Key Lessons Learned and REcommendations

Drawing from the rich list of REFURB main activities, the key lessons learnt with recommendations are here presented.

Custommer segments of the nZEB home renovation market

Defining customer segments has its complexities, namely through different dwelling characteristics and different dwellers characteristics. To pass this complexity, a ‘matrix’ had to be created as means to identify the (six) market segments with high-potential for which it makes sense to further develop “compelling offers” for homeowners on nZEB renovation.

Drivers and barriers for nZEB renovation

An interesting lesson learnt was that although similar drivers and barriers were found in the six identified high potential customer segments, local (regional) conditions differ and may play an important role into the weight of each driver or barrier. The local conditions include local legislation, ownership market, subsidy schemes, conditions of the building sectors and its readiness to deliver nZEB renovation, etc.

Demand side (homeowners) aggregation schemes

REFURB analysed 10 existing demand side aggregation schemes. A range of lessons were learned. For example,

• The strength in organising homeowners is in: focusing on a well-defined customer segment; providing independent tailor-made advice; reduce the burden of a renovation process; give trustworthy information on the benefits of renovation (energy, monetary, other); involvement of a neutral party (i.e. local authority/government); access to financial incentives and clear information on the upfront costs.
• The fail factors in organising homeowners are: weak financial structure of the aggregation scheme; predominantly aimed at raising awareness; insufficient support for the added value of reaching the nZEB renovation standard; inadequate involvement of the key stakeholders in the value chain; the approach to inform and motivate home owners is too generic, lacking in specific tailor-made information; and high dependence of the aggregation scheme from the external financing and subsidies provision.
• Key strategies to reduce likelihood of homeowners to drop out of their participation in an nZEB home renovation aggregation scheme are: provide personal approach and tailored advice; understand the value of creating kind of ‘communities’, for example by groups of neighbours; give the long-term perspective on the renovation; quality knowledge on the renovation measures and time planning of the renovation; support the aggregation scheme with a funding plan, from undertaking small-number of nZEB renovations up to scaling up, i.e. a solid business models.

Drivers for homeowners to renovate to nZEB standards from the perspective of the supply side

A clear understanding of the country context is required to estimate the replication potential of nZEB home renovation packages on a national and EU level. Therefore, local conditions that influence the supply side were explored of the participating countries in REFURB. It was learnt that:

• In general, two categories of solutions can be distinguished, technical (linked to the building typologies in each country) and non-technical solutions (financing models, online tools, demonstration/showcase projects, means for quality assurance, etc) to renovate houses to nZEB standards;
• The non-technical solutions are more important than the technical solutions to seduce homeowners to renovate to nZEB standards;
• The One-stop-shop-solutions seem to have the highest potential to convince the homeowner to renovate to nZEB since they offer a holistic approach;
• The specific country context determined the success of the one-stop-shop solutions, most of them as embedded in a much broader programme.

Towards creating “compelling offers”

The REFURB project focused on bringing forward solutions to solve the complex interplay and gap between the demand and supply side in the residential sector nZEB renovations. The main aim was to develop an integrated approach which bridges the gap between the demand and supply side, through providing ‘compelling offer’, i.e. an “offer you can’t refuse” – to a house owner.

All country partners in the REFURB project carried out a tailored analysis of their individual markets and created a solid overview identifying key local segments, drivers and solutions. Two main groups of segments were identified. For each segment the relevant local drivers and solutions were identified and the similarities between countries identified.

• Single Family Houses (SFH) with Young Families (YF) and Empty Nesters (EN) as dwellers.
• Multi Family Houses (MFH) with Owners and Tenants as decision maker and dwellers.

It was learnt that the drivers identified for the segments are mostly rational relating directly to a given “pain” or “gain” for the building owner. It is important that these rational drivers are addressed when creating a compelling renovation package design. In the design of the compelling offer it is also important to address the non-rational drivers in the decision process, so an offer to be easy, accessible and affordable to attract a majority of the market in each country.

An important aspect of a “compelling offer” is also the financial stimuli to reward/stimulate homeowners when renovating to nZEB standard. REFURB found that although existing coaching, grants and subsidies for individual energy-efficiency related house renovations, as well as tax deduction or tax reduction stimuli are already available on the market in each REFURB country, number of challenges exist in both single family and multi-family segment.

Considering these challenges, REFURB made specific recommendations in regard to fiscal regulations and subsidies; loans and mortgages; construction of “compelling offer” renovation packages with focus on health, comfort aesthetic; more effect of the EPC and regulation of validation of houses; develop and support local energy advice programs.

Defining “compelling offers”

REFURB developed a methodology, a toolbox and a template for creating compelling offers. The tools used for developing the compelling offers were: customer journey, value proposition, and the business model generation. Based on using these tools, REFURB created a database of 10 country specific and market/ownership segment related (single or multi-family houses, focused on private homeowner), compelling offers for BE, DK, DE, NL, SI and EE. It was learnt that certain similarities between the countries in creating REFURB compelling offers, especially for the single-family houses exist.

The compelling offer can be summarized in the following steps:

1. Decide your market segment
2. Use the customer journey to identify the stumbling blocks and advantages/actions
3. Generate the value proposition
4. Describe the business model
5. Add the financial support (optional)
6. Appoint a Single Point of Contact (if required).

REFURB learnt that:

• Key to have a successful completed journey of a house owner when undertakes renovation is in understanding the customer journey (each of its 11 steps) and tailoring it to meet the specific homeowner’s requirements.
• A strong value proposition addresses the pains (barriers), gains (drives) and jobs (solutions) relevant for the chosen house renovation market segment.
• The value proposition in the business model should be based on the value proposition for the key stakeholders in the nZEB hose renovation process.

It was concluded that that the initial stages of the customer journey are well covered by online tools and provide fast numbers and “ballpark estimates; although, such calculations are not enough to offer a tailored solution for deep energy renovation. Therefore, it was recommended that further steps of the customer journey are supported by Renovation Coach service that would guide house owner through technical and financial aspects of the journey.

Based on the knowledge from the market analysis of the online tools and their strengths and weaknesses, the REFURB partners were able to develop a specific online tool and approach to ensure market uptake of nZEB house “compelling offers” containing renovation packages.

My Energy Compass (Leideral Region Tool) was designed to convince homeowners to start with their customer journey to renovate their house and to nudge them through all other steps in the customer journey. This tool can be rolled out into other regions in Europe using the methodology developed while creating ‘My Energy Compass’, taking into account local conditions.

Recommendations for this tool for the demand side of the renovation process (house owners) should be:

• User friendly.
• Have appealing, intuitive and transparent interface.
• Should be easy to follow (it should be easy to fill in information).
• Should not be too detailed and not require too much time spent.
• Should give clear und understandable to house owner indication of what is the current state of the building and where is the priority for the renovation.

Quality Assurance

An important lesson is that quality assurance for home renovations is handled differently per country depending on the market situation. Also, that performance guarantees are neither a trigger for homeowners to complete their nZEB renovation nor a major barrier in entering the customer journey.

However, this does not mean that quality issues should be neglected or that actions should not be put in place to achieve the expected energy savings. It is rather an appeal for a holistic quality approach: the entire customer journey should have quality checks and balances built in.

While certification of the supply side is imposed in the majority of the quality assurance schemes, performance guarantees are neither legally implemented nor found in practice in general.

Some loans or financial incentives for energy renovation are linked to the quality of the works or the energy performance of the building afterwards. Nevertheless, there is no guarantee to actually achieve energy savings to the expected extent, because they are usually based on the EPC calculations instead of on the real savings.

Quality assurance can take the form of a toolbox of quality assurance measures embedded in the ‘compelling offers’. Which kind of measures and under which conditions must be tailored to the local guarantees for energy savings is one way to create customer confidence, but there are a lot of other options possible that can achieve the desired result.

There still is a need for stronger collaboration and trust building between ‘traditional’ partners such as contractors, designers and consultants. In addition, collaboration is recommended with new types of stakeholders such as renovation advisors, project managers, ESCO’s, renovation stores, one-stop-shops, and non-profit organisations. Therefore, the single-point-of-contact (SPoC)revealed highly relevant for market uptake as a way to improve the customer relationship by providing guidance along the entire customer journey.

Wide spread roll-out

The regions selected focus groups of local stakeholders (including homeowners) to participate in the pilot tests and feedback.

For increasing the chance of market-uptake on a local scale, the project learned that:

Homeowners were able to interact with installers, local decision-makers and vice versa. Additionally, important lessons were learnt from focus groups about how to reinforce a “compelling offer”.

Based on experiences within the network and focus groups, it was recommended that:

➢ It is very important for a government to invest in a solid and consequent approach for the first four crucial steps of the customer journey, starting by spreading the message on the importance and benefits of energy saving.

➢ A stimulating and facilitating municipal government can help to create ‘synergy’ within the boundaries of the municipality (the demand side) as well as the market for deep energy renovations (the supply side). Keeping an open dialogue with homeowners and stakeholders is key.

➢ It is good to have compelling offers that clearly differ from each other. Opting to stimulate and promote multiple and diverse types of compelling offers and approaches, enhances the level of success as it will increase the change that (certain aspects of) either one of them will appeal to a wide range of residents.

In terms of further transferability, a plan was composed focussing on private homeowners throughout Europe that consist of three different phases:

• Phase 1. Implementation of legislation (where needed) and creating general awareness and support in government and industry.
• Phase 2. Ensuring the building industry is ready.
• Phase 3. Making of a “compelling offer” in combination with local pilots for validation and demonstration in practice of the compelling offers.

The three phases are translated to a bottom-up “local to national” cycle, with 3-steps:

1. The municipality in cooperation with local actors in private- public partnership is implementing necessary actions to initiate and secure a local functioning customer journey;
2. Combined with stronger engagement of national stakeholders;
3. And securing national government improving incentives and promotion of energy retrofit at national level based on the REFURB approach. Stronger national support will potentially attract more municipalities and help scale up the REFURB concept to other regions and municipalities.