Subsidies on Energy Saving! Get money to make money

In 2015 the municipality of Leiden decided to give subsidies to energysaving measures for households. A budget of 1.5 million Euros has been provided. In this way, twenty-five percent of the investment is paid by the government, in order to make energysaving more accessible.

Actually, a subsidy on measures like cavity wall insulation and glass insulation are barely needed. I claim this because of three reasons: insulation is comfortable, insulation decreases the costs for gas and electricity and insulation increases the value of the house. Within a few years, the investment has been paid back (MilieuCentraal).

In the picture below, the returns on investments are shown. For roof insulation, there is a yearly saving of 650 Euros on average!gemiddelde-eengezinswoning

The measures can be divided into two categories. The insulation measures save energy. This includes roof-, cavity wall-, floor-, and glass insulation. These measures make sure less heat disappears from the house. In this way, gas is saved.

On the other hand, measures like solar panels get energy from the sun and turn it into electricity. This causes a decrease on electricity costs enormously. Green energy for free!

Besides the gas and electricity costs, another financial aspect is interesting. Research by Tias in the Netherlands showed that a house with a better Energylabel is sold in less time for a better price (Tias, 2015)! For example, the price for a house with energylabel A is 12.000 Euros higher than an average D-label house. In general, energysaving measures are responsible for a better energylabel.

figuur1_energielabelindex1503

So, I believe, subsidies are not really needed. But maybe, it makes it a smaller step to invest. And this is needed to lower the energy needs for the people in Leiden.

But it’s not all nice.. The city center of Leiden consists of a lot of monumental buildings, that are hard to improve. Often, things like glass insulation are not allowed. Therefore, a monumental building are supposed to have energylabels.

Another problematic aspect of the subsidy is the subsidy for ground insulation. Ground insulation is different than floor insulation. Ground insulation is on the bottom of the space under the floor. Floor insulation is right under the floor. Ground insulation is not such a good insulator. It’s definitely good against moistured areas. But the insulation value is low, in comparison to newer techniques.

Concluding, energysaving measures are really perfect to take, and it’s good that the municipality shows that they encourage these opportunities. However, we still have to ask ourselves: Is a subsidy really needed? Why not a loan? And, if subsidize, is it good enough? Definitely, smart people should invest in their houses. Comfortable and moneymaking.

More info on cavity wall insulation? watch this! https://www.youtube.com/watch?v=csLRsqx2T-8

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3 thoughts on “Subsidies on Energy Saving! Get money to make money”

  1. Jesse, I like your way of thinking towards subside energy saving insulation.

    But, I wonder how do you see the role of the municipalities? Is that the same as our national government ?
    Cited from the government about the role and responsibilityof the municipalities[1]:

    “Implementing national policy and strategy on environmental management is largely decentralised to municipal government. These authorities prepare local regulations and have both the legal and financial means to implement and enforce decisions and regulations.
    Municipalities may also work together with public authorities such as Water Boards on water quality and wastewater treatment. The municipalities are responsible for preparing regulations for implementing and enforcing the regulations in the national Environmental Management Act and other environmental regulations. The Environmental Management Act covers matters such as separated waste collection, disposal of hazardous waste, air quality, and noise nuisance, and environmental permits for industrial and commercial activity.
    Environmental regulations may vary from one municipality to another, for instance on separated waste collection from households and commercial and industrial activity, and the treatment, recycling and disposal of waste. “

    Six times the environment is mentioned in such a small quote, if they may not subside to reach these goals, what is your alternative?

    1. https://www.government.nl/topics/environment/contents/roles-and-responsibilities-of-provincial-government-municipal-governments-and-water-authorities

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  2. Jesse, I think this is an interesting blog and you’re making a good point. Nevertheless, it should also be taken into account that people who change houses a lot, or will change houses the coming 5 years, are less likely to be willing to make such an investment, because time won’t pay back in their situation. Especially if this isn’t subsidised and investment rates are highter.

    However, it could be an idea if it was made into a loan that the new buyers of the house take the loan on them if it isn’t paid back yet. Although I wonder if that doesn’t scare people from buying the house at all. More awareness should be created that it does pay back to insulate your house and that buying a house that is insulated will save you a substantial amount of money in the future.

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  3. Nice comments, thanks! Jaco, I believe that the government should take action on housing. Subsidizing is definitely an option. However my point is that for an individual citizen/houseowner, a subsidy is just a small part of the benefits, and should therefore not play a role in their cost-benefit analysis. Wendy, your idea is correct. I think the loan doesn’t help. However, if you use the loan in an inventive way, it can be beneficial! For instance, small credits can be made available, if the creditor owns the profits of the energysaving measures. In this way creditors will be likely to lend out money for low interest rate and save return on investments. The debtor will pay a low interest and a guaranteed lowering of gas costs.
    Those new interesting financing options are coming up, and can fasten the process of energy saving measures.

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