Calculating Financial and Carbon Payback from Insulation
by Mike Hardy

For your property it is possible to calculate approximate figures for your own situation.

To relate this to your own property/properties firstly compare your fuel bills in summer and mid-winter.

This will give an indication of the cost of heating the hot water used for baths, taps etc. and heating for the building fabric – and it is also likely to concentrate the mind on such items as hot water usage and for you to consider ways in which it is possible to have hot water available when required and yet not have to store it for such long periods of time through the day – it did mine!

An allowance will have to be made for other items such as cooking if the same fuel is used.

Once the approximate heating for the building fabric has been isolated then break down the areas of heat loss in winter, these will be elements of the building exposed directly to outside air in winter.

The areas are likely to be external glazing, walls, roof and floor.

To assess the loss through a specific building calculate the area of walls, roof space, glazing and floor.

This will mean that the proportion of heat loss of each element may be estimated and related to the fuel bill (after the deduction of hot water heating).

But each element area firstly needs to be multiplied by the relevant thermal transmittance or U-Value and then proportioned to the fuel bill.

The new U-Value may then be estimated after the addition of insulation and the calculation may them be made of the approximate cost saving for the improved insulation to that element.

Some typical U-Values are given below – all figures are watts/metre2K.

Single glazing
For glazing without frames5.6
For glazing with wooden frames5.0
For glazing with aluminium frames6.4
Double glazing
Double glazing with 25mm or more airspace2.9
Double glazing with 12mm air space2.1
Double glazing with 6mm air space2.5
Double glazing with 3mm air space3.0
Roof glazing skylight6.6
Roofs: 35° pitched
10mm tile, loft space and 10mm plasterboard i.e. completely uninsulated2.6
10mm tile, loft space, 25mm glass fibre quilt and 10mm plasterboard0.99
Roofs: Flat
19mm asphalt, 75mm screed, 150mm cast concrete, 13mm plaster1.9
105mm brickwork, 10mm plasterboard2.7
220mm as above2.0
220mm as above with 25mm air gap1.56
200mm heavyweight concrete block, 25mm air gap 10mm plasterboard1.8
200mm lightweight concrete block, 25mm air gap, 10mm plasterboard0.68
200mm cast concrete unplastered3.1
Solid Floors
Area4 edges exposed2 perpendicular edges exposed
60m × 60m0.150.08
60m × 20m0.260.15
40m × 40m0.210.12
40m × 20m0.280.16
20m × 20m0.360.21
20m × 10m0.460.28

Proportioning the Fuel Bill and Calculating Pay Back

The annual fuel bill incurred may now be proportioned using the above information and the approximate payback of improved insulation may be calculated.

The Sutherland tables provides information on the cost of space and water heating for domestic buildings using various fuels and for 2-bedroom terraced houses, 3–bedroom semi and 4-bedroom detached.

Their figures for October 2008 show a figure of £2,365.00 for an oil boiler providing heating and hot water to a 4 bedroom detached house.

Let us assume that £365 of this energy is for hot water and this may be verified by the energy bill for summer when heating is not required.

Let us assume that 10% of the heat is lost through ventilation and cold air entering the house in winter.

Then the remainder which is the heat losses through the fabric of the house will be costing £1800 per year in fuel bills.

If we assume a 125 metre2 double storey house with a roof space area of 125 metre2 consisting of 10mm tile, loft space and 10mm plasterboard a 220mm wall with a 25mm air gap and single glazing with wooden frames of 36 metre2 and the building has four exposed edges.

The proportions are as follow (as the numbers are for proportioning only, the units are not shown):

125 metre2 × U-Value of 2.6 = 325
125 metre2 × U-Value of 0.36 = 45
156 metre2 × U-Value of 1.56 = 243.36
36 metre2 × U-Value of 5 = 180

The figures add up to 793.36 so the proportion of cost per element related to an £1800 fuel bill for heat losses through the fabric of the building:

325/793.36 × £1,800 = £737
45/793.36 × £1,800 = £102
243.36/793.36 × £1,800 = £552
180/793.36 × £1,800 = £409

Cost Effect of Improving the Insulation to the Roof

Simply turn upside down the U-Value to obtain the R-Value, i.e. the figure for the roof becomes 1/2.6 = 0.38 and add the R-Value for the new insulation and turn upside down again to find the new U-Value.

The R-Value if not known is equal to the thickness in metres being applied divided by the thermal conductivity of the material – the latter figure will be given by the insulation manufacturer in units of watts per metre °C.

So assuming we are going to apply 270mm of roof insulation with a conductivity value of 0.04 watts per metre K, the R-Value would be 0.27/0.04 = 6.75 metre2 K per watt.

Add this to the 0.38 R value above this becomes – 0.38 + 6.75 = 7.13 metre2 K per watt.

So the final U-Value is this figure turned upside down = 0.14 watts/metre2K which is a huge improvement on the original figure.

In terms of money saved and again related to the £1800 fuel bill for heat losses through the building fabric of the building this would be:

The new proportioned figure for the roof which came to 325 before now after adding the insulation comes to 125 × the new U-Value of 0.14 = 17.5.

So the new financial cost of fuel due to heat loss through the roof is now - 17.5/793.36 × £,1800 = £39 (compared with an uninsulated roof financial cost of £737 per year.)

An exceptional saving per year, in this case, because the original roof had no insulation at all so the addition of 270mm thick insulation has made a huge financial saving on fuel cost.

Cost for Loft Insulation Material and Payback

The cost of insulation material varies hugely at present and consequently, of course, so do financial payback periods – the cost of materials is driven by the energy suppliers having to hit targets for carbon emissions.

The general advice is that your energy supplier will put their nominated insulation installer in touch with the building owner for a survey and quote.

But this is not necessary the cheapest way especially if the installation is going to be DIY.

At the moment for example B&Q in conjunction with British Gas are offering 200mm thick × 3.6 metre2of encapsulated fibre glass for £3 a roll instead of the usual £34.88 per roll - so less than a tenth of the normal cost.

So supply only for 125 metre2 would be 35 rolls at £3 = £105.00.

As we have seen before the annual energy saving would be (£737 - £39) = £698 per year or £58 per month then the financial payback for the above example would be less than 2 months.

The total cost assuming a subcontractor installs the work insulation for £200 = £200 + £105 = £305.

So financial payback then is just over 5 months.

However the insulation we are buying is 200mm thick insulation instead of the 270mm insulation so it won’t be quite as fast a payback as that but not far behind.

An approximation then of the revised figure would be 270mm/200mm x £39 = £52.65.

So still a massive saving of (£738 - £53.66) = £684.34 per annum, or around £57 per month saving.

At a cost of £105 for DIY insulation would be a payback period of 2 months.

At a cost of £305 for the work installed by a sub–contractor would be a financial payback of about 6 months.

The above is using fibre glass which is encapsulated and suitable for 400mm centre joists.

An alternative to fibre glass is rock wool or sheep's wool – the latter is the most adaptable for cutting and carving around in a roof space but the most expensive.

So considering sheep's wool insulation, this is likely to be the most expensive insulation but claimed to be the most sustainable by their suppliers – I will let them put their own case below as to why you should pay more for using this insulation.

The key advantages of sheep wool insulation compared to man-made are

  • A better insulator compared to mineral wools, requiring 10% less gauge to achieve the same insulating factor.
  • Controls condensation - wool absorbs and releases moisture; wool can absorb up to 40% of its own weight and remain dry.
  • Glass fibre thermal performance deteriorates dramatically when any moisture is present, wools performance is not affected.
  • Wool absorbs harmful gasses, e.g. formaldehyde and locks them up permanently, man-made emits gasses!
  • Wool will last for the life of the building due to the resilience of wool, glass fibre compacts and requires topping up every 10 years.
  • Wool is truly sustainable; a yearly clip of wool is available as a by-product of the livestock farming.
  • Wool is a Carbon sink”, it actually locks up CO2, man-made pollutes CO2 in its manufacture.
  • Very low energy required in its manufacture, only 15% of the energy required to produce mineral wools.
  • Biodegradable at the end of its life.
  • Safe to handle, no skin or respiratory problems typical of mineral wools.
  • Supports economic deprived areas of the UK.
  • Black Mountain only uses virgin UK wool, typically hill farmed Swaledales and Welsh Black Face, hence the product is truly sustainable and environmentally conscious and totally safe requiring no protective clothing to install.

The heat loss calculation in the example above uses a figure of 0.04 watts per metre conductivity for both fibre glass and sheep wool – the suppliers of sheep wool state a conductivity figure of 0.044 which is why they are claiming 10% improved performance.

I am not at all sure of the source of their information they have used that assumes fibre glass will require topping up every 10 years as stated above - I agree more with the figure of lasting for 40 years as stated on the Energy Savings Trust website.

This assumes that it is looked after and not crushed down with heavy items in the loft which will reduce the insulation value of the material.

The Sustainability Centre’s price for 100mm thick sheep's wool with an area of 3 metre2 is £21.11.

So we would have to double up on the sheets for 200mm thickness to get the same insulation value as the 200mm thick fibre glass – the conductivity value for both the materials is about the same at 0.04 watts per metre K.

For 125 metre2 42 sheets would be required and this would have to be doubled to 84 sheets for the 200mm thickness.

So the cost would be for DIY - 80 × £21.1 = £1,688.

If installed by a contractor let us assume £200 again then installed = £1,888.

Based on our annual saving of £684 per annum this is a payback of around 33 months or 2 years 9 months – a far cry from the B&Q special deal but using a more natural material.

An alternative would be to use the 150mm thick sheep wool insulation at a price of £12.45 per metre2 which would considerably reduce the installation costs and the reduced financial saving at the same time calculated - still very significant.

I can’t find anyone who will subsidise the installation of sheep's wool and this includes the insulation company nominated by my energy supplier – but all other things being equal I would prefer sheep's wool in my loft – but they are not all equal!

So depending on the deal the financial payback is anywhere between 2 months and approaching 3 years.

What about carbon dioxide payback as a direct result of the improved insulation?

Using a saving of £684.34 per annum for insulating the roof.

If 4p per kWh is being paid for gas then 684.34/0.04 = 17,100 kWh per annum is saved or

For gas
17,100 × 0.185 = 3,163kg of carbon dioxide or just over 3 tonne of carbon dioxide per annum.
For electricity
17,100 × 0.537 = 9,182kg or just over 9 tonne of carbon dioxide per annum.
For gas oil
17,100 × 0.252 = 4,309kg or over 4 tonne of carbon dioxide per annum.
For fuel oil
17,100 × 0.268 = 4,582kg or over 4.5 tonne of carbon dioxide per annum.

Glazing Improvements

The financial loss through the single glazing of the house was calculated at – 180/793.36 × £1,800 = £408.

The figures above were based on 36 metre2 of single glazing × U-Value of 5 watts/metre2 K = 180 as a proportioned figure.

The addition of secondary glazing with a 150mm air gap is typically likely to improve the U-Value around half to 2.5 watts/metre2K.

One manufacturer claims that using 4mm low emissivity glass and a 150mm air gap achieved a U-Value of 1.86 watts/metre2 K but we will work with the figure of 2.5.

The loss would now be 36 metre2 of secondary glazing × U-Value of 2.5 = 90.

The financial loss after the secondary glazing improvement would now be 90/793.36 × £1,800 = £204 per annum so this is a saving of £204 per annum.

So if the addition of the secondary glazing was £2,000 this would be a payback of around 10 years.

For the carbon dioxide payback per annum:

If 4p per kWh is being paid for gas and a saving £204 per annum then 204/0.04 = 5,100 kWh per annum is saved.

For gas
5,100 × 0.185 = 943kg of carbon dioxide per annum.
For electricity
5,100 × 0.537 = 2739kg of carbon dioxide/annum.
For gas oil
5,100 × 0.252 = 1,285kg of carbon dioxide/annum.
For fuel oil
5,100 × 0.268 = 1,366kg of carbon dioxide/annum.

Wall Insulation

Insulation may be added in the form of external insulation, internal insulation or cavity wall insulation (assuming the building wall has a cavity).

The simplest and least costly is cavity wall insulation.

The financial loss due to heat loss through walls in the example was calculated as follows:

  • Walls – 156 metre2 × U-Value of 1.56 = 243.36
  • Walls – 243.36/793.36 × £1,800 = £551

If 50mm of insulation is added with a conductivity of 0.04 watts per then the R-Value would be insulation thickness divided by the insulation conductivity = 0.05/0.04 = 1.25 metre2K per watt.

If this is added to the resistance of the existing wall which is the U-Value of 1.56 turned upside down which is 0.64 then the sum of both resistances – 0.64 + 1.25 = 1.89 metre2 K per watt.

The new U-Value is now 1.89 turned upside down = 0.53 watts per metre2 K – quite an improvement from a figure of 1.56.

The financial loss now due to heat loss through the insulated walls is:

  • Walls – 156 metre2 × U-Value of 0.53 = 82.68
  • Walls – 82.68/793.36 × £1,800 = £188.00

So this will be a saving of £551 - £188 = £363.00

A specialist contractor should not charge much more than this for the cavity wall insulation so the figure could be recovered in one year or perhaps 1.5 years at worst.

For the carbon dioxide saving per annum:

If 4p per kWh is being paid for gas and a saving £363 per annum then 363/0.04 = 9,055 kWh per annum is saved.

For gas
9,055 × 0.185 = 1,675 kg of carbon dioxide/annum.
For electricity
9,055 × 0.537 = 4,862 kg of carbon dioxide/annum.
For gas oil
9,055 × 0.252 = 2,281 kg of carbon dioxide/annum.
For fuel oil
9,055 × 0.268 = 2,426 kg of carbon dioxide/annum.

For internal and external insulation the installation cost will be considerably more but the financial payback and carbon dioxide payback would be similar unless thicker insulation was added than 50mm.

A specialist builder/insulating contractor would need to survey the site and quote for the work.

Draught Proofing

In our calculation of proportioning heat loss we allowed 10% for ventilation or cold air entering the home.

The UK Building Regulations require that buildings are now much better sealed than has been the case in the past. So well sealed, in fact, that fan assisted heat recovery units are used in some houses such as the Passivhaus in Germany.

Older buildings are often not well sealed at all, as is the case of my own property, and likely to have a heat loss even greater than the 10% assumed in the example above.

Brushes, foams and sealant may all be used to fill gaps etc. to minimise the entrance of cold air.

The Draught Proofing Association represents the major draught proofing manufacturers and contractors in the UK and as it says on their web site is one of the most inexpensive yet effective ways of making the efficient use of energy.

At the beginning of these figures I assumed £200 per annum of the energy bill was lost through ventilation or cold air entering the house. If the leakages were reduced by half and £100 could be recovered and £100 spent then the financial payback would be 1 year.