Decision making under uncertainty in the retrofit analysis of the UK housing stock: Implications for the Green Deal

In order to reduce carbon emissions and alleviate fuel poverty, the UK Government has outlined proposals for a “Green Deal” to help provide financing for the installation of cost-effective retrofit measures to the existing UK housing stock. However, the Green Deal proposals have the potential to generate financial risk, due to a possible overestimation of the energy savings arising from retrofit measures. This paper proposes a framework for handling the uncertainties associated with the prediction of these energy savings, as well as demonstrating how decisions can be made in the face of the uncertainties involved in the retrofit analysis of a housing stock. The proposed framework is applied to a case study set of dwellings and it is seen that a limited range of measures will be cost-effective under the Green Deal proposals for these dwellings; as a result, subsidies will be required if higher impact measures are to be considered viable. Finally, however, it is also seen that the monetary value of additional societal benefits, such as reduced carbon emissions and improved thermal comfort, is likely to more than outweigh the cost of any subsidies.

• The UK Government's Green Deal policy is examined.
• The role and impact of uncertainty on the Green Deal policy are highlighted.
• An integrated model is outlined for accounting for uncertainties.
• The integrated model includes the “rebound effect” of temperature takeback.
• Techniques for retrofit analysis and decision making under uncertainty are explored.