Retrofit must be ambitious to deliver ROI

Ambitious building retrofits are the only way to deliver return on investment in energy saving measures by 2050, with housing offering greatest potential for savings, says a new report. The new report, Monetary benefits of ambitious building energy policies, commissioned by the Paris-based Global Buildings Performance Network (GBPN), finds that ‘shallow’ energy efficiency improvements do not pay-off in the long run.

The analysis found total cumulative energy cost savings under a ‘deep efficiency scenario’ exceed total cumulative additional investment costs with a return on investment of 124% by 2050. With a more shallow set of building efficiency programs under a ‘moderate scenario’, return on investment is -6%. It is therefore economically more efficient to promote the proliferation of very high performance buildings rather than to focus on accelerated investment into ‘shallow’ energy efficiency improvements during building retrofit or construction.

The report finds that most opportunity for cost efficient energy savings is in residential buildings, and in particular in single-family housing.

The study demonstrates that long-term cost analysis of building use scenarios is critical to have a comprehensive overview of the financial costs and benefits of alternative pathways in the building sector. This is because buildings have long lifespans, and the full benefit of advanced measures can only be seen after several decades of the building’s operation. Most of the major regions studied for the report (EU, USA, China and India) reach cost-effectiveness between 2030 and 2040, beyond the 2030 horizon often used for analysis of energy savings potential in buildings.

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