 The thinking deeper report is out there and really my presentation reflects the the main points coming out of that as Was mentioned earlier. I suppose the the idea for this came from Joe Carton from the IIEA They came and talked to us in SEI and we agreed to Co-write it with them and do some research So just to introduce it. I'm going to talk a little bit about the current environment out there So, you know, what's the playing field for us? What are we trying to do and what do people think then a little bit about what do we mean when we say deeper retrofit? What what are we really trying to achieve then looking at various financing options? And we weren't looking to create something new that hasn't been tried and tested anywhere We were looking at international pilots international tests Ideas that are out there already and just looking at how they worked in other countries and how might they work in the Irish Situation talking at both the supply and demand side So talking to the people who would be offering these options and then talking to the most important people of all the consumers And what would they like? So just to set the environment first the task, what are we trying to do and people have talked about this already? It's 20% energy efficiency target by 2020 that means 1 million buildings It means achieving another 8,000 gigawatt hours of savings. We have better energy the program to do that Which is great. We have the energy suppliers coming on board to get involved in the market to push this even further We have a great cohort of contractors out there already very active in the market So on that side the scene is set But what are the challenges? Well for us the challenges of course are the economy at the moment And I don't just mean the Irish economy internationally. We have a challenge there We can even see the Asian stock markets this morning are in a little bit of trouble So we all have to be conscious of that but at the same time look this is a problem at present It's going to change things will get better But another challenge there just within the present circumstances is when you're talking to a homeowner Some of these people are in negative equity and again on the supply side You know if a bank is looking at somebody in negative equity, are they happy to lend on that? If a consumer is facing negative equity in high mortgage rates, you know, do they want to borrow? How are we going to finance thing and then the the final challenges? We do need to look beyond Exchequer grants Exchequer grants on their own can't achieve the the depth and scale that we want in any way As a country we can't afford that So a little bit about the supply factor That we have to look at a bank lending policies at the moment I suppose we were reading some research and it talked about liquidity constraints back in the 1980s And I think here we are in 2011 and we need to be talking about that again Banks have long to deposit ratios that have been at about a hundred and sixty percent Part of the deal in Ireland getting money from Europe and the IMF is those sort of ratios need to come down So obviously banks need to look at credit assessment leads to lower their risk exposure Within that they're looking at payback We need to move them to looking at return on investment because something in investing in energy efficiency. It is The investment that keeps giving it's not just about payback You know you will have your loan payback, and you know what you're still going to be leaning savings from that investment So that's a positive there Again banks need to look at what are the appropriate discount factors they'll do in looking at Return on investment and credit assessment, and we need to look at what's the proven case for energy efficiency because At the moment we say it makes savings But we need to put I suppose collateral out there that the market becomes more confident in that and and financiers are happy to lend within that consideration Just that graph there is just to look at an approximation looking at Mortgages going back to 2005 and the certain numbers we were talking about and then mortgages now and we're down at Only one fifth of those sort of mortgages. So again, that's just looking at the the lending side of things On the demands the man side just looking at consumers And again just looking at consumer sentiment, and you can see there that That has reduced quite a bit in the last number of years And I suppose what you have to say is within that how do you get consumers to open the purse strings? How do you get them to be happy? On the the bottom one there is just a trust parameter, and it's probably a little bit hard to see but you can see Ireland is Less than EU or international levels in trust and government in banks and business. We're not very trusting at the moment So I suppose on the on the banking side that becomes an issue, you know, who will consumers borrow from who will they trust? Again on the demand side and Lisa had talked about this a little bit earlier on there's the split incentives issue. So What's the length of tenure? How long is somebody going to be in a home? Do they intend to live in it in the next 20 years if they're thinking of selling it in three years? Are they happy to invest in it? Maybe they think they won't get the cost of the investment back in the sale price You've also got the landlord tenant issue, you know a landlord if he invests in the home Will he get that investment back in rental income because he's not going to get it back in the savings and energy bills It's going to be a tenant who reaps that reward on the other side just if somebody does own their home And we're looking at them to invest there are behavioral factors people are a risk adverse People procrastinate about purchasing decisions. You know, I'll think about that I'll research it a little bit, but you know what? I'll put it on the back burner for the moment And maybe I'll think about it again next month or next year There's also social norms and this is where community groups and just getting retrofits out there will change consumer norms People will if they see their neighbor doing something if they see their community doing something They're much more likely to do it if there's a little bit of an element of keeping up with the Joneses But it's also just changing the game on the information and knowledge side what we're finding and Brian mother we will talk a little bit later In a much more expansive manner about consumers and what they think and how they think and what they might be willing to do But at the moment what we're saying is consumers. They're not sure what to do They they don't have full knowledge and and full information and even if they decide what to do they're thinking well What's what's the payback? How does pricing work? What do I do and as we've said already there are financing issues, you know Savings won't do what we need if they agree to borrowings Well, who do they borrow from and how do they borrow and what's the payback options and just a small quote there Again coming from our focus groups that we did. I think I hit a milestone when I paid off my mortgage I know I said never again so consumers that just there's a little push We need to to make their little nudge to move them into not being averse to taking borrowings out for smart investments So then just moving on what is deep retrofit? What where are we now and how do we move? So what do we mean by deep retrofit? Well, the sort of measures we're talking about are things like insulation the roofs and walls looking at energy efficient boilers and heating controls Airtightness which is like draft proofing windows doors and then maybe looking at renewables as well But the important thing about deeper vet deep retrofit is the whole building approach We want one intervention Because you don't want somebody saying okay. Well, you know what? I've dry lined my whole house this year and then next year they go back and they say Okay, well, you know what I need to upgrade my heating system now You have to start pulling things out upsetting what you've done already. That's just not the right way to go We need a whole building approach where the work is done all together The kind of savings we're talking about our 40 to 50 percent reduction in energy use And I stress this is average because as Lisa said earlier on look some homes Just need a small amount of retrofit to bring them up to the kind of levels we need But there are other homes who need a very in-depth retrofit So when I say 40 to 50 percent we are talking averages So what's our current position and the Irish housing stock? Well We estimate and these are estimates because it is difficult You're looking at the age of homes and trying to make an assessment on the types of buildings at that particular time that they were building But we reckon that there's about 400,000 homes at a rating of F or G So those sort of homes need a very deep retrofit. There's another almost 200,000 homes at ratings of E So again quite an intense retrofit needed in those homes This year we're looking to retrofit 60,000 homes and I stress that's in the the private home sector Will do an additional 20,000 in People who are in fuel poverty in the warmer homes area But the important thing is the average investment that we're seeing at the moment is only 3,000 of an investment and that will save about 400 gigawatt hours those 60,000 homes per annum Where do we need to in the move to in the future? We need to be moving to do in about 100,000 homes a year and we need an average of around 10,000 of an investment Some will be 5,000 some will be up towards 15,000 and we need to be moving to savings of about a thousand gigawatt hours per annum So quite a step change needed there Now just to look a little bit at the financing options and again to say we looked at international research about what was out there We talked to stakeholders and suppliers to see what did they think about the various options And what did they think where the good things about them what challenges or barriers they feel might exist and the most important thing of all What was the consumer view? What did they think about it? So the first option we'll look at and again We've talked about this a little bit earlier and Emma has talked about the UK version of it pays you safe What is it look you put together a fund to lend out for these sort of investments That's available to the consumer in a very easy hassle-free vein through the Providers of the service. They'll say look we're coming and this sort of funding is available to you There's a lien on the home or the measure in the US It's tended to be on the home in the UK They're looking at the lien being on the measure and what that essentially means is this isn't alone to the actual Personal homeowner. It's actually on the home or the measure the repayment comes through the energy bill or the local authority bill in The UK they're looking at the energy bill the repayment fee is generally in line with the reduction in energy use So, you know, you borrow 8,000 to invest in your home your energy bills are reduced by 800 a year. That's 10,000 year 10 year repayment to pay that back with a little bit extra maybe for the for the interest rates and But the important thing for the homeowner I suppose is there is no upfront cost to them the money is there for them So essentially they're paying a fee almost like a lease fee for the use of the upgrade in the house and the loan stays with The home it doesn't stay with them. It transfers if there's any sale The challenge is there is I suppose homeowners In our research, they found it hard to differentiate between hey, I own the loan It's I'm responsible for it and this home this inanimate object or this meter Which is even more inanimate to them owns this loan That's just a difficulty and it's a it's a communication barrier that we need to on overcome with them The other challenge is the fund, you know, who funds it is a government back But even if it was government back where does the money come from essentially? The golden rule that they talk about in the UK People weren't that fun to that in Ireland. They were like well if I've got more money Can't I pay it back quicker? I don't like being in debt I want to pay off my loans as quickly as I can so again It might be more of a golden guideline in Ireland than a rule and The other thing that people were concerned about is look the change of use of the house happens So if you say the repayment is X amount because that's the saving on the energy bill What if I have a load of kids? What if I start to work at home? What if my children move out and now there's only two of us in the house so good points And on the green bank So what is that when we're looking at green bank our green banks are out there already They're usually for environmental projects in this case. We'd be looking at energy efficiency projects specifically again They're often government backed, but there could be some EU involvement there There's there's EU project bonds out there at the moment being talked about and there for for maybe large community projects So if we if we had community initiatives, then maybe that's an area that we could look at and There's a lack of profit motive which again Could make the consumer a little more trusting of going to a green bank What are the challenges? Well, it's a new vehicle So there are costs around establishment and Catherine talked about that we need to be careful about thinking about that You know creating something new when maybe we have vehicles that we can change a little to to work for us and Any new organization in the financing sector that you're going to establish needs to have a high credit rating to attract funding Again, presently, that's a challenge the access for capital rates will be a challenge You know at the moment we're looking at downgrading of people's energy ratings. So how do we turn that around? The examples of green banks out there at the moment There are a German state-owned bank Kfw that is already lending in the market and has been very successful 10 billion lent over the last 10 years. So that we can see that there are models out there that are working for that What's the good things about it? Well, it could create Confidence for these new energy efficiency projects as as Brendan said it is in some ways a cottage industry at the moment We need to build the confidence and build the recognition of the brand And this could be maybe a way to to get funding to those sort of projects Consumers also liked it. They were more trusting of something like this Looking at the next one then is looking at private savings and Again, this could be two ways of doing this. You could create a fund so that People look to invest in this fund and they get you know good returns Or we could look at leveraging domestic savings and encouraging Self-funding by people by giving them tax breaks So you might create a fund where people get nice returns and because they feel good about Investing in such a fund that is going to upgrade And the homes in Ireland, they're more likely to invest or you could say to people well Look, you've got all these pots of money And we do have pots of money in savings in that we're at the moment Sitting on them saying what's going to happen in the future and maybe it's getting people to open the purse strings on that and We can do that through as Lisa called it fiscal instruments earlier on by tax breaks What are the challenges and something like that? Well, you know if the government is going to be involved in either the fund or in tax breaks Clearly that has an effect on the ex-jacker position and we need to look at that in the wider context And the other thing is you know, you need to attract investors and people are savvy If they'll be looking at well, what sort of return are you going to give me for investment in this fund? So it has to be attractive to those Looking to invest examples of it are at the moment in France. They do have tax-free savings accounts To create funds that are then used to lend to energy efficiency projects also in the Netherlands They have issued green bonds. So that's something that perhaps government could look at The good thing about this is you don't need to go to the international markets looking for finance you get the finance right at home and You know, that means that you could leverage Irish money to invest in this and Consumers also like this They're like the feeling of of the investment and doing something good for the country and they also They I suppose likened it in one way to the credit union you save a bit and you lend a bit So there was a little bit of liking that That two side of the same coin Then looking at the traditional financing options that are out there already. There's the equity release option and Bank of Ireland is one of those that has an equity release at the moment where you can actually borrow to Invest and upgrade in your home. It's directly linked to the better energy scheme And they're mortgage type rates so more attractive to consumers And you don't actually have to have an existing mortgage or be an existing customer with them You also have the mortgage top-ups where you know, if somebody already has a mortgage They can go to their bank and look for a top-up on that mortgage at Similar certain mortgage style rates, which are generally in the three to five percent rate So again, you know, we shouldn't forget they're out there already and maybe we can look at leveraging those There's also green loans that are out there and there's many providers Giving those and I know that permanent TSP announced this morning that they're coming out with a new one and The challenges I suppose on on those is around Debt restructuring costs for consumers, you know, if you get a mortgage top-up or equity release Well, what if you were already in on a track or mortgage? Can I still keep that or do I lose that and you know, is that not as attractive for me or if you've got to go And look at my house. What's the transaction costs around legal fees and all of those things and Again people in negative equity, you know, is this suitable for them? No, it's not For a lot of them and then if you're looking at green loans, you know The interest rates and those are still up around the 10% level which again for a longer term investment just isn't sustainable So what are we saying about all of those things? Well, there are challenges and I suppose The main one is it doesn't matter what finance option. We're looking at it's the cost of finance That's par par amount. Where are we going to get the money for these investments from and at what cost? So that is the first thing we need to look at no matter what finance option We talk about the vehicle comes next then we can decide well, which one suits better And maybe there's a number of them that work together to achieve what we need On the demand side, we need to address consumer behavior We need to look at you know getting them going deeper getting them to actually move to go ahead and do it and Getting them to assess the cost benefit. So making them understand the concept I'm providing information Consumers need to know what to do. We need to help them with that. We need to To help them out to give them advice Communication is key as well consumers want to understand and as Catherine said they're they're very savvy in the Irish market So, you know, we believe that where they were questions about well How is pay is different than my personal loan consumers will understand that we just need to know How to communicate that message to them conclusions Okay, so our feeling was at the end of the day. There isn't a silver bullet at the moment It won't be solved quickly and not necessarily easily, but we do need to start we need to get on this road and begin now One size is unlikely to fit all look consumers are different. They're different people different circumstances different requirements We need to be aware of that and maybe there's not just one solution. Maybe there's a number of solutions We need to listen to consumers within that and then we need to position the options based on their concerns So that we're communicating it properly to them so that they can see the benefits Above all, we need to look at affordable sources of finance How are we going to make this an attractive proposition at attractive rates? And lastly for whatever options we choose we need to test them to pilot them see how they work and refine them based on Feedback That's it for me. Thank you