot water).

Our monthly payments:  
Electricity - 43 GBP = 516 GBP a year. Actual consumption 576 GBP or 48 a month.
Natural Gas - 81 GBP = 972 GBP a year. Actual consumption 956 GBP or 80 GBP a month.

Electricity – 14.8p a day, 16.56p per kWh, actually paid 18.26p per kWh.
Natural gas – 14,8p a day, 4.28 p/kWh, actually paid 508 GBP per 1,000m3 or 4.5 per kWh.

Natural Gas: consumed 1,884 m3 x 1.022640 volume correction 1,927 m3 corrected units
1,927*39.4 calorific value MJ/m3 /3.6 kWh/MJ = 21,086 kWh
Total natural gas cost = 14.8*365 + 21,086*4.28=54.02+902.48= 956.5 GBP or 80GBP per month.

Electricity: consumed 3,153 kWh
Total electricity cost 14.8*365 +3,153*16.56 = 576.16 or 48 GBP per month

Domestic Natural Gas Prices in the UK
With my utility company in the UK I am paying 508 GBP per 1,000m3 of natural gas to the utility company, distributing gas.   Whole sale market prices:
In 2017 natural gas, giant Gazprom is selling natural gas to western europe distributors at $167 per 1,000m3 (125 GBP).
In 2011 Centrica bought 5 billion cubic meters of gas from Norway for 10 years for $20.5 billion, this is $410 (305 GBP) per 1,000m3.
For distribution within the UK I am paying between 383-203 GBP more for every 1,000m3 of natural gas on top of the whole sale prices (306% - 67% markup).

Average annual consumption of electricity per country kWh per dwelling:
The UK
The Netherlands

Historical energy prices in the UK:
2011 - Gas 20,500 kWh cost £729 GBP and 3,300 kWh electricity cost £424 GBP, total 1153 GBP.
2015 - Average annual household energy bills (based on fixed consumption of 3,800 kWh per
annum for electricity and 15,000 kWh per annum for gas - £1,298. The government for reporting purposes “promotes” energy efficiency, which cost hundreds of pounds, so the average annual household energy bill would not be so scary. Energy efficient houses have lower natural gas consumption by 25% (between 2011 and 2015), this disregards the upfront payment and return of 7-8 years on your investment.

In 2017 the 20,500-kWh gas and 3,300 kWh electricity package is 25% more expensive than in 2011, when actual oil and natural gas prices are lower than in 2011.

EU energy certificate
Estimated bill from EU energy certificate for our house in 2016 was 1,457 GBP. It was indicted that by replacing – lightning, boiler and loft insulation potential combined savings are 600 GBP or 857 GBP a year. We implemented everything before moving in (apart from loft) and the actual cost was still 1443 GBP per year. Energy consumption was estimated as 279 kWh/m2 a year, our actual one is 162 kWh/m2. 
Where it went wrong, EU energy certificated estimated us paying 5.2 GBP per kWh/m2 a year, the actual cost is 8.9 GBP per kWh/m2 a year.
In the certificate the economic effect (savings) from the additional loft insulation estimated as 150 GBP a year (my calculation is 100 GBP a year). Before this improvement our house was so bad that with heating on, temperature on the 1 floor was higher than on the second floor and we could not raise temperature above 20C on the second floor, even with heating on all the time. This is changed now.

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