Energy efficiency for residential buildings: Nathers heating and cooling load limits Consultation ris

R.2Information Barriers and Regulatory Credibility

The design of a house or apartment with good thermal performance in both summer and winter is readily achievable. However, a great many factors and variables are at play and the design process is consequently complex.

Thermal performance is affected by every aspect of a house/apartment. First there is the site to consider – the site’s climate zone (there are 69 climate zones that are separately considered under NatHERS), site conditions, aspect/solar orientation, etc). Second come myriad building design factors: overall size; room size; cladding, window frame and roof material choice and colour; insulation levels; window to wall ratios; ceiling heights; eave width; shading features; window dressings, etc. The list of design features with an impact on thermal performance is very long.

The NatHERS software referenced under Part 3.12.0.1 and J0.2 of the NCC considers all these factors when generating energy ratings of homes. The rating metric is MJ/m².year, with the figure determined by annual total thermal energy load (i.e. the sum of heating and cooling loads).

NatHERS uses a highly sophisticated, physical science-based engine developed by CSIRO (called Chenath). NatHERS accredited software (AccuRate, BERS and FirstRate5) are the front end of the Chenath engine and play a vital role in meeting the technical challenge of estimating the thermal performance outcomes of designs and design changes.

In the residential construction market, the roles of design and thermal performance assessment are performed, in the main, by designers, architects and energy assessors who are accredited to use NatHERS software.

In terms of information flows within the market, these professionals using NatHERS software are the chief holders of design and thermal performance expertise and knowledge. They play the role of informing other market participants of the ramifications of design inputs on thermal performance.

Most market participants are not design professionals and don’t therefore have a very precise knowledge of thermal load design considerations. Most builders for instance will understand thermal performance concepts and appreciate the complexity of the design and thermal performance interface. However, most builders are reliant on the design professionals for the provision of precise information on thermal load management – in the same way that they might rely on engineers to design or approve structural design features.

Home buyers are understandably not expert (in general) in any aspect of the construction process. A prospective owner, sitting in the office of a project home builder and contemplating roof colour choice, might have learnt that the solar absorptance of COLORBOND “surf-mist” colour roofing is 0.32, while “monument” colour is 0.73.¹⁰ Most consumers though will be thinking about issues such as roof colour choice from an aesthetic viewpoint. All consumers, regardless of their depth of knowledge, are reliant on industry experts to inform them of the precise impact of design choices on thermal performance.

These circumstances set up a market situation with four key features:

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  The information required to understand building thermal performance is extensive and highly complex.
  
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  Most players in the market don’t have a deep technical appreciation of the issues, nor do they even have direct access to that information (because the knowledge is mainly held by some professionals who use NatHERS software).
  
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  Consumers in particular are highly reliant on building professionals being able to pass on complex information in a simple and understandable form if they are going to be able to integrate that information into their decision-making processes.
  
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  Industry and consumers alike are relying on NatHERS and the NCC to encompass settings and requirements that ensure homes, designed to those standards, deliver adequate thermal performance: that is, the sound reputation and credibility of the NatHERS and NCC is a necessary condition of an effective market.
  

In this market situation, it is understandable that NatHERS has attempted to simplify the complex energy rating process by using a total thermal load (heating + cooling) metric.

However, with the benefit of hindsight, this can be seen to be problematic. As described above, the market situation is one where many participants are not expected to have a deep technical appreciation of the design issues. Accordingly, the market is relying on highly proficient designers, architects and energy assessors to manage this intricacy.

In this situation it is desirable to maximise the sophistication and depth of understanding of those market players who are equipped to assess the thermal performance of homes. The information equipped market players (designers etc) have the market role of informing the many under-informed market players about thermal load design issues. The market will best function when those charged with the informing task are as well informed as possible.

However, by combined heating and cooling load into a single thermal load, current NatHERS settings are simplifying a very sophisticated issue - and reducing the quality of information available in the market.

The combined heating and cooling load settings under NatHERS amounts to a lack of precision and clarity – an information barrier sitting within regulatory settings.

Markets are most effective and efficient when information quality and regulatory credibility is high. Separate load limits would provide new information that will help the residential construction market make better-informed decisions. Better energy performance with lower compliance costs is possible, where actors value these outcomes sufficiently influence their preferred designs.

R.3The Extent of the Problem

The ABCB has been examining how the problem of a combined heating and cooling load limit can be resolved without changing the stringency of the current 6 star requirement.

Extensive research by TIC/EES indicates that around 10% of house designs would exceed the separate heating and cooling limits proposed. In other words, 5% of homes have poor performance relative to other designs under heating load, and 5% of homes will have poor cooling load performance relative to other designs. The evidence base for these findings is very large. TIC analysed over 170,000 NatHERS ratings data records which were provided for the purpose by CSIRO and Sustainability Victoria. ¹¹

The TIC research also indicated that the extent of this un-optimised performance in the 10% of effected house designs, measured in energy waste, is modest at the level of individual dwellings. Nevertheless, the benefit cost analysis (see Section 4) shows that the quantity of national energy and greenhouse gas emissions savings is significant.

It should be noted that the modest extent of thermal under-optimisation and energy waste as explained above is relative to the current 6 star requirement. The underlying position of the ABCB is that current stringency equates to adequate performance.

Importantly, there are options available to resolve this problem of poor design optimisation that are simple and modest in impact. These options are presented in Section 3 and are assessed in Sections 4 and 5 of this Consultation RIS. The net social value that could be created by addressing this problem, with a regulatory solution, is shown to be over $95 million in net present value terms, with a 7% real discount rate.