Solid Wall insulaton chain review

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					Solid Wall Insulation Supply Chain Review
May 2009




                             Prepared for:




                             Date:

                             1st May 2009
Solid Wall Insulation Supply Chain Review (April 2009)                                                                                         2




                                                          CONTENTS

1. EXECUTIVE SUMMARY................................................................................................. 3
1.1. Size of the solid wall insulation market 2008................................................................................ 3
1.2. Cost of solid wall insulation .......................................................................................................... 3
1.3. Cost of external wall insulation ..................................................................................................... 4
1.4. Cost of internal wall insulation ...................................................................................................... 5
1.5. Cost of insulated wallpaper .......................................................................................................... 5
1.6. Thermal benefits of solid wall insulation....................................................................................... 6
2. INTRODUCTION ............................................................................................................. 7
2.1. Definition of the solid wall insulation sector.................................................................................. 7
2.2. Objective of the research.............................................................................................................. 7
3. PRODUCTS AND SUPPLY CHAIN IN SUMMARY ........................................................ 8
3.1. Manufacturers............................................................................................................................... 8
3.2. Insulation supply chain ................................................................................................................. 9
4. SIZE OF THE UK SOLID WALL INSULATION SECTOR ............................................. 11
4.1. Previous estimate of the size of the solid wall insulation market ............................................... 11
4.2. External wall insulation installations ........................................................................................... 11
4.3. Internal wall insulation installations ............................................................................................ 14
5. THE COST OF SOLID WALL INSULATION ................................................................. 15
5.1. General note on price of SWI ..................................................................................................... 15
5.2. Cost of external wall insulation ................................................................................................... 16
5.3. Cost of internal wall insulation .................................................................................................... 19
5.4. Cost of insulated wallpaper ........................................................................................................ 22
5.5. Thermal benefits of solid wall insulation measures .................................................................... 22
5.6. Offsetting costs against benefits ................................................................................................ 24
5.7. CERT contribution ...................................................................................................................... 24
APPENDIX A: RESEARCH METHOD ............................................................................... 25
APPENDIX B: SOURCES.................................................................................................. 27


 Report prepared for the Energy Saving Trust (www.energysavingtrust.org.uk) and the Energy
 Efficiency Partnership for Homes (www.eeph.org.uk).
 Compiled by:                                                    Purple Market Research Ltd.
 Purple Market Research contact:                                 Trevor Wilkinson
 Telephone:                                                      020 8538 0133
 Email:                                                          trevor@purplemr.co.uk
 Web:                                                            www.purplemr.co.uk
Solid Wall Insulation Supply Chain Review (April 2009)                                              3




1. EXECUTIVE SUMMARY
1.1. Size of the solid wall insulation market 2008
We estimate the total number of solid wall insulations carried out on domestic properties in 2008 to
be in the range 25,000-35,000, with external wall insulation comprising around 60% of the market.

There remains uncertainty over these estimates, in particular the number of properties installed with
internal wall insulation.

External wall insulation

Our survey of installers, cross checked against the estimates of industry representatives
(manufacturers, system designers and trade bodies), quantifies the total number of EWI
installations in the 15,000-21,000 range.

          Estimated number of domestic external wall insulation installations in 2008

                                  Range of estimates of number of
                                                                       Number of properties with EWI -
                                  properties with EWI from different
                                                                            our best estimate
                                               sources
  New builds                                 4,000-6,000                            5,000
  Retrofits                                 11,000-15,000                          13,000
  All external wall insulation              15,000-21,000                          18,000
                                                                              Source: PMR estimates

Internal wall insulation and insulated wallpaper

We estimate that the number of properties with internal wall insulation installed in 2008 is in the
10,000-16,000 range, with approximately 10%-20% of the IWI market estimated to be flexible
thermal lining (‘insulated wallpaper’). Just over half of internal wall insulation installations are
thought to be refurbishments.

In the absence of more robust or precise data (see explanation in Appendix A), our IWI market
estimates should be treated with caution.

1.2. Cost of solid wall insulation
Determining typical costs for solid wall insulation is more complicated than for other insulation
measures, such as cavity wall or loft insulation, because costs for SWI will vary according to the
measure being employed, the type and condition of the property and the number of properties being
insulated within a project (i.e. whether economies of scale can be applied).

Another key characteristic of solid wall insulation is that the measure cannot be applied in isolation:
there is usually a requirement for other associated work:
    • Preparatory work such as the erection of scaffolding or the stripping of tiles or wallpaper;
    •   The removal of items such as gutters and pipes on the outside of a home or electrics and
        fixtures on the inside;
    •   Making good through re-fixing of above items and decorating.
Solid Wall Insulation Supply Chain Review (April 2009)                                                 4




Cost guidelines should include those extra costs unless this work is being done anyway, for
example if the project is a total refurbishment.

With that in mind, we have determined the ranges of costs for conducting both external and internal
wall insulation. All the following cost estimates are based on insulation of a typical solid wall three-
bedroom semi-detached property.

1.3. Cost of external wall insulation
Typical costs for insulating a three-bedroom semi-detached home with external wall insulation are
summarized below.

We have prepared separate cost estimates for insulation of a single property and for a project
involving multiple properties, the latter taking economies of scale into account. In each case costs
have been split into those covering EWI material and installation and the extra costs incurred in the
majority of cases (scaffolding, preparatory work and making good, as outlined above). For most
EWI projects the total costs given below will apply.

                             Estimated cost of external wall installation

                            Cost of EWI material and   Extra costs required for
                                                                                       Total costs
                                  installation               installation

                                  £4,800-6,000              £1,500-4,000             £6,300-10,000
EWI - multiple properties
100+
                                Average £5,500             Average £3,000           Average £8,500

                                  £5,600-8,500              £2,000-5,000             £7,600-13,500
EWI – multiple properties
under 100
                                Average £6,500             Average £3,500           Average £10,000

                                                            £3,000-7,000             £10,600-14,600
EWI – single property               £7,600
                                                           Mid-point £5,000        Mid-point £12,600


These costs are based on feedback from installers, system designers and trade bodies. In addition
costs for insulation of a single property are based on costings prepared by a quantity surveyor.

Interviews with around 20 local authorities and housing associations suggest that the average costs
for EWI when less than 100 properties are involved may be slightly lower than the £10,000
indicated above, with an average £8,400 recorded. This figure is within the range estimated in the
table above, but further research among local authorities and housing associations would
strengthen our understanding in this area.

All of the above costs are exclusive of VAT, which is currently charged at 5% for the SWI element
and 15% for other costs.
Solid Wall Insulation Supply Chain Review (April 2009)                                                5




1.4. Cost of internal wall insulation
Typical costs for insulating a three-bedroom semi-detached home with internal wall insulation are
summarized below. Costs have been shown for internal wall insulation systems both for projects
involving multiple properties and those involving just a single property.

As for external wall insulation, in the majority of cases extra costs will be incurred to cover
preparation and making good. For most IWI projects, the total costs given below will therefore
apply.

                    Estimated cost (exclusive of VAT) for internal wall installation

                             Cost of IWI material and   Extra costs required for
   Type of insulation                                                                  Total costs
                                   installation               installation

Internal wall insulation –        £2,400-4,000                                      £3,900-5,500
                                                            Average £1,500
multiple properties              Average £3,200                                    Average £4,700

Internal wall insulation –        £4,500-5,500               £1,000-3,000           £5,500-8,500
single property only             Mid-point £5,000           Mid-point £2,000       Mid-point £7,000


These costs are derived from a number of sources, including installers, trade bodies and
manufacturers. For the single property costing we have again referenced costings prepared by a
quantity surveyor (which tend to be conservative and are at the upper end of the range given – see
section 5.3 for more detail) together with feedback from insulation product manufacturers and trade
bodies.

A wide range of costs is given each case, which reflects the different insulation solutions that might
be used and also the varying amount of preparatory work and making good that might be required
in each case.

1.5. Cost of insulated wallpaper
Typical costs for insulating a three-bedroom semi-detached home with flexible thermal lining should
again include additional costs for preparation and making good. For most projects, the total costs
given below will therefore apply.

                                Estimated cost of insulated wallpaper

                             Cost of IWI material and   Extra costs required for
   Type of insulation                                                                  Total costs
                                   installation               installation

                                  £2,000-2,400                                      £2,500-3,900
Insulated wallpaper
                                                            Average £1,500
(flexible thermal lining)
                                 Average £2,200                                    Average £3,700


Again all of the above costs are again exclusive of VAT.
Solid Wall Insulation Supply Chain Review (April 2009)                                            6




1.6. Thermal benefits of solid wall insulation
Building regulations specify a minimum U-value for solid walls post-installation of insulation of 0.3
W/m²K for new builds or 0.35 W/m²K for an upgrade of existing thermal elements (major
refurbishments).

Almost all the installers and local authorities interviewed in our research were aiming for a U-value
of at least 0.35 W/m²K for refurbishments (with the exception of insulated wallpaper) in order to
meet the requirements of building regulations. To achieve that figure a range of thickness of
insulation material was applied (from 50mm to 110mm), depending on the material in question.

In the case of insulated wallpaper the Defra Insulation Supply Chain Review 2007 quotes a post-
installation U-value of 1.6 W/m²K achieved for internal flexible lining.


                                                   *****


In the rest of this report we discuss these findings in greater detail.
Solid Wall Insulation Supply Chain Review (April 2009)                                                      7




2. INTRODUCTION
2.1. Definition of the solid wall insulation sector
The solid wall insulation sector can be segmented into three main product categories, external wall
insulation, internal wall insulation and flexible thermal lining (often referred to as ‘insulated
wallpaper’):

        Category            Specific product types                     Detailed description

                                                         An insulation layer, plus a protective layer of
                          Wet rendered
                                                         render with decorative finish.
 External insulation
                          Dry cladding systems           Dry cladding fixed to the outside of a building

                                                         Spray applied polyurethane foam applied
                                                         between previously erected timber or metal
                                                         studwork and then covered with plasterboard, or
                          Spray-applied insulation
                                                         plasterboard can be fixed to the foam with dabs
                                                         or a bonding plaster and finish can be applied
 Internal insulation                                     directly to the foam
                                                         Rigid thermal laminated board           made      of
                          Internal rigid thermal board
                                                         insulation-backed plasterboard

                                                         Built up systems use insulation held in place
                          Built up internal systems
                                                         using a studwork frame.

                                                         Supplied on rolls, typically one metre wide. The
 Insulated wallpaper      Internal flexible lining       material is made from latex and has a fiberglass
                                                         face that allows it to be decorated over.


2.2. Objective of the research
In 2008 Purple Market Research compiled a profile of the Solid Wall Insulation sector for the Energy
Efficiency Partnership for Homes. In that report we commented on the lack of robust data on the
number and value of installations done and recommended that research is conducted to validate
and possibly correct the estimates made in the report.

The aim of the current project is to conduct further research on the installation of solid wall
insulation, in particular to establish:
    •    A more robust estimate of the number of solid wall insulation installations completed in
         2008;
    •    Those numbers split by external and internal insulation solutions and also (within each of
         those categories) by new builds vs. refurbishments;
    •    The types of building being treated;
    •    Prices being charged to complete the work.

The research is based on a combination of qualitative and quantitative interviews with a cross-
section of industry representatives (see Appendix A for more detail on the methodology).
Solid Wall Insulation Supply Chain Review (April 2009)                                          8




3. PRODUCTS AND SUPPLY CHAIN IN SUMMARY

3.1. Manufacturers
There are a number of large manufacturers of general insulation materials, such as Cape, Celotex,
Saint-Gobain Isover, Encon, Kingspan, Knauf, Rockwool, Springvale EPS and Vencel Resil.

In addition there are manufacturers who specialize in particular product types. Some of these are
listed below.

External wall insulation

External wall insulation comprises both wet and dry cladding and a variety of fixing systems.

Manufacturers of render and cladding materials include members of INCA such as Brett Specialised
Aggregates, EJOT Ltd., JB Products, Rockwool, Kingspan, Vensel Resil, Wacker Chemicals,
Wemico and Derbyshire Aggregates.

External wall insulation system designers include Alsecco (UK), Alumasc Exterior Building
Products, BRC Special Products, Dryvit UK, Permarock Products, Powerwall Systems, Rockwool,
Sto, Weber, Wetherby Building Systems and Structherm.

Most of the major manufacturers and system designers are members of trade bodies such as the
Insulated Render & Cladding Association (www.inca-ltd.org.uk) and the National Insulation
Association (www.nationalinsulationassociation.org.uk).

Internal wall insulation

A number of manufacturers supply internal wall insulation products in the form of plasterboard with
insulants such as mineral wool, phenolic foam or polystyrene fixed to the back. Suppliers of such
products include British Gypsum, Celotex, Kingspan, Knauf, Lafarge, Rockwool, and Saint-Gobain
Isover.

Alternatively spray applied polyurethane foam can be applied between previously erected timber or
metal studwork and then covered with plasterboard, or plasterboard can be fixed to the foam with
dabs or a bonding plaster and finish can be applied directly to the foam. Manufacturers of rigid
polyurethane (PUR) and polyisocyanurate (PIR) insulation products are represented by the British
Rigid Urethane Foam Manufacturers Association / BRUFMA (www.brufma.co.uk) and include
Celotex, Ecotherm, Isothane, Kingspan, Quinntherm, Recticel and Xtratherm.

Insulated wallpaper

Flexible thermal lining, such as Sempatap Thermal (supplied by Mould Growth Consultants) is
referred to as ‘insulated wallpaper’ in CERT documentation such as their illustrative mix of
measures.
Solid Wall Insulation Supply Chain Review (April 2009)                                               9




3.2. Insulation supply chain
The thermal insulation sector consists of both manufacturers and suppliers/installers, the former
relatively concentrated, and the latter more fragmented. Many of the big manufacturers have their
own installation teams, or operate via a countrywide network of appointed installers.

MBD (UK Thermal Insulation Market Development 2008) reports that the structure of the distribution
network for building thermal insulation in the UK is diverse, reflecting the wide range of products
and applications. There are specialist thermal insulation distributors dealing in specific market
sectors, as well as national distributors who stock a broader range of items.

Many of the larger, international groups have regional distribution facilities; however, there is also a
plethora of smaller, independent regional distributors.

The diagram below shows the flows of materials from manufacturer to customer for internal and
external solid wall insulation.


                               Solid wall insulation supply chain distribution map




                                                 Raw material
                                                 manufacturers
                Internal
                insulation
                                                                   Manufacturers
                                      Product
                                                                      /system
                                    manufacturers
                 External                                            designers
                 insulation


                                                                             Specialist
                              DIY/trade
                                                                             insulation
                              suppliers
                                                                            distributors




                         Decorators/                 Specialist
                           jobbing                   installers/                    House
                          builders                  contractors                    builders




                                Domestic         Registered Social            Local
                                properties          Landlords               authorities




Installers of solid wall insulation can take several forms. Some products (notably flexible thermal
lining) can be installed by home owners as DIY jobs. At the other end of the scale some products
require specialist skills, notably spray applied polyurethane insulation products and the external wall
insulation process.
Solid Wall Insulation Supply Chain Review (April 2009)                                                10




INCA have around 30 contractors who specialize in external wall insulation, although they estimate
that there could be as many as 400 contractors who will do external work as part of their service
offer.

The Federation of Plasterer and Dry wall Contractors (FPDC) list only four installers who carry out
solid wall insulation on domestic properties from a total of 116 member companies. Details of these
companies can be found at www.fpdc.org.

Some kinds of internal or external insulation can be installed by other trades, such as decorators,
builders or plasterers.

Solid wall insulation jobs may require several different contractors to carry out the installation.

        For external wall insulation scaffolding usually has to be erected on the outside of the
        building, before fixing and cladding is carried out and renderers apply the exterior finish.
        However INCA state that for one-off housing jobs the complete job might be carried out by
        specialist contractors.

        Fixing internal insulation may require major work of each space, including refitting of
        radiators and pipes, adjusting electricals, adjusting cupboards and other woodwork and
        decorating. Therefore the overall job may involve numerous different trades apart from
        those actually installing the insulation material.

Much of the installation of internal wall insulation is done by general builders, although identifying
those who do such installations is not straightforward. By way of illustration, the Federation of
Master Builders website has a ‘Find a Builder’ search facility which does not include solid wall
insulation in the search criteria (although cavity wall insulation is one of the search criteria).
Solid Wall Insulation Supply Chain Review (April 2009)                                           11




4. SIZE OF THE UK SOLID WALL INSULATION SECTOR
4.1. Previous estimate of the size of the solid wall insulation market
Consultation with trade representatives in 2008 suggested that the actual number of solid wall
installations in domestic properties was 30,000 – 35,000 per year, half in new builds (or conversions
of buildings such as warehouses into apartments) and half in retrofits. However there was no
robust central data available on installation rates and we therefore expressed considerable
uncertainty over those numbers.

In the current analysis we have revisited our provisional market analysis and, based on a
combination of primary research with installers and local authorities, cost estimates from a quantity
surveyor and further consultation with manufacturers and trade bodies, we have made revisions to
our estimates where necessary.

When estimating the size of the SWI market, EEC2 and its successor CERT are reasonable starting
points. Under EEC2 on average around 14,000 solid wall insulations per year were completed.

                    Solid wall insulation installations under EEC2 2005-2008

                                       Priority group     Non-priority group      Total measures

  Number of properties installed           29,550               11,769                41,269
  with SWI under EEC2

                                                                 Source: EEC2 Annual Report 2008

Under CERT the number of solid wall insulation installations in the ‘illustrative mix of measures’ is
higher, at 50,000 EWI, 100,000 IWI and 2,000 insulated wallpaper (equivalent in total to around
50,000 solid wall insulation installations per year). However, in the first nine months of CERT,
Ofgem reports that only 7,161 solid wall insulation measures were completed with CERT funding.
Extrapolating that figure to a whole year suggests that around 10,000 solid wall insulation
installations will be completed with CERT funding in the first year of CERT.

There is anecdotal evidence that many SWI installations are done (by local authorities) outside of
CERT, so we estimate that many more than 10,000 SWI installations have been done in the last
year. On the other hand, we have no evidence that the total number of installations are as high as
the figures given in the CERT illustrative mix. However we can safely assume that (as a starting
point) the total number of SWI installations in 2008 was between 10,000 and 50,000.

In the following sections we present our revised estimates of the size of the external and internal
wall insulation markets.

4.2. External wall insulation installations
Consultation with energy suppliers suggests that many (if not most) of the solid wall insulation
measures carried out with CERT funding are EWI. However we also believe that many EWI
installations are currently carried out outside of CERT.

We consulted a number of manufacturers and system designers who suggested that the total EWI
market (residential and non-residential, combining new build and refurbishment) in terms of
installed material was in the range of 2.7 million to 3.2 million square metres.
Solid Wall Insulation Supply Chain Review (April 2009)                                                  12




Of that total around 60% is believed to have been installed in residential properties, mainly for
refurbishment. Translating this data into properties insulated with EWI, manufacturers estimate that
around 5,000 domestic new builds and 15,000 domestic refurbishments were carried out with EWI
in 2008.

Those estimates are slightly higher than our own extrapolations from the survey of installers. Our
own estimate of the size of the EWI market is largely based on a survey of specialist installers
registered with the Insulated Render & Cladding Association (INCA). Out of the 34 registered
installers listed on the INCA website, we have conducted telephone interviews with 21, a robust
sample. In the interviews INCA installers were asked to estimate the number of properties in which
they had installed EWI in the last year. The resulting data suggests the following estimates of EWI
installations.

                        Estimated EWI installations by INCA installers in 2008

Number of properties installed with       Non-residential properties          Residential properties
              EWI                         New build          Retrofits      New build          Retrofits
Average number of properties installed
                                              57                18              88               245
with EWI (per INCA installer)
Estimated number treated by all INCA
                                            1,938              612            2,992             8,330
installers (n=34)
                                         Source: PMR survey of INCA installers February 2009 (n=21)

Our main focus is on residential installations and our survey suggests that INCA installers are
responsible for around 3,000 domestic new build installations and 8,300 domestic refurbishments, a
total of 11,300. INCA registered installers represent only a proportion of the EWI market and we
have extrapolated our findings to the total market. INCA estimates that its installers represent
around 50%-60% of the market, which would suggest that the overall market equates to around
5,000 new builds and 14,000 refurbishments, a total of 19,000. However, INCA believes that the
total number of domestic EWI installations (combining new builds and refurbishments) is closer to
the 15,000 market.

We therefore have a variety of estimates of the size of the EWI market from different sources
(manufacturers and system designers, trade bodies and installers) all of which tend to fall within the
15,000-21,000 range.

Our best effort at reconciling these figures is our own estimate of 18,000 installations, as illustrated
in the table below.

           Estimated number of domestic external wall insulation installations in 2008

                                    Range of estimates of number of      Number of properties with EWI -
                                         properties with EWI                  our best estimate
   New builds                                 4,000-6,000                             5,000
   Retrofits                                 11,000-15,000                            13,000
   All external wall insulation              15,000-21,000                            18,000
                                                                                Source: PMR estimates
Solid Wall Insulation Supply Chain Review (April 2009)                                          13




INCA installers offer mainly wet rendered EWI but also dry cladding in a third of cases. The
systems most likely to be used are Sto, Alumasc, Weber and Wetherby.


                Insulation measures used by INCA installers
           % of INCA                                         System        % using
           installers                                  Sto                    78
                                                       Alumasc                61
                 100%                                  Weber                  50

                                  90%                  Wetherby               39
                                                       Permarock              22
                                                       Structherm             22
                                                       Other                  20
                  50%

                                                          35%


                   0%
                          Wet rendered             Dry cladding
                              EWI                      EWI

                                   Source: PMR survey of INCA installers February 2008 (n=21)


Just over one third of properties treated with EWI are flats, with a similar proportion being
commercial non-residential buildings.


                 Breakdown of type of properties treated with EWI by
                                  INCA members

                       Non-
                    residential                                         Flats, 35%
                    properties,
                       32%




                     Detached
                    houses, 5%        Semi-                          Terraced
                                     detached                      houses, 13%
                                   houses, 15%




                                  Source: PMR survey of INCA installers February 2008 (n=21)
Solid Wall Insulation Supply Chain Review (April 2009)                                            14




The majority of properties insulated with EWI are done for local authorities and housing
associations. Most EWI projects are done as multiple property projects (blocks of flats, rows of
houses) rather than single dwellings. It would therefore appear that few projects are currently being
conducted for private householders and few projects involve single properties. The following charts
relate to both new builds and retrofits.


          Breakdown of properties treated with EWI by type of
                          client and project
                       Private
                        house
                     holders (incl
                        house                          Local
                      builders),       Charities,
                                         1%         authorities,
                         9%                            68%
            Housing
          associations
             , 22%
                                                                                   Single
                                                                                  property
                                                                                  projects,
                                                                                    12%


                                                      Multiple
                                                      property
                                                      projects,
                                                        88%



                                     Source: PMR survey of INCA installers February 2008 (n=21)



4.3. Internal wall insulation installations
Estimating the size of the internal wall insulation (IWI) market is more difficult. Partly that is
because, compared with the EWI market, much of IWI is installed by non-specialists, such as
general builders or even (in the case of flexible thermal lining) by home owners themselves.

Industry representatives estimate that similar volumes of insulated plasterboard and external wall
insulation were installed in 2008, at around 3-4 million square metres. In addition, market analyst
MBD estimates that the value of the EWI and IWI markets are very similar. However a considerable
amount of IWI is used in non-residential properties and in the building of loft conversions and loft
rooms. Also there is anecdotal evidence that IWI is often used to insulate single rooms (kitchens,
bathrooms, cold or damp ‘problem’ rooms) rather than the whole dwelling. This makes sizing the
IWI market particularly difficult. Although there is considerable variance of opinion among industry
representatives, a similar number of IWI and EWI installations in new builds are thought to be
carried out, but on average internal wall insulations are estimated to represent around only around
40% of all solid wall insulation refurbishments.

We estimate that the number of properties with internal wall insulation installed in 2008 is in
the 10,000-16,000 range, with approximately 10%-20% of that figure estimated to be flexible
thermal lining (‘insulated wallpaper’). Just over half of internal wall insulation installations
are thought to be refurbishments. However there is considerable uncertainty over these
figures and we would welcome feedback from industry.
Solid Wall Insulation Supply Chain Review (April 2009)                                                   15




5. THE COST OF SOLID WALL INSULATION

5.1. General note on price of SWI
The price of solid wall insulation is a real barrier to installation. The costs of solid wall insulation will
vary depending on whether the work is being carried out in conjunction with other work such as
repairing the external fascias of a property, the system used and the thermal conductivity of the
material being used (the U-value that the insulation measure has to achieve and the insulation
system used to achieve it).

We noted in the 2008 sector profile that information available on costs is inconsistent and often
does not factor in supporting work that is required when an installation is done (scaffolding,
carpentry and rendering for external insulation, refitting of electrics, radiators, pipes and fixtures and
decorating for internal insulation).

The National Insulation Association notes that there is currently little consistency in the way that
prices are quoted for solid wall measures (within the industry and from outside the industry) which is
causing confusion amongst consumers and is thus preventing the market from growing.

There is therefore a clear need for greater consistency and clarity on the direct and indirect costs of
solid wall measures and payback times.

This is illustrated in the following quotes:



                                                      “INCA indicates a cost for EWI of £45
                                                      per square metre or £4,500-5,000 for a
                                                      typical semi, which is unrealistic.
                                                      Materials are £25 per square metre,
        “The price varies dramatically from           scaffolding is £10 per square metre.
        project to project. Depends how               There is also labour, window alterations,
        long you are on site. If you need a           roof extensions, fences, gates and
        hut for the men it is £100 to have it         trellises to remove, cables, satellite
        delivered and another £100 to                 dishes, piping may need to be removed
        have it taken away, plus £20 a                and put back, boilers and flues adjusted
        week rent.                                    (needing a CORGI registered engineer).
        On housing authority work the                 Plans may need to to drawn up and
        charge out for scaffolding is £10             surveys done. There are then insulants,
        per sq metre – more expensive for             finishes and a huge range of colours to
        private work.”                                consider. What about skips?

                               INCA installer         Anything below £100 per sq metre is a
                                                      joke. The real cost would be £9,000-
                                                      10,000 for a typical semi.”
                                                                                     INCA installer
Solid Wall Insulation Supply Chain Review (April 2009)                                                     16




5.2. Cost of external wall insulation
A number of trade and Government sources give estimates of the costs for external wall insulation
(EWI). The following indicative costs are taken from Defra’s Insulation Supply Chain Review 2007
and trade sources (as of early 2009).

                                   Indicative costs of EWI measures

                                                  Approximate installed          Cost of insulating a typical
                    Source                                cost                     80m2 semi-detached
                                                        (per m2)                           dwelling
 Defra ‘Insulation Supply Chain Review 2007’                  £55-£70                   £4,400-5,600
 National Insulation Association                         Around £55                        £4,500
 Insulated Render & Cladding Association                      £55-75                    £4,400-6,000


The Insulating Render and Cladding Association (INCA) acknowledges that costs vary and are very
dependent on the condition of the exterior surface, detailing and scaffolding requirements. There
are also likely to be economies of scale if multiple properties are treated simultaneously.

Our 2009 survey of SWI installers suggest the following prices for EWI material and fitting only.

       Costs for EWI for typical domestic properties – costs for materials and fitting only

        Type of property                   Estimated surface area                 Average cost charged
                                                         2
Flat                                               30m                                    £3,250
                                                         2
2 bed terraced house                               50m                                    £4,000
                                                         2
3 bed semi-detached                                80m                                    £6,000
                                                          2
4 bed detached / bungalow                          100m                                   £7,000
                                                 Source: PMR survey of installers February 2009 (n=31)

We have already noted that the majority of EWI projects carried out by INCA installers involve
multiple properties. The above costs tend, therefore, to assume some economies of scale. This is
illustrated in the following table which shows average costs for the insulation of a 3 bed semi-
detached property when it is part of a larger and smaller overall project.

Costs for EWI of a typical 3-bed semi for multiple property projects – costs for materials and
                                          fitting only

 Number of properties
                                   Cost per m2                 Cost range per unit      Average cost per unit
     insulated
100+                                 £60-75                       £4,800-6,000                 £5,500
Less than 100                       £70-100                       £5,600-8,500                 £6,500
                                                 Source: PMR survey of installers February 2009 (n=31)
Solid Wall Insulation Supply Chain Review (April 2009)                                             17




It is important to note that these costs only apply in the exceptional circumstances where a
property is being totally refurbished or re-rendered. In the majority of cases other costs
must be taken into account.

Those additional costs depend on the other work required, for example:
    •    Scaffolding

    •    Removing and refitting items, such as gutters and other drainage pipes, cables, alarm
         boxes, satellite dishes, outside lights, etc.

    •    Adjusting windows, door frames or side gates;

    •    Extending gas flues

    •    Treatment of walls for mould

Feedback from installers indicated that the cost of scaffolding tends to be in the £800-1,500 range,
depending on location and number of properties being treated within the project (and associated
economies of scale), with an average of £1,000 quoted (a figure lower than that estimated for a
single property – see table below).

In addition to the cost of scaffolding, there are costs associated with other work required. Those
additional costs vary greatly depending to the work that is required, but can be between £1,000 and
£4,000, with an average £2,000-2,500 quoted.

Thus all extra costs tend to average out at around £3,000-3,500, which makes the total cost of SWI
including extras average out at around £8,500-10,000.

The following table summarises the above data and gives typical costs for EWI installation in a
three-bedroom semi-detached home. Costs have been split into those covering EWI material and
installation and the extra costs incurred in the majority of cases (scaffolding, preparatory work and
making good, as outlined above).

For most EWI projects the total costs given below will apply.

            Estimated cost of external wall installation in summary (for a 3 bed semi)

                            Cost of EWI material and   Extra costs required for
                                                                                    Total costs
                                  installation               installation
EWI - multiple properties          £4,800-6,000             £1,500-4,000           £6,300-10,000
100+                              Average £5,500           Average £3,000         Average £8,500
EWI – multiple properties          £5,600-8,500             £2,000-5,000           £7,600-13,500
under 100                         Average £6,500           Average £3,500         Average £10,000

All costs are exclusive of VAT.
 Solid Wall Insulation Supply Chain Review (April 2009)                                                 18




As we have already noted, the majority of EWI projects involve the insulation of multiple properties,
which involve economies of scale. In order to estimate costs for a single property installation, we
commissioned a Quantity Surveyor (Robert Lombardelli Partnership Ltd.) to calculate costs for a
single property EWI project (a semi-detached house). Costs for the external insulation (wet render
system) are as follows.

                  Cost of EWI for 3 bed semi – costs for materials and fitting only

                                        Item                                           Approximate cost
50mm Phenolic Foam Insulation mechanically fixed to existing walls                          £3,225
20mm Phenolic Foam Insulation to external reveals                                           £725
Overall 10mm Silicone Acryllic Texture Render applied as three-stage: base coat
and mesh, primer paint and silicon acrylic texture finish cost in colour to suit (to        £2,650
walls and reveals)
Other: stainless steel head, corner and edge beads to the render, full depth PPC
                                                                                            £1,000
stop beads to base and party wall junctions
Total for materials and fitting                                                             £7,600
                                                         Source: Robert Lombardardelli Partnership

The cost of EWI material and fitting is therefore equivalent to around £88 per square metre. This is
of course, just for the material and fitting, and additional extra costs are likely to be required, unless
work is already being done on the dwelling. Possible additional extras are:

                             Cost of EWI for 3 bed semi – additional extras

                                        Item                                           Approximate cost
Scaffolding                                                                                 £2,000
Take down and refix rainwater downpipes and cabling                                         £300
Protection of garden                                                                        £150
Standard under-cill extenders to under windows                                              £240
Removal and disposal of defective render and mould                                          £500+
Take down and refixing of items e.g. lights, alarm box, doorbell, satellite dish or
                                                                                            £200
cable box, outside tap etc.
Extending existing boiler flue or overflow pipes, plus removal and refixing of gas
                                                                                            £300
pipework
Adjustment to door canopy, windows, etc.                                                    £150
Creating a larger roof overhang to cover the new insulation (if required)                  £3000+
Total for extras if all required                                                         £3,000-7,000
                                                         Source: Robert Lombardardelli Partnership

Not all of these costs will be required in all cases, so the above total is probably the most that would
be required. The total cost might therefore be in the range of £11,000-15,000, with the higher total
applying if the roof overhand needs to be extended. Some of these costs (notably scaffolding) are
higher than the cost estimates given by installers, and they probably represent the upper end of the
scale.
Solid Wall Insulation Supply Chain Review (April 2009)                                                 19




The table below summarises costs for a single property project. Costs have again been split into
those covering EWI material and installation and the extra costs incurred in the majority of cases
(scaffolding, preparatory work and making good, as outlined above). As before, for most EWI
projects the total costs given below will apply.

          Estimated cost of external wall installation of a single property - in summary

                           Cost of EWI material and    Extra costs required for
                                                                                       Total costs
                                 installation                installation
                                                            £3,000-7,000             £10,600-14,600
EWI – single 3 bed semi             £7,600
                                                           Mid-point £5,000         Mid-point £12,600


All costs are again exclusive of VAT.

If multiple properties are being treated simultaneously that cost might be reduced by 20% or more,
which would bring costs closer to those estimated by installers for multiple property projects.

5.3. Cost of internal wall insulation
In our research for the initial SWI Sector Profile in 2007, various trade sources indicated a cost for
internal wall insulation of $40 per m2, equivalent to £3,200 for a typical 80m2 dwelling. More
recently (in 2009) the NIA website gives a cost estimate for rigid thermal board insulation of around
£42 per m2, which suggests a total cost for a typical 80m2 dwelling of £3,360. BRUFMA estimates
the cost of spray-applied urethane foam insulation at £30 per m2 or £2,400 for a typical dwelling.

Our 2009 survey of SWI installers yields cost estimates that are consistent with those given above.
Our survey of installers suggests the following prices for IWI material and fitting only.

            Costs for IWI of a typical 3-bed semi – costs for materials and fitting only

   Type of insulation         Cost per sq. metre         Cost range per unit      Average cost per unit

Internal wall insulation            £30-50                  £2,400-4,000                 £3,200

                                              Source: PMR survey of installers February 2009 (n=31)

However, as for EWI, it is important to emphasise that these costs only apply if a property is
being totally refurbished and other work is being done anyway. Otherwise other costs must
be taken into account.

Additional costs depend on the other work required, for example:
    •    Wall preparation (e.g. removing wallpaper) plus any treatment of damp or mould required;
    •    Removing and refixing electric sockets and lights, radiators and pipes, tiles and fixtures;
    •    Re-tiling and decorating

These extras add on average £1,500 to the cost, giving an average total cost for the project of
approximately £4,700 for internal wall insulation.
Solid Wall Insulation Supply Chain Review (April 2009)                                                            20




The following table summarises the costs incurred for internal wall insulation when multiple
properties are being treated. As for EWI, for most IWI projects the extra costs will be required and
so the total costs given below will therefore apply.

          Estimated cost of internal wall installation for multiple properties (excl. VAT)

                                Cost of IWI material and           Extra costs required for
   Type of insulation                                                                              Total costs
                                      installation                       installation

Internal wall insulation –              £2,400-4,000                                               £3,900-5,500
                                                                       Average £1,500
multiple properties                   Average £3,200                                              Average £4,700


As for EWI, in order to estimate costs for a single property IWI installation, we commissioned a
Quantity Surveyor (Robert Lombardelli Partnership Ltd.) to calculate costs for a single property IWI
project (a semi-detached house).

Costs for the installation of internal wall insulation, as calculated by the quantity surveyor, are as
follows.

         Cost of IWI for single property 3 bed semi – costs for materials and fitting only

                                             Item                                             Approximate cost

   Plasterboard system: 12.5mm plasterboard tapered edges, fixed with screws
   to 38 x 100 softwood studs at 600 centres

   85mm Polyfoam Floorboard Standard Insulation between studs.                                     £3,870
   Taped and finished flush, fill all joints with joint filler

   Surface finished with one coat Drywall Top Coat.

   27mm liner board insulation to internal reveals                                                 £820

   Galvanised metal: corner and edge beads to the system                                           £810

   Total for materials and fitting                                                                 £5,470
                                                                 Source: Robert Lombardardelli Partnership

The cost of material and fitting for an internal plasterboard system is therefore equivalent to around
£64 per square metre. For a composite board system, an additional £860 is estimated, giving a
total cost of material and fitting of £6,330 (at £74 per square metre).

Industry sources believe that the QS costs are conservatively high and that, with different solutions,
the cost of insulating a single solid wall property will be lower, at around £4,500. We therefore
assume that the cost of IWI materials and fitting is in the range £4,500-5,500.

All of those costs are again exclusive of extra work required in preparation and making good.
Solid Wall Insulation Supply Chain Review (April 2009)                                                    21




Possible additional extras, as calculated by the quantity surveyor, are as follows.

                                Cost of IWI for 3 bed semi – extra overs

                                         Item                                         Approximate cost

   Remove skirtings and window boards and replace with new / wider ones to
                                                                                           £1,100
   match existing

   Removal of damp / mould areas                                                          Est. £250

   Take off and refix items e.g. radiators, pipework, electric sockets & switches,
                                                                                         Est. £250
   electric wall lights, sundry other items

   Remove air brick and refix new air brick flush with new finish                           £75

   If bay window, form neat junction all round                                              £75

   Remove and refix metal gas pipework                                                      £250

   Painting - 2 coats plus gloss finish of woodwork                                         £800

   Box in SVP with battens, insulation and plasterboard, in corner of room, full
                                                                                            £200
   height

   Total for extras if all required                                                        £3,000
                                                        Source: Robert Lombardardelli Partnership

Not all of these costs will be required in all cases, so the above total is the maximum that would be
required, and the actual range of extra costs likely to be incurred is around £1,000-£3,000.

The total cost of IWI would therefore be in the range £5,500-8,500, with a mid point at around
£7,000.

In summary, the costs for IWI of a single property project are therefore as follows.

     Estimated cost of internal wall insulation - single property project (3 bedroom semi)

                             Cost of IWI material and      Extra costs required for
   Type of insulation                                                                       Total costs
                                   installation                  installation

Internal wall insulation –            £4,500-5,500                  £1,000-3,000           £5,500-8,500
single property only              Mid-point £5,000              Mid-point £2,000         Mid-point £7,000


Costs are again exclusive of VAT.

The quantity surveyor estimates that if multiple properties are being treated at the same time those
costs might be reduced by 20-25%, which would bring costs closer to the average £4,700 estimated
by installers for multiple property projects.
Solid Wall Insulation Supply Chain Review (April 2009)                                               22




5.4. Cost of insulated wallpaper
In the initial SWI Sector Profile we quoted costs of £25-30 per m2 for the supplying and applying of
insulated wallpaper, taken from various trade sources.

Our 2009 survey of SWI installers yields cost estimates that are consistent with those earlier costs.
Our survey of installers suggests the following prices for insulated wallpaper material and fitting
only.

            Costs for IWI of a typical 3-bed semi – costs for materials and fitting only

   Type of insulation         Cost per sq. metre         Cost range per unit      Average cost per unit
Flexible thermal lining            £25-30                    £2,000-2,400                £2,200
                                                Source: PMR survey of installers February 2009 (n=31)

However again it is important to emphasise that these costs only apply if a property is being totally
refurbished and other work is being done anyway. Otherwise other costs must be taken into
account.

As before, additional costs depend on the other work required, but are likely to include wall
preparation, removing and refixing electrics, radiators and so on and possibly re-tiling and
decorating. These extras add on average £1,500 to the cost, giving a total cost for the project of
approximately £3,700.

The following table summarises the costs incurred for insulated wallpaper. As before, for most
projects the extra costs will be required and so the total costs given below will therefore apply.

                      Estimated cost of insulated wallpaper (exclusive of VAT)

                           Cost of IWI material and    Extra costs required for
   Type of insulation                                                                  Total costs
                                 installation                installation
                                 £2,000-2,400                                         £2,500-3,900
Flexible thermal lining                                    Average £1,500
                                Average £2,200                                       Average £3,700


Flexible thermal lining can be applied by the householder as a DIY job. Typically, DIY applications
are more cost-effective, although this is often offset by lower levels of insulation achieved.


5.5. Thermal benefits of solid wall insulation measures
Building regulations specify a minimum post-installation U-value for solid wall insulation of 0.3
W/m²K for new builds or 0.35 W/m²K for an upgrade of existing thermal elements (major
refurbishments). Almost all the installers and local authorities interviewed in our research were
aiming for a U-value of at least 0.35 for refurbishments (with the exception of internal flexible lining
– see below).
Solid Wall Insulation Supply Chain Review (April 2009)                                               23




To achieve that figure a range of thickness of insulation material was applied, depending on the
material in question. The survey of installers and local authorities provided some data on external
wall insulation.

                   External wall insulation: materials used and U-values achieved

               Insulation material                       Thickness                U-value achieved

Expanded polystyrene / EPS                                70-90mm                       0.35
                                                          100mm                      0.28-0.30
Mineral wool                                             80-100mm                       0.35
                                                          110mm                         0.25
Phenolic                                                  50-60mm                       0.35
                                                           70mm                         0.30
PIR                                                       60-80mm                       0.28
                                     Source: PMR Survey of Installers and Local Authorities March 2009

Installers claim to use a variety of external wall insulation systems (see section 4.2 of this report)
and among the manufacturers of insulation materials mentioned are Rockwool and Knauf
(particularly for mineral wool), Kingspan (for phenolic and PIR boards) and PermaRock and
Celotex, although this list is not exhaustive.

For internal wall insulation we have limited data from installers and local authorities, and the
following table is bolstered by worked examples of IWI from Communities and Local Government.

                   Internal wall insulation: materials used and U-values achieved

               Insulation material                       Thickness                U-value achieved

Polyurethane foam                                          60mm                         0.35
                                                           75mm                         0.28
Phenolic                                                   60mm                         0.35
Extruded polystyrene *                                     80mm                         0.35
Studwork IWI using mineral wool slabs *                    100mm                        0.35
                             Source: PMR Survey of Installers and Local Authorities March 2009 / CLG
                                                                             * CLG worked examples

Manufacturers of internal wall insulation materials cited by installers and local authorities include
British Gypsum, Celotex, Isothane, Kingspan, Knauf and Rockwool (see section 3.1 of this report
for more information on manufacturers of insulation products).

In the case of insulated wallpaper the Defra Insulation Supply Chain Review 2007 quotes a post-
installation U-value of 1.6 W/m²K achieved for internal flexible lining.
Solid Wall Insulation Supply Chain Review (April 2009)                                                 24




5.6. Offsetting costs against benefits
It is difficult to calculate average payback periods for solid wall insulation precisely, since the cost of
insulation depends upon the size of the building, the energy savings resulting from the insulation
(and the cost of energy), the level of insulation applied, the presence of other kinds of insulation
already in the property and the availability of subsidies. Quoted payback times are averages and in
reality they vary from 3-4 years for a simple installation (for example replacing worn render with an
insulated render system) up to 20 years or more for more extensive installations (such as an
expensive brick slip system to match masonry buildings).

The absolute costs and payback period are also misleading in that solid wall insulation often
provides benefits besides thermal ones and these tend not to be factored in. For example, external
wall insulation also weatherproofs the property, provides air tightness, and revitalizes the
appearance by covering worn render and masonry. INCA comments: ‘It is a mistake to concentrate
on payback – it varies so much. In the UK external wall insulation is used largely to upgrade and
modernize buildings; on the Continent it is accepted by the public as a positive measure to enhance
their investment and their comfort.”

In addition solid wall insulation measures become particularly economical where a property needs
redecorating, refurbishing, re-rendering or weather-proofing, and the work is likely to be carried out
anyway.

5.7. CERT contribution
Ofgem estimates that just over 7,000 solid wall insulation measures were carried out in the first nine
months of CERT. Thus only a small proportion of SWI measures call on CERT funding.

Interviews with installers, local authorities and energy suppliers suggest that CERT funding
represents anything between 1% and 15% of the project costs. Typical CERT funding per home
tends to be in the £800-1,000 range.

Most installers are unaware of the level of CERT funding (or indeed whether CERT funding has
been accessed by their clients, the local authorities or main contractors). Many installers perceive
the process of accessing CERT funding to be too onerous for the level of funding available.
Solid Wall Insulation Supply Chain Review (April 2009)                                            25




APPENDIX A: RESEARCH METHOD
Method

For the current research project, we have addressed the research objectives through a telephone
survey of installers and local authorities / housing associations, supplemented by consultation with
a number of industry experts, such as manufacturers and system designers, trade bodies, Ofgem
and energy suppliers.

We have found that estimating the size of the external wall insulation (EWI) market is a more
straightforward task than doing so for the internal wall insulation market. This is mainly because
EWI installers tend to be specialists and there are reasonable lists available of the main installers
from trade sources such as the Insulated Render & Cladding Association (INCA).

Researching internal wall insulation is not so straightforward, mainly because IWI is often done by a
non-specialist, such as a building contractor or decorator. There are some IWI specialists, such as
the installers listed on the website of the British Urethane Foam Contractors Association, but these
tend to offer one specific technology. Beyond that technology there are no comprehensive lists of
installers of IWI.

In order to research IWI we focused on more qualitative interviews with a small number of BUFCA
installers and also with industry experts including manufacturers and trade bodies. We were unable
to obtain robust market data on IWI from these industry representatives and our estimates for IWI
are based on more qualitative feedback from industry (notably that IWI represents around 40% of
the SWI market).

Interviews conducted

INCA lists 34 installers on its website and we have spoken to 21 of those. In addition, the
Federation of Plastering and Drywall Contractors (fpdc) lists four installers specializing in EWI (out
of a total of over 100 members) and there are a small number of solid wall insulation contractors on
the NIA website (although not many - NIA installers mainly focus on cavity wall insulation).

In total we have conducted 31 interviews with installers as follows.

                  Source                      Approx. total in group             Interviews
INCA installers (top 10)                                 10                           8
Other INCA installers                                    24                           13
FPDC installers                                          4                            2
NIA installers focusing on SWI                          5-6                           2
BUFCA installers                                         20                           2
Installers of flexible thermal lining                Unknown                          2
Others                                               Unknown                          2
Total                                                   64+                           31
Solid Wall Insulation Supply Chain Review (April 2009)                                              26




We also interviewed a number of other relevant bodies to gauge the level of SWI installation and
cross-check our survey findings. These bodies include:
    •    Manufacturers / system designers

    •    Relevant trade bodies

    •    The CERT team at Ofgem

    •    Energy suppliers

    •    Other relevant people / bodies e.g. Jacky Pett (researcher who has done some recent work
         on how to improve hard to treat homes within the CERT framework).

We have also interviewed local authorities and housing associations to obtain the perspective of
organizations commissioning solid wall insulation projects.

Feedback from all of these sources can help us cross-check and sense-check estimates arising
from the installer interviews.

Establishing costs of SWI

It is difficult to establish the cost of completing SWI measures and estimates given tend to vary
depending on assumptions (type of insulation, type of property and also other work that is likely to
be required, such as the erection of scaffolding, rendering, carpentry, plumbing and decorating).

A key aim of the current research has been to obtain more detailed and specific information on
pricing of SWI. To obtain robust data on the pricing of SWI we have taken a number of different
approaches:

    •    Firstly, in the survey of installers we asked respondents to describe 2-3 recent projects they
         have completed involving SWI in terms of type of insulation, type of properties, number of
         properties, client type, cost of SWI, other costs (e.g. scaffolding);

    •    Secondly we asked installers taking part in the above survey if we could email them a more
         detailed specification of a SWI project so that they could cost the specified job together with
         assumptions made about type of insulation to be used (it should be noted that not all
         respondents fulfilled their promise to do so);

    •    Thirdly we have asked local authorities and housing associations about projects
         commissioned;

    •    Finally we commissioned a quantity surveyor (Robert Lombardelli Partnership Ltd.) to price
         a detailed specification for SWI work.

Our resulting cost estimates have also been cross-checked against estimates given by trade
bodies.

Timing

All research was conducted in February and March 2009.
Solid Wall Insulation Supply Chain Review (April 2009)                                 27




APPENDIX B: SOURCES

For further information on the solid wall insulation sector:

British Gas (www.centrica.co.uk)

British Urethane Foam Contractors Association / BUFCA (www.bufca.co.uk/members/)

British Rigid Urethane Foam Manufacturers Association / BRUFMA (www.brufma.co.uk)

Centre for Sustainable Energy (www.cse.org.uk)

Communities and Local Government (www.communities.gov.uk) - specifically Review of
Sustainability of Existing Buildings 2006

Defra Supply Chain Review 2007 (www.Defra.gov.uk/environment/energy/eec/index.htm)

Energy Efficiency Partnership for Homes (www.eeph.org.uk)

Energy Saving Trust (www.energysavingtrust.org.uk)

Federation of Plastering and Drywall Contractors / FPDC (www.dpdc.org)

Insulated Render & Cladding Association / INCA (www.inca-ltd.org.uk) and registered INCA
installers and system designers

National Insulation Association / NIA (www.nationalinsulationassociation.org.uk) and member
installers and manufacturers

MBD (www.mbdltd.co.uk) – UK Thermal Insulation Market Development 2008

Ofgem (www.ofgem.gov.uk)

				
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