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Economic viability in thermal retrofit policies: Learning from ten years of experience in Germany

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  • Galvin, Ray
  • Sunikka-Blank, Minna

Abstract

Germany aims to reduce CO2 emissions by 80% by 2050 compared to 1990 levels and has merged this target with mandatory Energy Saving Regulations for thermal renovation of existing homes: the policy uses the criterion of ‘economic viability’, whereby renovations must pay back through the space and water heating fuel savings they produce. This paper explores the extent to which economically viable thermal renovations can contribute to the 80% goal, based on an analysis of Germany’s experience. It finds that the theoretical savings being achieved, based on calculated pre- and post-renovation consumption, are around 33%, while actual savings, based on measured consumption, are likely to be around 25%. The difference appears to be due to the effects of household behaviour. Further, average measured consumption is estimated to be around 150–180kWh/m2a nationally, and this would have to be reduced to 30–35kWh/m2a to meet the 80% policy goal. This is beyond the limits of economically viable renovation technology, which currently achieves around 100kWh/m2a. The paper suggests that policymakers should de-couple the criterion of economic viability from the 80% goal, emphasise other reasons for renovating to economically viable levels, and consider a more systematic approach to facilitate household behaviour change.

Suggested Citation

  • Galvin, Ray & Sunikka-Blank, Minna, 2013. "Economic viability in thermal retrofit policies: Learning from ten years of experience in Germany," Energy Policy, Elsevier, vol. 54(C), pages 343-351.
    • Handle: RePEc:eee:enepol:v:54:y:2013:i:c:p:343-351
    DOI: 10.1016/j.enpol.2012.11.044
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    References listed on IDEAS

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    1. Hoppe, T. & Bressers, J.Th.A. & Lulofs, K.R.D., 2011. "Local government influence on energy conservation ambitions in existing housing sites--Plucking the low-hanging fruit?," Energy Policy, Elsevier, vol. 39(2), pages 916-925, February.
    2. Sorrell, Steve & Dimitropoulos, John, 2008. "The rebound effect: Microeconomic definitions, limitations and extensions," Ecological Economics, Elsevier, vol. 65(3), pages 636-649, April.
    3. Jakob, Martin, 2006. "Marginal costs and co-benefits of energy efficiency investments: The case of the Swiss residential sector," Energy Policy, Elsevier, vol. 34(2), pages 172-187, January.
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