Govt Scheme Cancels Underfloor Insulation Retrofit Option.

7 October 2009

If you live in a home fitted with substandard foil underfloor insulation your entitlement under Warm Up New Zealand Heat Smart has changed from replacement with quality cavity insulation material to a repair option for the foil.

The insulation of timber floors has been a requirement in the New Zealand building code since 1978. 400,000 homes were built between 1978 and 2000, the cut off for Warm Up New Zealand Heat Smart’s subsidy entitlement. The vast majority of houses constructed during this period were timber floor construction using foil to achieve the minimum insulation standard. EECA’s Energywise programmes retrofitting low-income homes also retrofitted foil as underfloor insulation until June 2007. The use of traditional foil however has not delivered the performance and longevity expected.

Jeanette Fitzsimons who worked on the development of Warm Up New Zealand Heat Smart says. “It was a genuine learning that the foil did not perform as well as expected, and when the foil was agreed other products were not widely available”.

Since November 2008 EECA’s Energywise retrofits have removed existing foil underfloor insulation, even including that fitted in it’s own insulation programmes and replaced it with modern cavity insulating products, but as part of new rules sent to EECA service providers on the 29th September and effective 1st October, foil underfloor insulation is to be repaired and not replaced.

On the eve of this announcement, Richard Moore, manager of Poly Palace, Porirua’s award winning polystyrene recycler, re-manufacturer and underfloor insulation specialist, went public with a damning criticism of Warm Up New Zealand Heat Smart and the way it had effected Poly Palace’s business causing Mr Moore to lay off staff, and now he is ‘gob-smacked’. “This is a huge policy U-Turn that impacts on hundreds of thousands of home owners who live in homes that now do not qualify for a Warm Up New Zealand underfloor insulation retrofit. It makes a mockery of EECA’s claims that Warm Up New Zealand Heat Smart is about quality insulation,” says Mr Moore.

“As I said in my critique of EECA, Poly Palace promise ‘climate of Brisbane’, money back guarantee, using a superior underfloor product that we manufacture locally diverting waste polystyrene from local landfills. Where foil is fitted during construction, we fit our polystyrene Palace Planks under the foil giving the cumulative insulation effect of both the R 0.7 foils remaining value plus the R2 insulation of our Premium Palace Plank range giving total performance including the effect of continuous concrete foundations approaching the New Zealand underfloor insulation standard’s best practice guideline of R3.1. That’s typically a lot better than EECA’s subsidised offer and I have never been asked to uninstall a house we have installed and I have never been asked to honour our money back guarantee, that is underfloor performance EECA can’t match”.

Poly Palace was left out ‘in the cold’ missing out on selection as a service provider for Warm Up New Zealand Heat Smart. Mr Moore has restructured Poly Palace by laying off staff and renegotiating his support arrangements with Porirua City Council, so Poly Palace could compete with Warm Up New Zealand Heat Smart by matching the 33% insulation subsidy offer. “It is bizarre that those effected by this change can come to Poly Palace to get the equivalent of subsidised underfloor insulation since Poly Palace can hardly price 33% more or less depending whether foil was used in construction or not” explains Mr Moore.

For the first 3 months of Warm Up New Zealand Heat Smart, prior to this policy U-turn, the insulation component offered was largely unchanged from EECA’s Energywise retrofit subsidy program that was put in place in November 2008 by the previous government. The major change in National’s budget announcement was offering ‘Warm Up New Zealand Heat Smart’ to all homeowners without a maximum income limit and with an added heat pump component.

The National government has called for spending restraint and also a move away from credit borrowing, however the Warm Up New Zealand 33% insulation subsidy and $500 heat pump subsidy funded in a deficit by borrowing, has been shown to be more than was necessary for EECA to generate the required demand for the schemes success. Initially announced as a four-year programme, Warm Up New Zealand has been reduced to three years to meet demand and the borrowing necessary to fund the program has been brought forward. ”We are borrowing against our economy’s future…” says Mr Moore, “… and under National we give a subsidy to higher income earners who should be able to afford insulation independent of the subsidy while we reduce the performance of the insulation package and that effects a large number of those in lower quality timber floored homes built since 1978 who can’t afford any other insulation option.”

Mr Moore questions how EECA will police these changes and believes that there is a real risk that home owners will seek to qualify for the full insulation package by removing the foil themselves. “Apart from this providing a huge opportunity for home owners to rort these changes by removing or damaging an existing foil installation beyond repair so that they qualify for the cavity insulation retrofit, there is a real danger of electrocution if a wire is cut while cutting out underfloor foil insulation with a box cutter.”

EECA claims the focus of Warm Up New Zealand Heat Smart is on the installation of insulation, rather than the installation of heaters. Mr Moore explains that the addition of heaters and particularly heat pumps to the scheme only makes sense if optimum insulation levels are achieved. “Otherwise heat-pumps will be heating under insulated houses, that’s simply putting money back into the pockets of the power companies,” Mr Moore says.

Since September Greater Wellington ratepayers can finance the rest of the retrofit cost through a special rate offer at 7% p.a. funding over 10 years. “Why are we funding and financing the purchase of a generational consumer appliance like a heat pump with a life expectancy 10-15 years, into a significant number of homes which, with this policy U-turn, will now still be poorly insulated?” Mr Moore asks. “We could have instead been fitting quality underfloor insulation that would last the life of the home and leave the short life heating choices to each generation’s occupants.

Warm Up New Zealand Heat Smart’s underfloor insulation component is often the most expensive part of retrofit. The change will significantly reduce the cost of applying Warm Up New Zealand Heat Smart to homes built between 1978 and 2000. This will impact positively on the affordability of the scheme for the National government and allow more homes to be insulated with the $323.3 million allotted. An alternative may have been to remove the optional $500 clean heat subsidy component however with so many heat companies contracted as service providers, this would have would have proved unworkable without re-tendering the schemes implementation.

The Minister of Energy, Gerry Brownlee in early September said “I am asking people to be patient while the scheme is still gearing up.” The news of this U-Turn will be cold comfort for those in homes effected by these changes who followed his advice and now no longer qualify for a quality underfloor insulation retrofit. However as his predecessor Max Bradford found, the implementation of energy policy often doesn’t live up to National government promises.