Improvement option evaluation
September 24, 2023 By Andrew Foote

What is an Improvement Option Evaluation?

This guide explains what an Improvement Option Evaluation (IOE) is and when it is required, what information it holds and how it is used.

Improvement Option Evaluation

Retrofitting existing homes

The world of retrofit improvements and installing Energy Efficient Measures (EEM) to homes is a brand-new world of acronyms, regulations, and compliance while being at the forefront of helping the UK reach net zero by 2030 by cutting our carbon emissions by at least 45% and offsetting the rest.

When we retrofit existing homes with energy efficiency measures there are regulations and standards we must comply to. Most people involved with property repairs, renovations and remodelling will be aware of building regulations, planning permissions, Gas Safe and electrical regulations. Not many people will be aware of a particular regulation regarding the installation of energy efficient measures such as wall, floor and roof insulation, high energy efficient heating systems and LZC measures such as solar panels. This standard is PAS2030/2035:2019.

What is an improvement option evaluation? (IOE)

An improvement option evaluation (IOE’s) is created by a retrofit coordinator to help clients realise, understand and agree on the best options available in relation to improving the energy efficiency of their homes. The IOE will show what energy, cost and CO2 emissions could be saved by improving an aspect of their home such as installing wall insulation, roof insulation or a new efficient heating system, while also considering micro generation options such as solar panels or heat pumps when retrofitting existing homes.

Why do we need an IOE?

An IOE is a requirement of PAS2035. Where homeowners, social housing or private tenants receive government funding to pay for energy efficient measures. The installations have to comply to PAS2030 and the project itself has to comply to PAS2035.  The fundamental requirements of PAS 2035 are the property must have a retrofit assessment completed (condition and ventilation assessment) at the start of the project, and the project needs to be coordinated by a Retrofit Coordinator (RC). Where the project is a risk path B or risk path C, an improvement option evaluation and a medium-term plan has to be created by the RC and included within the final submission in order for the project to be compliant to PAS2035.

What does a Retrofit Coordinator do?

Retrofit design ECO4 Gusus

The Retrofit Coordinator (RC) ensures that the whole project including all retrofit installations within the project comply to PAS2035. The RC is instructed by the main installer to coordinate the project. Upon instruction, the RC will study the retrofit assessment (condition and ventilation report), and any other technical surveys that have been completed pre installation and any constraint imposed on the building. The RC will then assess what energy efficient measure could be installed at the property, what remedial work if any would be required and what enabling works would need completing before the installation of any proposed measures. The RC will also assess the inherent risks of each measure and additional risks where measures interact with each other and the building.

Where the project risk path is deemed to be a path A or path B the RC will create an improvement option evaluation showing what energy, costs and CO2 emissions could be saved by improving different aspects of the property.

What is a Retrofit Risk Path?

Assessing the risk path

Depending on the measures to be installed, there is a risk that installing some measures could make the property worse (yes this is possible). As an example, installing wall insulation would help the property retain heat, but could also make the property more airtight. If the property is more airtight then this may cause ventilation issues resulting in condensation, mould and damage to the property.

The inherent and cumulative risks to property and people of the project are assessed by the RC and designated a risk class of ‘A’, ‘B’ or ‘C’ in accordance with PAS2035. Each risk path triggers additional requirements. Risk paths ‘B’ and ‘C’ require the creation of an Improvement Option Evaluation.

What’s the point of an Improvement Option Evaluation?

The point of a IOE’s is to outline what measures could be installed, what savings the measures could create and in what sequence the measures should be installed, while addressing issues and establish an appropriate and effective set of retrofit measures for your specific home.

Upon completion of the whole project, which may include several improvements, the IOE will be uploaded to a Data Warehouse so that future occupiers and owners of the property can access the IOE in years to come and continue the property’s retrofit journey.

What is the IOE used for?

As discussed, the IOE is a requirement of PAS 2035 for projects following risk Paths B or C. The IOE is used by the RC, property owner/occupier, installer and other stakeholders to assess the options available for that property. When all parties have reviewed the IOE and the proposed retrofit improvement measures with the client and other people involved in the project, and sometimes the local planning and building control, a package of measures will be confirmed.

Based on the proposed intended outcome, available funds, requirements, significance and limitations of the building, a package of suitable measure will be agreed upon and the risk path of the project can be confirmed. The package may be installed in several stages, but in most cases the chosen package is installed at the same time and future packages or options are detailed within the Medium-term Plan (MTP) to be completed within the next 20 to 30 years.

What is a Retrofit package?

A retrofit package is a group of appropriate measures that could be installed at a property, at the same time, to improve the energy efficiency of the home. This will be a mixture of measures that when installed correctly with have a cumulative effect on the property’s energy efficiency.

Eco4 Gurus create a package prioritising the necessary improvement measures in stages in accordance with a ‘fabric first’ approach, ensuring that measures are installed in the correct order, without blocking future measures, and with measures that should be installed together in the same stages.

As an example, solar PV panels work very well with air source heat pumps, while a heat pump works very well with a well-insulated home.

The package is agreed upon by all parties after considering and confirming the scope of the project, the available budget, the intended outcomes, and appropriate energy performance targets.

The measures that are not appropriate or financially viable right now but may be viable in the future will be included in a medium-term plan (MTP).

What have we learned so far?

  • Projects with retrofit energy improvements that will receive government funding must comply with PAS2030/2035:2019
  • Projects that comply to PAS2035 must have a retrofit assessments completed by a Retrofit Assessor (RA)
  • These projects also require a Retrofit Coordinator (RC) to ensure that the project complies with PAS2035.
  • The RC produces compliant documents which in most cases (Pathc B and C) includes an Improvement Option Evaluation (IOE).
  • The IOE highlights measures that could be installed to improve the efficiency of the home.
  • The IOE is used by all stake holders to discuss and agree upon a package of measures to be installed.
  • When the project is completed with all measures installed, or each stage installed, the IOE is lodged to Trustmark Data Warehouse so future residents/owners can have access to the IOE and continue the retrofit journey of the property.

What is included in an Improvement Option Evaluation?

An Improvement Option Evaluation can be carried out using a recognised domestic energy performance simulation model such as SAP.

Using data collected during onsite assessment, Eco4 Gurus uses modelling software as well as full SAP to calculate the present energy efficiency of the property. This is used as a base model to compare and calculate savings of different retrofit measures as if they were being installed individually.

We also calculate a package of 2 or more retrofit measures and calculate the cumulative saving when installing all the measures at the same time. This is called an improvement package.

Why do we calculate an improvement package?

Improvement Option Evaluation calculating savings

We calculate an improvement package of measures because the energy savings, savings in fuel cost and carbon emission savings associated with each measure depends on how they interact with each other and their compounded savings.

We also consider the installation costs (capital costs), the annual savings and the simple payback period.

We must first calculate the savings as if only one measure was installed on to the base model of the property. We do this for each proposed measure.

The list of measures show indicative costs and savings presented in a way that can be easily assessed and understood.

As a simplified example on a particular house, the following may be true in relation to the cost of energy required for a year. Just say the homeowner pays £2000 per year to heat their home…

  • Installing loft insulation costing £600, where there was previously no insulation, could reduce heat loss resulting in a 30% saving or £330 (30% of £2000)
  • Installing solid wall insulation costing £15,000, may reduce heat loss resulting in a %50 saving of £1000.
  • Installing a new energy efficient heating system costing £5500 where previously there where only direct electric room heaters, could reduce energy usage by 50% giving a saving of £1000.

It can be seen from the above that installing loft insulation is an economic way of saving £300 a year while only costing £600. This would be an obvious measure to install, paying for itself in only 2 years.

It can also be seen that installing a heating system could save £1000 a year and be paid back within 5.5 years.

Solid wall insulation on the other hand saves £1000 a year and costs £15000 so would take 15 years to pay for itself.

In the above example loft insulation and a new heating system may be proposed as a package with the homeowner as there will be a simple payback period of about 6 years with many more savings for the lifetime of the measures.

This will allow the expected savings of measures or packages to be compared and reported to the Client as well as supporting the development of a ‘Medium-Term Improvement Plan’.

The owner of the property may decide to save up funds to pay for the solid wall insulation in the future. The solid wall insulation and other possible measures would then be added to the medium-term plan, with indicative costs and savings.

A more robust approach would be to install the fabric insulation measures before the installation of heating and renewable measure, but this is not always practical within every project.

What are the total savings?

Improvement Option Evaluation saving money

The actual total savings has to be calculated between the base property values and all of the proposed measures to be installed all together, producing the total costs and potential savings.

In the above simplified example:

Loft insulation saves 30%, £332

Solid wall insulation saves 50%, £1000

New heating system saves 50%, £1000

You could be mistaken that adding all these savings up and getting £2332 would be the total saving were all 3 measures where installed. But this is not the case.

Compounded savings

The savings are based on the energy usage prior to installing the measure and compound as further measures are added to the base model.

Base model costs £2000

Loft insulation reduction of 30% of £2000. Total cost per year £1668

Solid wall insulation, reduction of 50% of £1668. Total cost per year £834

New heating system, reduction of 50% of £834. Total cost per year £417

A total cumulative saving of £1583

The total cost of installing all measures is £21100, there is a saving on £1583 per annum, and the installation cost will be paid back in just over 13 years.

As can be seen above, an IOE showing individual savings helps one understand what measures would be the most cost effective to install, while the savings and cost of the measures can be evaluated to help agree upon a package.

A package containing all three measures with costings and cumulative savings and simple payback, can help one understand the cost effectiveness of the whole completed project and overall payback period.

What does the Improvement Option Evaluation show?

The IOE shows, as required by PAS 2035, the capital costs of the measures the simple payback in years and the Carbon Cost-Effectiveness in pounds per tonne of carbon emissions (£/tCO2).

Simple Payback (in years)

This is the capital cost of the improvement measure or package of measures divided by the estimated annual fuel cost savings. The Capital costs include the installation costs and any servicing and maintenance costs throughout its lifetime, while acknowledging that the person or organisation incurring the capital cost might be different from those benefitting from the fuel cost savings. Simple payback indicates how quickly a householder’s or landlord’s financial investment will be returned in fuel cost savings.

Carbon Cost-Effectiveness (in £/tCO2)

This is the lifetime cost of the measure or package of measures, capital cost less annual savings over the estimated life of the measures in years, divided by the lifetime reduction of carbon dioxide emissions such as the annual reduction multiplied by estimated life in years. Carbon cost-effectiveness indicates how much it costs to reduce emissions by one tonne over the life of a measure (or a package of measures).

When calculation the value of carbon cost effectiveness (in £/tonne), this figure can be positive or negative. The lower the value is, the more cost effective the measure is in reducing emissions. Negative values indicate that the measure or package saves more money (in fuel cost savings) over its lifetime than its capital cost to install and maintain.

What else is included in the Improvement Option Evaluation?

Other metrics for each measure could be the annual energy usage, the estimated cost of the energy used, and the equivalent CO2 emissions calculated from the energy used and the source of the energy such as solid fuel, mains gas or electricity, and the possible saving relating to energy, cost and CO2 emissions.

The option evaluation Eco4 Gurus also includes:

  • List of potential EEMs
  • Installation cost
  • Annual fuel savings
  • Repayment period
  • Carbon cost effectiveness
  • Potential energy savings
  • Potential environmental impact rating
  • The lifetime of the measure
  • Potential energy rating improvement
  • Heat demand
  • Heat demand savings

What happens once the Improvement Option Evaluation and packages are agreed?

Once the IOE is produced and the proposed installation packages agreed, technical surveys are carried out for each proposed measure to be installed and the results used to create a ‘Retrofit Design’.

Retrofit Design

Retrofit Designs

The retrofit designer will assess the retrofit assessment, ventilation assessment, condition reports, technical surveys, etc. to ensure that the proposed measures can be installed, what issues or details of the installation will require specific attention and outline remedial or enabling works required before the installation of any measures.

Pertinent details for the installation are detailed within the retrofit design such as what measures will be installed, products and systems to be used, installation methods and detailing, constraints and limitations of the building, planning constraints etc.

The design will also include ventilation assessment of the building and a ventilation upgrade strategy where required that meets the requirements of PAS2035.

The design once accepted by the installer, homeowner, etc. shall be confirmed and the measures can be installed.

After the measures are installed.

Once all the measures are installed and relevant warranties, installation details collated, warranties provided and the whole project handed over to the homeowner/occupier, the RC will lodge the project with the Trust Mark Data Warehouse and the whole project can be formally completed.

Retrofit Project Complete

Now you are well informed as to what an improvement option evaluation is, what it includes and how it is used within a retrofit project for improving the energy efficiency of homes.

How Eco4 Gurus can help?

Eco4 Gurus provide end-to-end retrofit services using industry experts from initial assessment to project completion.

We provide fully comprehensive Improvement Option Evaluations and Medium-term plans for your projects that highlight the best possible options to improve your property’s efficiency while providing you detailed potential savings and return on your investment for the future.

For more information and friendly advice contact Andrew Foote now on 07831564351, email or simply complete the form below.

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