§ Dr. McDonaldasked the Secretary of State for Energy if he will publish in the Official Report the cost-effectiveness in terms of the amount of investment per unit saved and the payback time of (a) roof insulation and (b) double-glazing for both old and new houses compared with the cost-effectiveness of new coal and oil-fired power stations and the incremental investment in North Sea oil and gas.
§ Mr. Norman Lamont[pursuant to his answer, 16 February 1981 c. 28]: The costs of installing roof insulation and double-glazing and the resultant energy savings will vary according to individual circumstances. Factors affecting the calculations of cost-effectiveness include the type, cost and quantity of fuel consumed, the type, size and construction of the dwelling, the type and efficiency of the heating system and the desired comfort level. Research results suggest that part of any benefits of improved insulation may be absorbed in increased comfort standards. As illustration, the following figures are based on a representative semi-detached house, estimated national average heating costs at current prices and assuming no change in internal temperatures. Alternative circumstances can yield widely differing estimates.
Capital cost per Therm saved per year £ Payback time Years 'Do it yourself (DIY) installation of 100 mm. mineral wool fibre loft insulation in an existing uninsulated house 1 3 DIY installation of low cost secondary glazing in an existing main living room 7 20 Contractor installation of 100 mm. mineral wool loft insulation in a new house 1 3 Installation of double-glazing in the main living room of a new house (only the marginal cost and benefits compared to single glazing are considered) 4 13 Note: Capital cost rounded to nearest whole pound an payback periods rounded to nearest whole year.
It is not always possible or even appropriate to draw up a list of the cost-effectiveness, measured in terms of 348W payback or cost per unit supplied, of such diverse investments as North Sea oil or gas projects, coal or oil fired power stations or home insulation. The degree of risk associated with the possible costs, revenues and returns will vary enormously, particularly for investments in the North Sea, where projects are undertaken in an exceedingly hostile environment. In the case of nationalised industries discounted cash flow methods are normally used to calculated a project's expected rate of return. The required rate of return for new investments as a whole is set at 5 per cent.