Economics of Deep Renovation Ecofys IX Study Design FINAL 01 02 2011 Web VERSION

8/3/2019 Economics of Deep Renovation Ecofys IX Study Design FINAL 01 02 2011 Web VERSION

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By:Dr.AndreasH.HermelinkandAstridMller

Date:1December2010

Projectnumber:PDEMDE101646

ThisreportwascommissionedbyEurima-EuropeanInsulationManufacturersAssociation

AllviewsexpressedinthisreportarethoseoftheauthorsandnotnecessarilythoseofEurima.

WewouldliketothankDENA(GermanEnergyAgency)fortheirsupport.

EcofysGermanyGmbH,StralauerPlatz34,10243Berlin,Germany

www.ecofys.de,Email:[email protected],Tel:+49(0)30297735790


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Table of contents

1 Executive Summary .................................................................................................................. 12 Background ............................................................................................................................... 33 Methodology ............................................................................................................................. 43.1 CalculationofCostperSavedkWhFinalEnergy................................................................4

3.2 IllustrativeTransferofResultstootherEuropeanCountries...............................................7

4 Selected Buildings from the Low Energy Building Stock Initiative ......................................... 105 Results .................................................................................................................................... 136 Conclusions ............................................................................................................................ 177 Annex Selected excerpts from the EPBD recast....................................................................198 References ............................................................................................................................. 21


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1 Executive SummaryInthecurrentcontextofclimatechange,energyinsecurityandrisingenergyprices,theEUisatthe

crossroadsforitsfutureenergypolicy.Itiswidelyacceptedthatboldactioninenergyefficiencyis

keyinordertorespondtothemultiplechallenges.

Buildingsare clearly perceivedas the low hanging fruitwith greater potential forcost-efficient

action in the energy efficiency field. In this context, the necessity ofawide campaignof deep

renovationoftheexistingEUbuildingstockisoftenmentioned,butsofarnoEU-wideanalysisofits

economicimplicationshasbeenundertaken.

ThisstudybyEcofysintendstoprovideanotionoftheeconomicfeasibilityofdeeprenovationsforsingleandmulti-familyhomesacrosstheEU,takingacase-studyanalysisasbasis.

Mainfindingsofthisstudy:

The time for deep renovation across Europe is now: The study concludes that deeprenovationhasthepotentialtobethepreferredsolutionfromecologicandeconomicpoint

ofview,evenwithoutsubsidies,forthenecessaryimmediateactionontheEUbuilding

stock;

Shallow renovations significantly increase the risk to miss the climate targets:Thestudypointsoutthat,ifsuperficialrenovationsofbuildingsareundertakenonleastperforming

buildings, hugeabsolutesavings remainuntapped.Theachievementof theEUslong-

termenergysavingsandclimategoalswillbeimpossible ifthecurrent trendof cream

skimmingrenovationsiskept;

Spending on deep renovations is worth from the first day:ForallstudiedEUcountries,energyrelatedcostspersavedkWhfordeeprenovationturnedouttobeequalorlower

thanactualenergycosts.WealreadyhavefavourablemarketconditionsacrossEurope

to make deep renovation a financially more attractive option than inaction (continue

paying higher energy consumption); the only exception is UK, where in the past gaspriceshavebeen relatively low compared to continental Europe. This low-priceperiod

mightend soonas theUK importsmore andmore gas athighercontinentalEuropes

pricelevel.ThusevenintheUKdeeprenovationistherightchoicetobeonthesafeside.


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Methodology:

Results were taken from case studies under the very ambitious Low energybuilding

stock(NiedrigenergiehausimBestand)deeprenovationprogramme,managedbythe

GermanEnergyAgency(DENA).theseresultswereextrapolatedtootherEUcountries

using EUROSTAT data on price level indices,mortgage rates, inflation rates, energy

pricesandheatingdegreedays;

This study has been made under conservative assumptions regarding future energy

prices,andexcludinganypossiblesubsidy thatwouldmakethe investmentevenmore

advantageous.


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2 BackgroundBuildingsplaythemajorroleinachievingEuropesveryambitiousclimatetargets.On19May2010amilestoneinEuropeanclimatepolicycameintoeffect:therecastoftheDirectiveontheEnergy

PerformanceofBuildings(EPBD).

Fornewbuildingsthe recastexplicitlyrequiresnearlyzeroenergy being the standardby2019

(publicbuildings)or2021respectively(allotherbuildings).

AstothebuildingstocktherecastrequiresMemberStatestoensurethatwhenbuildingsundergo

majorrenovation,theenergyperformanceofthebuildingortherenovatedpartthereofisupgraded

in order tomeet minimum energy performance requirements in so far as this is technically,

functionallyandeconomicallyfeasible[EP2010].Thougheventhetermnearlyzeroenergyusedfor new buildings still needs further definitions on European and National level, obviously the

wordingformajorrenovationsofexistingbuildingsleavesmoreuncertaintyabouttheactuallevelof

energyperformancethatisspokenof.Thisuncertaintycanbereducedbyevidencefromrealized,

ambitiousmajorrenovations.Amajorrenovationisaccomplishedwhentotalcostofrenovation

relating to the building envelope or the technical building systems is higher than 25% of the

buildingsvalueorifmorethan25%ofthesurfaceofthebuildingenvelopeundergoesrenovation.

Thetermeconomicallyfeasiblecitedabovereferstoanothernoveltyintherecast.Theeconomic

feasibility is to be calculated within the context of a comparative methodology framework for

calculating cost-optimal levels ofminimum energy performance requirements. Such frameworkdoesnotyetexistbutistobelaiddownbytheCommissionuntil30June2011.Furtherdetailson

theEPBDrecastsrelevantparagraphsareprovidedintheAnnexofthispaper.

Since2004awelldocumentedseriesofprogressivemajorrenovationsforresidentialbuildingshas

aimedatachievingatleastnewbuildingsenergyperformanceundertheumbrellaoftheambitious

initiativeLowEnergyBuildingStock,managedbytheGermanEnergyAgency(DENA).Dueto

their high ambition these renovations belong to the category of deep (major) renovations in

contrasttoshallowrenovationsonlyaimingatminorsavings.

ThispaperdiscussestheeconomicfeasibilityofdeeprenovationsforsingleandmultifamilyhomesusingtheGermanLowEnergyBuildingStockprogrammeasacasestudy.Inordertoputthe

resultsintoaEuropeanperspective,anestimationoftheeconomicsofsuchprojectsincl.ahintto

jobcreationpotentialforsomeselectedEuropeancountriesisincluded.


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3 Methodology3.1 Calculation of Cost per Saved kWh Final EnergyA comparative methodology framework for calculating cost-optimal levels of minimum energy

performance requirements is not yet available. Instead the economic calculations follow the

methodology being described by [Ecofys 2009]. The ultimate aim of that methodology is to

transforminvestmentsinbeyondthebusinessasusualenergyefficiencyintoEuro-ctpersaved

kWh.Thisenablesadirectcomparisonbetween:

Whatdoesitcosttosaveoneunitofenergy?and

Whatdoesitcosttobuyoneunitofenergy?

[Ecofys2009]concludethatcurrentcalculationsforcost-optimallevelsofrenovationoftensuffer

fromseveralmajordistortions.Distortionscanhappeninbothdirections:eithermakingtheenergy

efficiencyinvestmentlookbetterorworse,cf.Figure1.Asfaraspossiblethesedistortionshave

beeneliminatedinthispaper.

better worse

static calculations application of payback method

exponential energy price increase high interest rates

zero residual values

too short life-times

questionable alternatives

Distortions that often make investments look

Figure1 Distortions

Staticcalculationsdonottakeintoaccountinterestrates.Thereforeaninterestrate>0%

hastobeaccountedfor.

Inferring from historic energy price developments to future price assumptions is often

done by applying inconspicuously small annual price increases. Still the result is an

exponentialenergypriceincrease.Especiallywhenappliedincalculationsforlong-term

investmentslikebetterenergyperformanceofbuildingsthisleadstounrealisticallyhigh

futureenergy price levels. It ismore serious toassumean average price level for theperiodunderconsideration.Figure2showstheaverage2007-2009consumerrealprice

for natural gas/heating oil, differed by single-family (SF) or multi-family (MF) homes

respectively,basedon[Eurostat2010a].ThesectperkWhgascanbecomparedwith

thecostpersavedkWhoftheenergyefficiencyinvestmentinacountry.


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Figure2 GaspricesforsinglefamilyandmultifamilyhomesinselectedEuropeancountries

Payback calculations tend to prefer cheaper investments that usually not only have

smaller savings but also shorter lifetimes. Especially in the context of buildings with

lifetimesofseveraldecades,thepaybackcalculationisaninappropriatetooltopreparedecisions.Insteadacalculationmethodisneededthatgivesanindicationaboutthenet

benefitofalong-terminvestment-thecalculationofnetpresentvalues.

Investmentsinbetterenergyperformanceofbuildingsareusuallyfinancedbymortgage

loans. Nevertheless often much higher interest rates are assumed which lead to an

underestimationofbenefitsfromenergyefficiency.Forthepurposeofthisstudywetake

long-terminterestratesofhousingloanstohouseholds(>10a)[Eurostat2010b].Tolevel

outfluctuations,the2005-2009averageistaken.20yearsaretakenascalculationperiod

fortheannuityof the investment.Allcalculationsinthispaperarebasedonrealprices

(e.g.energyprices,mortgageinterestrates)incontrasttonominalpriceswhichincludeinflation - meaning that inflation has to be eliminated. Long-term inflation for different

EuropeancountrieswasderivedfromEurostatHICP Index [Eurostat2010c]. Figure3

illustratesnominalandestimatedrealmortgageratesforseveralEuropeancountries.

0.00

2.00

4.00

6.00

8.00

10.00

12.00

AT BE BG CZ DK DE HU NL RO SK SI UK

ct/kWh(incl.taxes)

Gas SF

Gas MF


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Figure3 NominalandRealMortgageRatesinSelectedEuropeanCountries

Usuallythelifetimeoftheinvestmentexceedsthecalculationperiod.Thereforeonlythe

valueoftheinvestmentthatisusedupduringthecalculationperiodmustbetakeninto

account. Consequently the residual is not taken into account. Assuminga calculationperiod of 20 years Table 1 gives some examples for the residual for different

combinationsofrealinterestrateandlifetime.

Table 1 Relativeshareofresidualvaluesintotalinvestments,calculationperiod20years

The best time for a major renovation or for improvements of components is when a

renovationhas tobedoneanyway.Thecost for theseanywayinvestmentshas tobe

subtracted from the total investment inenergy efficiencyasotherwise thequestionable

alternativedonothingwouldbethebaselineforacomparison.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%


ct/kWh(incl.taxes)

Nominal Mortgage Rate

Real Mortgage Rate

20 30 40 50 80

3.00% 0% 24% 36% 42% 51%

3.50% 0% 23% 33% 39% 47%

4.00% 0% 21% 31% 37% 43%4.50% 0% 20% 29% 34% 40%

Residual values

Lifetime (years)

real

interst

rate


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Itisnoteworthythatalthoughcertainlyhavingapositivemonetaryvalue,thefollowingco-benefitsof

correctlyimplementedenergyefficiencymeasuresarenotconsideredinthispaper,whichequals

theusualpractice(cf.[PHI2008]):

Higherindependencyfromenergyimports

Mitigationofexternalitieslikeglobalwarming(externalcosts)

Higherqualityenergyservicesresultinginbetterhealthlike,

o Betterthermalcomfort

o Betterindoorairquality.

Riskreduction

o Lessriskofdamagingthebuildingconstruction

o Lesspovertyriskincaseofsteeplyincreasingenergyprices.

Wealsodonotdiscusstheinvestor-user-dilemmaasthisisnotabouttheefficiencyofanenergy

savinginvestmentbutmainlyonhowtofairlydistributeitsbenefits.

3.2 Illustrative Transfer of Results to other European CountriesEmpiricalevidencefordeeprenovationsinthisstudywastakenfromDENAsLowEnergyBuilding

Stockseries. Asnocomparable data forotherEuropeancountrieswas readily available these

results have been transferred to some other countries context. The selection of countries

dependedontheavailabilityofallnecessaryinputdatawithintheEurostatstatistics.Theremaining

countries underwent another selection by climatic conditions, i.e. countries with heating degree

days similar toGermany andnegligible cooling demand in residential buildings were selected.Finallysomehighinflationcountrieswereeliminatedtoavoidquestionableresults.

Asan inputfor thecalculationofthe costpersavedkWhand theirinterpretation,thefollowing

dataisneeded:

1 Measures lifetime

2 Calculation period

3 Real energy price

4 Real long-term mortgage rate

5 Heating degree days for recalculation of energy savings

6 Additional cost caused by deep energetic renovation

Havingresultsforonecountry(Germany),especially3to6needtobeaddressed.Items1and2

wereassumedtobethesameinallselectedcountries.

Figure3alreadypresentedanoverviewofreallongtermmortgagerates.Figure4showsthe30

yearsaverage(1980-2009)forheatingdegreedays.Thehigherthevalue,thelongerand/orcolder

theheatingseason.Thevaluesshowcountryaveragessotherewillbealsocolderregionsin

everycountrywithmoreattractiveeconomicsfordeeprenovations.


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0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


Kd(Kelvindays)

Heating Degree Days

Figure4 HeatingdegreedaysinselectedEuropeancountries(30-yearaverage)

Themostcriticaltransformationrelatestoitem6theadditionalcostcausedbydeeprenovations

thatweknowfromGermanytoanothercountry.PriceLevelIndices(PLI),whichareavailablefrom

EurostatsPurchasingPowerParitiesdatafordifferentsectors[Eurostat2008]wereappliedforthis

transformation.AsEurostatdoesnotprovideaspecificindexfor(deep)renovationofbuildings,thePLIfornewresidentialbuildingsweretakenasaproxy,seeFigure5.Forafirstindicationonthe

economicsofdeeprenovationinEurope,thisapproachpromisessufficientreliability.TheEU27

averagehasaPLIof100.Lowervaluessignallowerpricelevelandviceversa.


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0

20

40

60

80

100

120

140

160

180

200


PLI - Price Level Index

Figure5 PriceLevelIndicesfornewresidentialbuildings2007

Anestimationonjobeffectscanbemadebyusingasimplifiedmethodthatneglectssmallereffects

but still offers a good indication of possible employment related impacts of energy efficiency

measures: the assumed additional turnover from energy efficiency projects is divided by the

averageturnoverperemployeeintheconstructionsector(availablefromEurostat)andmultipliedbyaspecificfactor,amethodologythatwealreadyusedintheimpactassessmentfortheEPBD

recast.

Job_creation=(additional_turnover/turnover_per_employee)*factor

This factordependson thespecific labour intensityof themeasures carried out. Dependingon

exact kind of activities, this factor may vary between 0.5 (share of material costs of energy

efficiency measures twice as high as the usual mix ofmaterial and labour costs as presently

observedinthebuildingindustryoftheEU27)and1.0(shareofmaterialcostsaccordingtousual

mix).Inthepresentstudythefactorwasassumedtobe0.7.


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4 Selected Buildings from the Low Energy Building Stock InitiativeThe pilot initiative Low Energy Building Stock of the German Energy Agency is designed toproducebestpracticeexamplesfordeeprenovations,e.g.byusingcomponentsusuallyappliedin

new very-low-energy buildings or Passive Houses in renovation. In fact the series anticipates

subsequent levels for funding by the federal German KfW bank. Up till know there have been

severalprojectphases,ofwhichthefirstthreefeaturedresidentialbuildings,therenovationstarting

between2004and2007.Typicalmeasurescomprise:

Thermoskin,insulationthicknessbetween10-24cm

Insulationofcellarceiling,5-20cm

Newwindows,U-values0.8-1.4W/mK

Roofinsulation SolarthermalcollectorsforDomesticHotWater

Ventilationsystemwithheatrecoveryorexhaustaironly

Reductionofheatbridges.

ThequalityofthebuildingenvelopecanbeshownasaverageU-value,Ht.Figure6showsthe

extraordinarily high standard of the building insulation after renovation. Note that EnEV 2007

indicatestherequirementsfor newbuildingsaccordingtotheGermanEnergySavingOrdinance

from2007.Obviouslyallrenovatedbuildingsaremuchbetter,mostofthemareevenbetterthan

todaysnewbuildlevel(EnEV2009=EnEV2007minus30%)andsomealmostreachPassive

Houselevel.

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

0.00 0.20 0.40 0.60 0.80 1.00 1.20

A/V - ratio surface area / building volume

W/(m2K)-AverageU-valueofBuildingShell

Ht' EnEV 2007 Ht' post renovation Ht' Limit new -30% Ht' Limit new -50% Passive House

Figure6 Specifictransmissionlossesofdemobuildings(dots)vs.severalbuildingstandards


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Forourstudywepickedseveral

Singlefamilyhomes,vintage1958-1978

Multi-familyhomes,vintage1958-1969.

Theyrepresentthewidest-spreadresidentialbuildingsinGermany.Astheyarenottheworstfrom

energeticpointofview,evenhighersavingsmaybeachievedinoldervintages.

Mergedtoareferencesinglefamilyhomeandareferencemultifamilyhomethebuildingscanbe

characterizedasfollowsbeforeandafterrenovation:

Figure7 Referencesinglefamilyhome,beforeandafterdeeprenovation

Singlefamilyhomesshowhugesavingsofappr.85%(morethan250kWh/m 2a)intermsoffinal

energyafterrenovation.Themajorityofbuildingswasdescribedashavingaheatedcellar,thisis

whytheinsulationlayerinthereferencehomeisinterruptedatthebottom.

gas /oil boiler Heat pump / biomass

Before

average U-value:1.34 W/m k

1958 68 or

1969 78 after


Reference single-family-house

living space = 213 m living space = 213 m

final energy: 44 kWh/m14.5 %

Natural ventilation

Solar thermal

Insulation of thebuilding envelop

Efficient windows/doors

Mech. ventilation with heat

recovery 80%

final energy: 302 kWh/m100 %


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Figure8 Referencemulti-familyhome,beforeandafterrenovation

Multifamilyhomesshowhugesavingsofappr.80%(morethan150kWh/m2a)intermsoffinal

energyafterrenovation.Themajorityofbuildingswasdescribedashavingaheatedcellar,thisis

whytheinsulationlayerinthereferencehomeisinterruptedatthebottom.

Pricesforadditionaldeeprenovationexpenditureswereeitherderivedfromarchitectsinformation

orfromre-calculatingthefindingsof[IWU2010].

gas /oil boiler Biomass / CHP

before


1969 78

after


Reference multi-family-house

living space = 2400 m living space = 2400 m


Efficient windows/doors

Natural ventilation Mech. ventilation

Insulation of thebuilding envelop



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5 ResultsTheGermanprojectsshowthefollowingspecificcostsforsingle/multi-familyhomes:

0

50

100

150

200

250

300

350

400

0 50 100 150 200 250 300 350 400

Living area

Energy

relatedcost/mlivingarea

Figure9 Energyrelatedcostsfordeeprenovationofsinglefamilyhomes(/m)

0

50

100

150

200

250

300

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Living area

Energyrelatedcost/mlivingarea

Figure10 Energyrelatedcostsfordeeprenovationofmultifamilyhomes(/m)

Figure10andFigure11showacostdegressionwithincreasinglivingareaandlowerspecificcostinmultifamilyhomescomparedtosinglefamilyhomes.


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0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0


ct/kWh

SF, cost per saved kWhadjusted

MF, cost per saved kWh

adjusted

Figure11 Estimated,adjustednationalcostpersavedkWhforsingle-andmulti-familyhomes

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%


SF, relation cost persaved kWh/Gas EF

MF relation cost persaved kWh/Gas

Figure12 Estimated, adjusted relation between national cost per saved kWh for single- and multi-family

homesandthelocalenergyprice


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ThesespecificcostsaretransferredtoaveragecostpersavedkWhforthewholeDENAsample,

separatelyforsingle-andmulti-familyhomes.InFigure11thesearethevaluesofGermany(DE).

ApplyingthetransformationstepsexplainedbeforetheGermancostpersavedkWharetransferred

toseveralselectedEuropeancountries,seeFigure11.Thereisquiteabigvarietyincostsper

saved kWh that can be expected for deep renovations which are comparable to the German

exampleinotherEuropeancountries.

AsexplainedbeforedeeprenovationsareveryattractivewhenthepossiblecostpersavedkWhis

lowerthantheactualrealenergypriceinacountry.Therelationbetweenthosecanbeshownby

dividingthenationalcostpersavedkWhbythenationalenergyprice,seeFigure12.

Figure12needssomeadditionalexplanationtoensureproperinterpretation:

Note,thatallvaluesarebasedonaGermansampleofdeeprenovations.TheGerman

samplehas been hypothetically transferred to a few European countries bymeans of

EUROSTAT data on price levels for energy and construction and climate. Therefore

Figure11andFigure12giveanindicationonwhatmaybeexpectedwhentheGerman

deeprenovationexampleswouldbeimplementedinthesecountries.Obviouslyevidence

fromprojectsinthesecountrieswithcomparableambitionwouldbewelcometogetreal

results.

Thegraphisbasedonaconservativeassumptiononfutureenergyprices.Theaverage

nationalhouseholdgaspricefor2007-2009hasbeentakenwithoutassumingfurtherreal

gaspriceincreasesoverthecalculationperiodof20years.Moreovernosubsidiesetc.

areincluded,whichwouldlowerthepricepersavedkWh.

ThegraphisbasedonenergyrelatedcostspersavedkWh(Figure11)forasampleof

veryambitiousdeeprenovations,meaningthatfinalenergyconsumptionwascutbymore

than 80% being in line with long-term climate targets. The energetic quality of the

renovatedbuildings in the Germansample is appr. 50% better than what is currently

requiredfornewbuildings.

Avalueof100%indicatesthatalreadyatthementionedconservativeassumptionsdeep

renovation is financially equivalent tonot investing inenergyefficiency and paying for

highenergyconsumption.Inotherwords:theenergysavingsalonepayfortheadditional

investment.Notethatpositivesideeffectsofdeeprenovationlikeincreasedrealestate

value,morecomfort,lowervulnerabilitytoenergypriceincreasesetc.areforfree.Avaluelower than 100% indicates that the energy savings over-compensate the additional

investment.50%meanssavingstwiceashighastheadditionalinvestment.

Thus theoverallpicture isremarkablypositive.Mostcountriesshowvalues ofcostper

savedenergybetweenappr.40%and100%ofthelocalgasprice.

UKistheonlyexceptionwithvaluesbetween120%and170%,themajorreasonbeing

thelowgaspricespresentedinFigure2.AllotherUKnumbersinFigure3,Figure4and

Figure5 show values being very close to the German referencecase.Assuming real

energypricesfortheUKsimilartoGermanywouldgettheUKnumbersinFigure12close

toGermanlevel.Infact,thereisreasontoassumethatthelongperiodofUKgasprices

beingsignificantly belowthe levelofcontinentalWesternEuropemight end soon.Few


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yearsagotheUKbecameanetimporterofenergy,i.e.thereisanincreasinginfluenceof

continentalEuropeangaspricesontheUKmarket.

ThusFigure11 notonlyshowsthepricepersavedkWhbutalso thebreak-even-gas-

pricewheretheavoidedenergycostequaltheadditionalinvestmentindeeprenovation.

FortheUKcasethismeansrealgaspricesatastillmoderatelevelaround5-6ct/kWh(as

averageforthenext20years)wouldsufficetomakedeeprenovationlookgood(again:

ignoringthevalueofallpositivesideeffectsinordertofollowtheusualpractice).

Finallyjobeffectsperm2deeprenovationareroughlyestimated,seeFigure13.

0.00000

0.00020

0.00040

0.00060

0.00080

0.00100

0.00120

0.00140

0.00160


a

dditionalemployeesperm2deeprenovation

average employees per additional deep renovated m2

Figure13 Roughlyestimatedadditionaljobeffectsbydeeprenovation

TakingGermanyasanexample,withroughly3.5billionm2ofresidentialareaandprovidedthe

renovation rate of 2% recently published for the Germanclimate concept this wouldmean ca.

100,000additionalemployeesbydeeprenovation.MoreprofoundjobeffectanalyseswouldneedforecastsonthedevelopmentofrenovationratesthroughoutEurope.


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6 ConclusionsCurrentlythediscussionstartsontheadequateenergeticlevelforrenovation.Basedonempiricalevidence from theGermanEnergyAgency (DENA) administeredprogramLowEnergyBuilding

StocktheresultspresentedhereindicatethatinEuropedeeprenovationhasthepotentialtobe

thepreferred solution fromecologicandeconomicpointofviewevenwithout subsidies. Further

evidenceshouldbederivedfromrealdeeprenovationprojectsalloverEurope.

Dueto lack ofsuchevidence,weadjustedprices andsavings from theGermanexperienceby

applyingEurostatPriceLevelIndices,mortgagerates,inflationrates,energypricesandheating

degreedays.Thismeansthevaluespresentedhereshouldbeinterpretedasanindicationand

tendencyforwhatshouldbeexpectedwhensuchprojectswouldberealizedinotherEuropean

countries.

Notethattheoftenheardargumentletsusetheavailableannualbudgetformanycheap,shallow

renovationssaving30-50%insteadofusingitforfewer,moreexpensivedeeprenovationssaving

70%-90%mayleadtounwanted,irreversiblelong-termconsequences.Dynamicsimulationsfor

futurebuildingstockscenarioshaveclearlyshown,thatdeeprenovationatreasonablespeedisa

morepromisingstrategytoreachthe2050climatetargetsthanshallowrenovationathighspeed-

shallowmeaningthatcurrentnationalrequirementsforrenovationarejustmet[Ecofys2010].Itis

importanttodoprojectionstill2050,asprojectionstillonly2020maybemisleadingandsuggestan

inadequatestrategy.Astheschematicpaths inFigure14show,atthe interimmilestone2020a

shallowrenovationstrategymightlookbetterthanadeeprenovationstrategy,whilesurprisinglyfailingtoachievethecrucial2050target.Theusuallyperformedshort-termprojectionscontaina

severe risk of getting irreversibly caught in this speed trap of shallow renovation: usually

renovationswith the best investment/saving ratio are done at the start of a nations renovation

program. These are the buildings having the highest absolute saving potential. When these

buildingsare renovated shallow, hugeabsolute savings remain untapped.This losscannotbe

compensatedanymorelateronbybuildingswithlowersavingpotential,-animportantfindingthat

wasconfirmedby[rge-Vorsatz2010].


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Figure14 Thespeedtrapofshallowrenovation

Deep renovation path

2050 climate target

Today 2020 2050

Shallow renovation path


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7 Annex Selected excerpts from the EPBD recast(Preamble)(14) The Commission should lay down a comparative methodology framework for

calculatingcost-optimallevelsofminimumenergyperformancerequirements.

(15) Buildings have an impact on long-term energy consumption. Given the long

renovationcycleforexistingbuildings,new,andexistingbuildingsthataresubjecttomajor

renovation,shouldthereforemeetminimumenergyperformancerequirementsadaptedto

thelocalclimate.

(16)Majorrenovationsofexistingbuildings,regardlessoftheirsize,provideanopportunity

totakecost-effectivemeasurestoenhanceenergyperformance.

(Article2)"ForthepurposeofthisDirective,thefollowingdefinitionsshallapply:

(10)"majorrenovationmeanstherenovationofabuildingwhere:

(a)thetotalcostoftherenovationrelatingtothebuildingenvelopeorthetechnical

buildingsystems ishigher than 25%of thevalueof the building,excluding the

valueofthelanduponwhichthebuildingissituated;

or

(b)morethan25%ofthesurfaceofthebuildingenvelopeundergoesrenovation;

(14) cost-optimal level means the energyperformance levelwhich leads to the lowest

costduringtheestimatedeconomiclifecycle,

(Article4-Settingofminimumenergyperformancerequirements)

1. Member States shall take the necessarymeasures to ensure that minimum energy

performance requirements forbuildingsorbuildingunitsaresetwithaviewtoachieving

cost-optimal levels. A Member State shall not be required to set minimum energy

performance requirements which are not cost-effective over the estimated economic

lifecycle.

(Article7ExistingBuildings)

"MemberStatesshalltakethenecessarymeasurestoensurethatwhenbuildingsundergo

majorrenovation,theenergyperformanceofthebuildingortherenovatedpartthereofis

upgradedinordertomeetminimumenergyperformancerequirementsinsofarasthisis

technically,functionallyandeconomicallyfeasible.Thoserequirementsshallbeappliedto

therenovatedbuildingorbuildingunitasawhole.


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(Article10FinancialBarriersandMarketIncentives)

6.MemberStatesshalltakeaccountofthecost-optimallevelsofenergyperformancewhen

providingincentivesfortheconstructionormajorrenovationofbuildings.

(Annex - III Comparative methodology framework to identify cost-optimal levels of energy

performancerequirementsforbuildingsandbuildingelements)

ThecomparativemethodologyframeworkshallrequireMemberStatesto:

define reference buildings that are characterised by and representative of

their functionality and geographic location, including indoor and outdoor

climate conditions. The reference buildings shall cover residential and non-

residential buildings, both new and existing ones,

define energy efficiency measures to be assessed for the reference buildings.

These may be measures for individual buildings as a whole, for individual

building elements, or for a combination of building elements,

assess the final and primary energy need of the reference buildings and the

reference buildings with the defined energy efficiency measures applied,

calculate the costs (i.e. the net present value) of the energy efficiency

measures (as referred to in the second indent) during the expected economic

lifecycle applied to the reference buildings (as referred to in the first indent)

by applying the comparative methodology framework principles.


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Economics of Deep Renovation Ecofys IX Study Design FINAL 01 02 2011 Web VERSION