A GUIDE TO DEVELOPING STRATEGIES FOR

BUILDING ENERGY RENOVATION

DELIVERING ARTICLE 4 OF THE ENERGY EFFICIENCY DIRECTIVE

Project lead
Dan Staniaszek

Editing team
Oliver Rapf
Marine Faber
Ingeborg Nolte

Contributions
Renée Bruel
Patty Fong
Eoin Lees

Graphic Design
Lies Verheyen - Mazout.nu

Published in February 2013 by Buildings Performance Institute Europe (BPIE)

Copyright 2013, Buildings Performance Institute Europe (BPIE). Any reproduction in full or in part of this
publication must mention the full title and author and credit BPIE as the copyright owner. All rights reserved.

ISBN: 9789491143076
A GUIDE TO DEVELOPING STRATEGIES
FOR BUILDING ENERGY RENOVATION
Delivering the Energy Efficiency Directive Article 4 requirements
on long term strategies for mobilising investment in renovation of
national building stocks

“I believe that renovation of buildings to high energy

performance standards could be one of the most cost effective
investments a nation can make, given the benefits in terms of
job creation, quality of life, economic stimulus, climate change
mitigation and energy security that such investments deliver”.
Oliver Rapf, Executive Director, BPIE

A guide to developing strategies for building energy renovation | 3

CONTENTS

INTRODUCTION 5

PART 1 6

BENEFITS OF IMPROVING THE ENERGY PERFORMANCE 6

OF BUILDINGS
BARRIERS AND CHALLENGES 14

VISION FOR A NATIONAL LONG TERM RENOVATION STRATEGY 16

PART 2 18
DEVELOPING THE RENOVATION STRATEGY 18

PHASE 1 IDENTIFYING KEY STAKEHOLDERS & INFORMATION SOURCES 19

PHASE 2 TECHNICAL AND ECONOMIC APPRAISAL 20
PHASE 3 POLICY APPRAISAL 22
PHASE 4 DRAFTING & CONSULTING ON THE RENOVATION STRATEGY 26
PHASE 5 FINALISATION, PUBLICATION & DELIVERY 28

CONCLUDING REMARKS 29

ANNEX 1 ENERGY EFFICIENCY DIRECTIVE: ARTICLE 4 - BUILDING 30

RENOVATION
ANNEX 2 STEPWISE SUMMARY OF THE TECHNICAL AND ECONOMIC 30
APPRAISAL
ANNEX 3 REFERENCES AND FURTHER READING 34
INTRODUCTION
Buildings represent the largest untapped source of cost effective energy saving
and CO2 reduction potential within Europe, yet the sector continues to suffer from
significant underinvestment. It is therefore timely that the Energy Efficiency Directive
(EED, 2012/27/EU) adopted in October 2012 includes a requirement for Member
States to develop long term renovation strategies for their national building stocks.

EED replaces two previous directives on energy services and cogeneration1. It seeks to promote energy
efficiency across the European Union and was developed in order to help deliver the EU’s 20% headline
target on energy efficiency by 2020, as well as to pave the way for further improvements thereafter. EED
contains a number of measures designed to deliver energy savings across all sectors, from overall national
energy efficiency targets to the setting of energy efficiency obligations on energy companies.

Alongside EED, the Energy Performance of Buildings Directive (EPBD, 2010/31/EU)2, recast in 2010, sets
out numerous requirements including energy performance certification of buildings, inspection regimes
for boilers and air conditioning plants, and requirements for new buildings to be nearly zero energy.
EPBD sets minimum energy performance standards for buildings undergoing renovation.

Together, EED and EPBD provide a framework for Member States to drive the reduction of energy use in
buildings, thereby delivering a range of economic, environmental, societal and energy security benefits.
This paper focuses on one of the most significant elements of the EED targeting the building sector,
namely Article 4 on Building Renovation, which requires that Member States:

“establish a long-term strategy for mobilising investment in the renovation of the

national stock of residential and commercial buildings, both public and private.”

Such a renovation strategy supports and reinforces many of the requirements set out in EED and EPBD,
as demonstrated in Part 2.

BPIE has prepared this Guide in order to assist Member States in the process of developing their renovation
strategies and in particular the first versions which are to be published by 30th April 2014. This Guide is
structured as follows:

• In Part 1, we set out the multiple benefits that arise from improving the energy performance
of buildings and highlight the existence of numerous challenges and barriers to the achievement
of the potential benefits. In light of the wide ranging benefits, and given the significant challenges
facing sustainable energy investments, we then argue the case for Member States to be visionary
in setting out a long term strategy for building stock renovation;
• In Part 2, we describe the strategy development process in detail, including a description of the
5 key phases and a suggested list of actions Member States could take to underpin the strategy;
• Concluding remarks reiterate the key objectives of a renovation strategy;
• Annex 1 sets out the specific requirements contained in Article 4 of the Energy Efficiency Directive;
• Annex 2 sets out the key steps and information requirements for undertaking the technical and
economic appraisal of the renovation potential in the building stock;
• Reference material is provided in Annex 3.

1
http://ec.europa.eu/energy/efficiency/eed/eed_en.htm
2
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32010L0031:EN:NOT

A guide to developing strategies for building energy renovation | 5

PART1

BENEFITS OF IMPROVING THE

ENERGY PERFORMANCE OF
BUILDINGS
Before outlining the strategy development process in detail, it is instructive to consider
the wider impacts and benefits that can be achieved as a result of building stock
renovation. When undertaking an economic appraisal of an energy saving investment
for a building, the only benefit that is normally monetised by the potential investor
is the energy cost saving, yet doing so undervalues the full impact. However, many
benefits accrue to society at large and hence are not valued by individual investors.
These benefits are discussed more fully below. Annex 3a) also includes a brief literature
review of reports on the multiple benefits of improving building energy performance.
Broadly speaking, the impacts of undertaking sustainable energy renovation of buildings can be
summarised under the headings:

• Economic Benefits “Every $1 spent on energy

• Societal Benefits efficiency in Iowa produces
• Environmental Benefits $1.50 of additional
• Energy System Benefits
disposable income”
United States Environmental
ECONOMIC BENEFITS: Protection Agency4.

• Energy cost saving. BPIE’s analysis3 of deep renovation

scenarios (covering EU27, Switzerland and Norway)
demonstrated the potential for net energy costs savings as much as €1300 billion (present value)
arising to end users, i.e. the individuals and organisations undertaking the investment as a result of
renovating Europe’s buildings between now and 2050.

For individual households, current energy bills typically range between €1000-1800 per annum,
equivalent to around 1 month of median annual income, as illustrated in Figure 1. The increased
disposable income that is generated through reduced expenditure on energy utilities leads to
increased expenditure on other goods and services, producing economy-wide benefits.

3
http://bpie.eu/eu_buildings_under_microscope.html
4
Assessing the Multiple Benefits of Clean Energy: A Resource for States (2010). http://epa.gov/statelocalclimate/documents/pdf/epa_assessing_
benefits.pdf

6 | A guide to developing strategies for building energy renovation

 Figure 1 – Annual household energy spend in selected countries (source – IEA, Eurostat)

2,000
1,800
Euros per year per household

1,600
1,400 Figures in
brackets indicate
1,200
the median
1,000 months of
800 income that is
600 expended on
energy
400
200
0
m

Ge nce

ce

nd

xe Italy

er g
s

Re al

ic

Ki nd

m
nd
an

ai
bl
ak tug
iu

do
Ne bou
ee

la

la
Sp
pu
rm
a

la
lg

Ire

ite er
Gr

ng
Fr

ov Por
Be

z
th

Un wit
d
Lu

S
Sl

Electricity Natural gas Oil and derivatives LPG Others

• Economic stimulus. In order to achieve the energy cost savings of €1300bn identified earlier, a
total investment of €940bn (present value) over the period to 2050 would be required to cover
the cost of materials as well as labour. This would be a significant, valuable and lasting boost to
the construction sector in particular, given the prevailing economic difficulties in many European
markets. The employment generated could be on average as much as 1.1 million net additional
jobs throughout the period to 2050. (source - BPIE)

The employment and economic impact

“Every $1 million in energy savings in stimulated by investing in a more sustainable
building stock can be seen across a wide range
Oregon produces $1.5 million of
of players in the value chain, from manufacturing
additional output and about $400,000 in and installation through to provision of
additional wages per year” professional services such as financing and
(Grover, 2005)5 project management, as illustrated in Figure 2.
(overleaf )

5
http://epa.gov/statelocalclimate/documents/pdf/epa_assessing_benefits_ch1.pdf#page=11

A guide to developing strategies for building energy renovation | 7

 Figure 2 – Schematic of building renovation value chain (source – WBCSD6)

• Impact on Gross Domestic Product (GDP).

The Commission’s EED impact assessment “Our analysis of some 1,100 recent rental
identified that achieving the targeted savings
transactions in the Netherlands
would result in an increase in the EU’s GDP of
€33.8 bn in 2020 (+2.7% compared to baseline)7. provides evidence that, on average, a
less efficient, “non-green” office building
• Property values. There is an emerging body achieves a 6.5% lower rent as compared to
of evidence that buildings with high energy similar buildings
performance are more valuable (in terms of with a “green” energy label.9
resale, the rent they can command and/or
in terms of occupancy levels) than their less
efficient counterparts8.

• R&D, industrial competitiveness & export growth.

By creating the drive towards ever more efficient
Evaluation of the KfW thermal ways to reduce energy consumption in buildings,
rehabilitation programme in Germany a major programme of building renovation will
has identified that, for every €1 of public spur research & development, leading to improved
subsidy, as much as €5 is returned industrial competitiveness and export opportunities.
to the public purse through reduced • Impact on public finances. According to a
unemployment payments, Copenhagen Economics report commissioned by
increase tax receipts and other sources.11 Renovate Europe10, investment in building retrofits,
given prevailing high levels of unemployment in
many Member States, will have a positive impact on
public budgets, equivalent to 0.5-1.0% of GDP.

6
“Energy Efficiency in Buildings”, World Business Council for Sustainable Development, 2008
7
http://ec.europa.eu/energy/efficiency/eed/doc/2011_directive/sec_2011_0779_impact_assessment.pdf
8
BuildingRating.org, an initiative backed by The Institute for Market Transformation and the Natural Resources Defense Council in the US,
lists in excess of 15 studies from Australia, Europe and the US which attest to this phenomenon (http://www.buildingrating.org/content/efficiency-
property-value)
9 “
The Value of Energy Labels in the European Office Market”, Kok & Jennen, 2011 (http://nilskok.typepad.com/KJ/KJ_NL_220511.pdf )
10
http://www.renovate-europe.eu/uploads/Multiple%20benefits%20of%20EE%20renovations%20in%20buildings%20-%20Full%20report%20
and%20appendix.pdf
11
http://www.kfw.de/kfw/en/KfW_Group/Research/PDF-Files/STE_Research_Report.pdf

8 | A guide to developing strategies for building energy renovation

 • Energy import bill. With virtually all Member
States being reliant on energy imports to satisfy
demand (see Figure 3) the energy savings
achieved through building renovation will “Achievement of our energy efficiency targets
have a positive impact on a nation’s balance for 2020 could reduce Ireland’s
of payments12. The EU already imports the energy costs by €2.3 billion per annum.”
majority of its energy needs, at a cost of €355 Sustainable Energy Authority of Ireland15
bn annually13. According to the latest IEA
projections in World Energy Outlook 201214,
this import dependency for both oil and gas
is projected to increase substantially over the
coming years.

Figure 3 – Energy bill import dependency in 25 EU Member States (Source – IEA, Eurostat)

United Kingdom
Czech Republic

Luxembourg

Netherlands
Lithuania
Denmark

Germany

Romania
Hungary

Portugal

Slovenia
Belgium

Slovakia
Bulgaria

Sweden
Finland
Estonia
Austria

Greece

Ireland

Poland
Cyprus

France

Latvia

Malta

Spain
Italy

-10

-20
Billion euros

-30

-40

-50

-60

-70

-80

Balance of trade (energy component)

12
“The benefit from reduced energy import bills and the importance of energy prices in GHG reduction scenarios” (http://www.sciencedirect.com/
science/article/pii/S0140988311003057)
13
http://blog.ewea.org/2011/10/eu-energy-import-bill-amounted-to-e355-billion-in-2010/
14
http://www.worldenergyoutlook.org/publications/weo-2012/
15
http://www.seai.ie/Publications/Statistics_Publications/EPSSU_Publications/The_Case_for_Sustainable_Energy.pdf

A guide to developing strategies for building energy renovation | 9

 SOCIETAL BENEFITS: “…there are clear benefits from spending carbon tax
• Reduced fuel poverty. Improving
revenues on improving energy efficiency in fuel poor
the energy efficiency of homes households. Such a policy will provide macroeconomic
has long been recognised in some benefits as well as the environmental and social benefits.
Member States (e.g. UK, Ireland) If the carbon revenue is so invested it could create up
as vital to achieving affordable to 71,000 jobs [in the UK] by 2015 and up to 130,000
warmth for families on low jobs by 2027. It will also remove 87% of the 9.1 million
incomes. Between 50 million and
households projected to be in fuel poverty in 2016 from
125 million people in Europe (10-
25% of the total EU population) that risk and reduce energy bills in all treated homes by
are estimated to be fuel poor, over £200 a year.”
according to the European Fuel UK Consumer Focus.17
Poverty and Energy Efficiency
study16. Deep renovation can
provide the means whereby
homes are “fuel poverty proofed” as a result of the affordability of the very
low energy bills that arise after such a renovation.

• Health. Closely allied to reducing fuel poverty are the health benefits from warmer homes with
fewer cold spots & draughts, less condensation/mould and improved indoor air quality. Copenhagen
Economics estimate that the health benefits from energy retrofits could be worth more than the
value of the saving in energy costs – see Figure 4. However, they acknowledge that the value of the
health benefits is subject to considerable uncertainty.

Another estimate from the UK Chief Medical Officer puts the saving to the National Health Service
at £0.42 for every £1 invested in keeping homes warm, but notes that this figure is an underestimate
since it does not include additional spending by social services, or economic losses through missed
work18.

Figure 4 – Annual gross benefits to society from energy efficient renovation of buildings (2020)
(Source – Copenhagen Economics)

200 Total: 104 Total: 175

180
160
88
140
Billion EUR

120
100
42 5
80
4 6
60
40 5 75
20 52
0
Low EE scenario High EE scenario

Energy savings Reduced outlay on subsidies Reduced air pollution Health benefits

16
http://www.fuel-poverty.org/files/WP5_D15_EN.pdf
17
http:// www.consumerfocus.org.uk/files/2012/11/Jobs-growth-and-warmer-homes-November-2012.pdf
18
http://www.instituteofhealthequity.org/projects/the-health-impacts-of-cold-homes-and-fuel-poverty

10 | A guide to developing strategies for building energy renovation

 • Increased comfort and productivity.
SELECTED FINDINGS OF THE UK Whilst those in fuel poverty are likely
MARMOT REVIEW TEAM ON THE to witness the greatest improvement
in terms of increased comfort, building
HEALTH IMPACTS OF COLD HOMES occupants across the spectrum can
AND FUEL POVERTY19 benefit from homes and workplaces that
• Countries which have more energy efficient are easier to maintain at comfortable
housing have lower Excess Winter Deaths. temperatures, avoiding both overheating
in summer as well as underheating in
• Excess Winter Deaths are almost three times winter as a result of thermal renovation.
higher in the coldest quarter of housing than in It is well established that a better
the warmest quarter. working environment leads to increased
productivity20.
• Children living in cold homes are more than
twice as likely to suffer from a variety of
respiratory problems than children living in
warm homes. “Thermal discomfort caused
• Mental health is negatively affected by fuel by high or low temperature
poverty and cold housing for any age group. had negative influence on
productivity.” 21
• More than 1 in 4 adolescents living in cold
housing are at risk of multiple mental health
problems compared to 1 in 20 adolescents who
have always lived in warm housing.

• Cold housing increases the level of minor

illnesses such as colds and flu and exacerbates
existing conditions such as arthritis and
rheumatism.

• Cold housing negatively affects children’s

educational attainment, emotional well-being
and resilience.

• Fuel poverty negatively affects dietary

opportunities and choices.

• Cold housing negatively affects dexterity and

increases the risk of accidents and injuries
in the home.

19
Ibid.
20
http://gpichub.org/activities/policy/projects/indoor-environmental-quality-occupant-behavior/lighting/sub-folder/indoor-air/thermal-comfort/
productivity-job-satisfaction
21
Lan, L., Z. Lian, and L. Pan. “The effects of air temperature on office workers’well-being, workload and productivity-evaluated with subjective rat-
ings;” Applied Ergonomics. (2003)

A guide to developing strategies for building energy renovation �����

| 11
��
ENVIRONMENTAL BENEFITS:
• Carbon saving. According to BPIE’s analysis under the deep renovation scenario, carbon emissions
from regulated energy use22 in the building sector across the EU-27, Norway and Switzerland
could be reduced by between 730 and 930 MtCO2/a in 2050 (a reduction of between 71% and
90%), depending on the rate of decarbonisation of the energy system. The monetary value of this
environmental externality is estimated at €830 bn23.

The importance of the building sector in achieving carbon savings is amply illustrated by the
analysis of the Intergovernmental Panel on Climate Change (IPCC), as presented in Figure 5. In all
world regions, and at all carbon prices up to at least US$100/tonne of CO2 equivalent, buildings
hold the greatest potential for cost effective carbon emission reductions.

Figure 5 – Comparison of cost effective CO2 reduction potential in 2030 by sector, at different
carbon prices (source - IPCC 2007)24

GtCO2-eq/yr
7
6
5
4
3
2
1
0
US$ / tCO2-eq
0
<1 0
00

0
<1 0
00

0
<1 0
00
0
<1 0
00

0
<1 0
00

0
<1 0
00

0
<1 0
00
<2
<5

<2
<5

<2
<5

<2
<5

<2
<5

<2
<5

<2
<5

Energy supply Transport Buildings Industry Agriculture Forestry Waste

Non-OECD/EIT Economies In Transition (EIT) OECD World total

“Our commitments to building a low carbon economy

as set out in the UK and Scottish Climate Change Acts
• Reduced air pollution. By reducing will reduce air pollution, but choices about the route we
the need for energy production
take to 2050 will affect the scale of improvements to air
from fossil fuels, there is a reduction
in the amount of pollutants such as
quality. Factoring air quality into decisions about how to
SO2, NOx and particulates that are reach climate change targets results in policy solutions
damaging to health, to buildings with even greater benefits to society. Optimising climate
and the environment25. change policies for air pollution can yield additional
benefits of some £24 billion (net present value) by 2050.”
UK Department of the Environment, Farming & Rural Affairs26

22
Regulated energy use = heating, cooling, hot water and fixed lighting
23
Externalities derived from http://www.eea.europa.eu/data-and-maps/indicators/en35-external-costs-of-electricity-production-1
24
IPCC “Climate Change 2007: Mitigation of Climate Change”. NOTE – EIT = Economies in Transition; OECD includes most EU Member States
25
http://epa.gov/statelocalclimate/documents/pdf/epa_assessing_benefits_ch4.pdf
26
http://www.defra.gov.uk/publications/files/pb13378-air-pollution.pdf

12 | A guide to developing strategies for building energy renovation

 ENERGY SYSTEM BENEFITS:
• Energy security. Reducing energy demand as a key component of energy security is acknowledged
in “A Strategy for Competitive, Sustainable and Secure Energy”27 published by the European
Commission, where top priority is ascribed to achieving the biggest energy saving potentials,
namely in buildings and transport.

• Avoided new generation capacity. According to

Commission estimates28, achieving the 20% energy “A study of widespread energy efficiency
efficiency target would avoid the construction of deployment in the Southwest used the
the equivalent of 1000 coal fired power stations29
calculated potential energy savings to
or 500,000 wind turbine installations30.
estimate avoided capacity investments of
• Reduced peak loads. Energy demand reduction about $10.6 billion by 2020”.
measures save a disproportionate amount at times Southwest Energy Efficiency Project (US)32
of high demand (through reduced winter heating
and summer cooling). By avoiding use of the most
expensive generation capacity which is required
to meet peak demands, and also lowering the
load, and hence the losses, in the transmission and distribution systems,
all electricity users benefit from reduced system operation costs31.

SUMMARY OF BENEFITS:
The above discussion identifies the wide array of benefits that can be achieved as a result of renovating
buildings to higher energy performance standards. Some are tangible and readily quantifiable, while others
are less so and may be difficult to assign a monetary value, like the social cohesion and sense of civic pride
that comes with the renovation of an apartment block or a district which has undergone regeneration.

In evaluating their renovation strategies, Member States are advised to consider mechanisms whereby
the mismatch between the benefits experienced by individual investors and those that accrue to other
parties can be addressed. For example, providing funding for renovation activity could be seen as being
of strategic national importance in terms
of the savings it provides for public health
In undertaking the cost effectiveness appraisal of The expenditure and reduced social security
payments, in addition to being a cost
Green Deal and Energy Company Obligation, the UK
effective means of cutting energy import
Government took account of some of the associated bills and meeting climate commitments.
benefits of energy saving investments. In addition
to direct energy savings of £15bn, a further £10.6bn Put simply, renovating the
worth of quantified air quality, increased comfort and nation’s buildings improves
carbon reduction benefits were included33. the health and the wealth of its
citizens.

27
Figures derived from the European Environment Agency (http://ec.europa.eu/energy/wcm/fpis/ressources-ese/docs/2-2011_energy2020_en.pdf )
28
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0772:FIN:EN:PDF
29
Assuming each power station has a 600 MW capacity, operating 7000 hours/a
30
Assuming each turbine has a 4MW capacity, operating 2300 hours/a
31
http://www.raponline.org/document/download/id/6103
32
http://epa.gov/statelocalclimate/documents/pdf/epa_assessing_benefits_ch1.pdf#page=11
33
http://www.decc.gov.uk/assets/decc/11/consultation/green-deal/5533-final-stage-impact-assessment-for-the-green-deal-a.pdf

A guide to developing strategies for building energy renovation �����

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��
BARRIERS AND CHALLENGES
Set against the multiple benefits described above are numerous obstacles to the uptake of renovation.
During 2011, BPIE undertook a detailed survey of the barriers and challenges to building renovation
across 29 countries. For a full discussion, please refer to Part 2 of “Europe’s buildings under the microscope”.
Figure 6 presents a schematic summary of the main categories of barriers identified in the BPIE study.

Figure 6 – Main types of barrier encountered in building renovation (Adapted from BPIE 34)

Access to finance
Payback  expecta,ons  
Financial Investment  horizon  
Compe,ng  expenditure  
Adequacy  of  price  signals    
Regulatory  &  Planning  issues    
Ins,tu,onal  
Institutional & Administrative
BARRIERS Structural  
Mul,ple  stakeholders  
Informa,on  
Awareness, advice & skills Awareness  of  benefits  
Professional  skills  
Landlord-­‐tenant  
Separation of expenditure and benefit
Investor-­‐society  

In designing renovation strategies, it is essential that Member States assess the particular barriers
affecting the renovation market in their country. Action to address these barriers must then be taken
if the strategy is to achieve the desired outcome and increase the propensity for building owners to
undertake deep renovation. These measures include, but are not limited to, new policies and regulatory
initiatives targeting particular building sectors, as well as removal of existing barriers which may be
holding back the renovation market.

It is important to tailor the policy response to the specific barriers affecting different market sectors.
Accordingly, the policy mix will need to encompass a range of measures that, collectively, address all
building categories, ownership profiles and tenures.

To reinforce the importance of this issue, Article 19 of the EED requires Member States to evaluate and
take appropriate measures to remove regulatory as well as non-regulatory barriers to energy efficiency.

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14 | A guide to developing strategies for building energy renovation

 In its report “Energy Efficiency: A Compelling Global Resource”, McKinsey likewise argued the importance
of a systematic appraisal of barriers and, more importantly, identification of solutions to these barriers.
An example of the process of identifying issues that are holding back investment and then proposing a
package of solutions to address the suite of barriers is visualised in Figure 7.

Figure 7 – Example of how to develop a holistic policy response to barriers (Source – McKinsey)

Barriers Manifestation barrier Potential approach Solution strategies

Agency Landlord-tenant issues Educate users on

Information flow
issues impact 4% of potential Home labeling and energy consumption
Transaction Research, procurement, and assessments Promote voluntary
standards/labeling
Structural

barriers preparation time, and lifestyle impact

Pricing Establish pricing
distortions signals
Ownership Limits payback to time owner lives in
transfer issues home; impacts 40% of potential
Innovative

Capital outlay
Risk and Increase availability
uncertainty1 financing vehicles of financing vehicles
Awareness and Limited understanding of energy use Tax and other Provide incentives
Behavioral

information and measures to reduce incentives and grants

Custom and
habit
Elevated Cognitively shortened expected payback
hurdle rate of 2.5 years, 40% discount factor
Adverse Required upgrades Raise mandatory
bundling at point of sale/rent codes and standards
Capital Competing uses for capital from
Availability

constraints a constrained budget

Product Limited availability of Develop certified Support third-party
availability contractors contractor market installation
Installation Improper installation of measures; improper
and use use of programmable thermostats

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 VISION FOR A NATIONAL LONG TERM
RENOVATION STRATEGY
Given the challenging set of barriers that is hampering the achievement of the wide range of benefits
identified previously, we believe it is incumbent on Member States to set out a long term vision for the
renovation of the nation’s building stock to very high energy performance levels by the middle of the
century. The level of ambition ought to be consistent with achieving greenhouse gas emission reductions
of 88-91% from the building sector compared to 1990 levels, in line with the European Commission’s
“Roadmap for moving to a competitive low carbon economy in 2050”35. Interim milestone targets in 2020,
2030 and 2040, consistent with achieving the 2050 target, will provide key reference points for review of
progress.

The timeframe of 2050 is also consistent with typical replacement cycles of major building equipment
and components, which suggest that it will take 30-40 years to substantially renovate national building
stocks. This corresponds to a renovation rate of around 2.5-3% p.a., a significant increase from the
prevailing rates of around 1% p.a. in most countries, (as identified by BPIE’s 2011 survey).

Most renovation activity at the moment achieves only modest energy savings, perhaps 20-30%, but this
needs to increase to deep renovations of at least 60% if the full economic potential is to be realised.

The impact of different renovation pathways on the resulting energy and carbon savings was modelled
by BPIE in its 2011 publication “Europe’s buildings under the microscope”. This showed that only in those
scenarios where both the rate and the depth of renovation were substantially increased, alongside rapid
decarbonisation of the energy supply system, could the carbon saving ambition for the building sector
set out in the Commission’s 2050 Low Carbon Economy Roadmap be achieved.

The figures below and overleaf demonstrate the scale of the challenge in terms of ramping up activity
rates if the EU is to meet its long term CO2 saving ambition, derived from BPIE modelling. They illustrate,
firstly, that the depth of typical building renovation needs to shift from the majority currently being at a
“shallow” level (i.e. up to 30% energy saving) to either “deep” (i.e. 60-90% saving) or increasingly “nZEB”
(i.e. nearly zero-energy buildings, saving 90% or more) for the period 2020-2050.

Figure 8 – Required increase in renovation depth to achieve 90% CO2 saving (Source – BPIE model)

100%
90%
% renovation by depth

80%
70%
60%
50%
40%
30%
20%
10%
0

2010 2015 2020 2025 2030 2035 2040 2045 2050

nZEB deep moderate minor

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16 | A guide to developing strategies for building energy renovation

 At the same time, the renovation rates need to ramp up from the prevailing rate of around 1% of total
floor area renovated annually, to between 2.5% and 3% p.a. from 2020 onwards. The final renovation rate
is determined by the speed with which activity is ramped up, as illustrated below.

Figure 9 – Required increase in renovation rate to achieve 90% CO2 saving (Source – BPIE model)

3,0%

2,5%
Annual renovation rate
(% total floor area p.a.)

2,0%
Medium
1,5% Fast

1,0% Baseline

0,5%

0,0%
2010 2015 2020 2025 2030 2035 2040 2045 2050

An effective building stock renovation strategy will engage building owners as well as the supply chain,
including the investment community. Member States need to consider the policy landscape that is
necessary in order to increase renovation activity, including removal of barriers that are currently holding
back investment.

In addition to the long term objective and interim milestones, the strategy should set out a detailed
plan of action for the next 5-10 years, focusing on the policies and measures that are needed to scale up
renovation activity and identifying priority sectors.

Efforts to increase the rate and depth of renovation will stimulate the development of new technologies
and techniques to deliver energy savings. Therefore, it is important to factor in the technological
dimension into the long term strategy, as well as the cost reductions that can be achieved through scaling
up activity levels. Thus, assumptions about the future costs and renovation potential must not be limited
by today’s technologies, construction techniques and costs.

In addition to setting a long term vision, a renovation strategy needs to be transformational and dynamic
in nature. The wider benefits arising from energy saving renovation need to be taken into account. At
the same time, the significant challenges, not least the issues of dealing with the inertia among building
owners and the classic tenant-landlord barrier, need to be addressed.

Some Member States have already set out a long term vision for the evolution of the building sector:

• France’s Plan Bâtiment Grenelle sets out an ambition to reduce carbon dioxide emissions from build-
ings by 50% by 202036
• In Germany’s National Energy Efficiency Action Plan, the stated vision is to achieve an almost climate
neutral building stock by 205037
• Denmark has a long tradition of active energy policy ever since the oil crises of the 1970s. In 2012,
widespread political support was secured for a further package of measures, including building retro-
fitting, that brings the country closer to the ultimate goal of eliminating fossil fuel use in the energy
and transport sectors by 2050.38

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 PART 2

DEVELOPING THE RENOVATION

STRATEGY
Here, we consider the key steps in the development of a renovation strategy. They have been divided
into 5 phases:

1. Identifying Key Stakeholders & Information Sources

2. Technical & Economic Appraisal
3. Policy Appraisal
4. Drafting & Consulting on the Renovation Strategy
5. Publication & Delivery

Figure 10 illustrates the main phases including the key steps within each phase

Figure 10 – Simplified process flow chart for strategy development

Identify key stakeholders

PHASE 1 Identify information sources

Building stock characterisation

Economic appraisal of renovation potential
PHASE 2 Identification of energy and non-energy benefits
Quantification of investment requirements and funding sources

Comprehensive appraisal of barriers

Assessment of range of policy measures
PHASE 3
Development of holistic policy package

Draft renovation strategy

PHASE 4 Consultation on draft strategy

Publish final strategy

Commence policy implementation process
PHASE 5 Establish monitoring and evaluation procedures
Review and update strategy every 3 years

18 | A guide to developing strategies for building energy renovation

Alongside the detailed description of each phase below, an indicative timescale is provided. Clearly,
circumstances will vary from country to country, and it is realistic to undertake certain phases
simultaneously. BPIE believes it could take up to a year for Member States to develop their first
renovation strategies, as indicated in Figure 11 and discussed more fully in each phase.

Given the EU delivery deadline of April 2014, Member States are advised to commence their renovation
strategy development process during the first half of 2013.

Figure 11 – Indicative timeline for building renovation strategy development

Month 1 2 3 4 5 6 7 8 9 10 11 12 year2+
PHASE 1 - Identify key stakeholders &
information sources
PHASE 2 - Technical and economic appraisal
PHASE 3 - Policy appraisal
PHASE 4 - Drafting & consultation
PHASE 5a - Finalisation & publication
PHASE 5b - Delivery Ongoing
thereafter

PHASE 1
IDENTIFYING KEY STAKEHOLDERS & INFORMATION SOURCES

Key to successful delivery of an ambitious yet achievable renovation strategy are preparation, planning
and leadership. Given that the strategy will influence an important sector of the economy for decades
to come, a strategy development team needs to be pulled together to include input from representa-
tives of Government ministries with responsibility for policy on energy, the building sector (including
housing/communities), regions, industry, finance and the economy. Lead responsibility also needs to be
clarified. Input from external stakeholders such as sectoral experts, the finance community and repre-
sentative industry bodies will also be invaluable within the project team.
In addition to establishing a project team, the preparation phase should include the following information
and data gathering to underpin subsequent phases:

• Sources of information on the building stock disaggregated by typology, energy use and current
level of energy performance;
• Literature review to identify the existing knowledge base of the barriers;
• Literature review of the effectiveness of existing or previous initiatives to increase the uptake of
sustainable energy improvements in the building stock;
• Identification of relevant stakeholders.

The preparation phase is likely to take 1-2 months.

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PHASE 2
TECHNICAL AND ECONOMIC APPRAISAL

In this phase, the technical potential for improving the energy performance of the building stock is
determined and the range of renovation options appraised and costed. The starting point is to gain
a full understanding of the building stock through a bottom-up summation of the different building
typologies, construction styles, ages, climatic zones, occupancy, ownership patterns and the like.
The reference buildings developed by Member States for cost optimality purposes may serve as a guide
for the number and type of building categories.

Analysis of the building stock and the range of possible renovation measures provides the basis for
assessing the technical potential for energy savings. The economic potential can then be determined,
using a range of assumptions regarding the evolution of energy prices and the costs of renovation.

In appraising the economic potential, a key component that is frequently overlooked is the monetisation
of the benefits that arise alongside the energy cost savings. The issue here is that most of the other
benefits discussed previously accrue to society at large, rather than to the investor. Member States should
quantify these benefits and factor them into the economic appraisal of the renovation strategy at a
national level. In this way, the cost of any public subsidy provided to stimulate deep renovation could be
more than offset by the national economic benefits that result from, for example, increased employment
or reduced health expenditure.

Notwithstanding the difficulties of quantifying the wider benefits, many Member States have
acknowledged their existence at a qualitative level and have used arguments such as increased
employment to support the case for renovation programmes, even if the full economic impact has not
been explicitly appraised.

In any economic appraisal, the discount rate, or rate of return applied, is a very significant consideration.
Here, it is important to recognise the disparity between discount rates used by building owners and
other potential investors which are typically far higher than societal discount rates. The challenge is to
design a support regime that increases building owners’ underlying propensity to invest in renovation.
While financial support programmes can bridge some of the gap, inevitably regulatory measures will
need to be developed and used extensively to require renovation of, for example, the least efficient
building stock or at change of ownership. The range of potential measures is discussed more fully
in Phase 3.

In summary, the detailed steps of the technical & economic appraisal are:
1. Building stock analysis;
2. Cost effectiveness appraisal of renovation options;
3. Quantification of energy saving potential;
4. Development of a long term investment horizon; and
5. Quantification of other benefits.

These steps are further elaborated in Annex 2.

20 | A guide to developing strategies for building energy renovation

The methodology presented above and in Annex 2 broadly reflects the approach taken by BPIE in
developing its scenario analysis for a Europe-wide renovation strategy, described more fully in "Europe's
Buildings Under The Microscope". Data on the existing European building stock, used in the modelling
work, is now available at www.buildingsdata.eu.

One of the key challenges when undertaking the economic appraisal is access to good quality data on the
costs and savings of renovation activities, and also forecasting these forward over the next 30-40 years.
Available information on the costs of deep renovation may be limited to demonstration or pilot projects,
which may not be representative of the costs in a larger scale rollout. Inevitably, certain assumptions will
need to be made based on incomplete data. In order to improve the knowledge base for future revisions
and updates to the strategy, it is recommended that Member States introduce or enhance data gathering
processes to enable a more accurate picture of the true costs and benefits of building renovation
to be built up.

The economic appraisal will identify the scale of investment required to deliver the strategy. Financing
sustainable energy investment has traditionally been one of the main barriers, so it is vital to the success
of the strategy that potential funding sources are identified and mobilised. Whilst many economies
within the EU are still feeling the effects of the economic downturn, it is important to recognise the long
term nature of the strategy, spanning 30-40 years, and so it needs to be resilient to the fluctuating market
conditions that will be encountered over time.

Notwithstanding the long term nature of the strategy, the action plan over the next 5-10 years ought to
be explicit about how the financing of renovation activity is to be achieved. Public budgets are under
pressure, yet Member States should recognise the potentially significant resources that are available
through EU Structural Funds and the Cohesion Fund39 under the Multiannual Financial Framework
2014-2020. One of the recommendations of the Commission is to increase the proportion of climate-
related expenditure to at least 20 %40. This represents a potentially very large pot of funding from which
to secure resources for programmes to support the renovation strategy, particularly given that buildings
have the largest potential for carbon reduction (see Figure 5) and the many other benefits that can be
attained as a result of improving the energy performance of buildings.

At the same time as maximising the allocation of EU and other public funding sources to the renovation
of buildings, it is important for Member States to identify ways to achieve high leverage levels of private
funding, be that building owners’ own resources or those of the investment community.

The technical and economic appraisal is the core analytical phase of the strategy development process,
so Member States can expect it to take around 4-6 months.

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PHASE 3
POLICY APPRAISAL

The purpose of the policy appraisal phase is, firstly, to review in some detail the current policy landscape
affecting building renovation, and secondly, to identify the changes to policies and additional policies
that will be necessary to unleash the building renovation market.

The specific policy mix required to deliver the long term renovation strategy will vary from country to
country, according to national circumstances. In addition to reviewing their own policy mix, Member
States might find it instructive to undertake an appraisal of the relevance of policies used in other
territories. A good source of reference is BPIE’s data portal – www.buildingsdata.eu.

The main point to note here is that, while the existing policy mix in a given Member State may have been
effective in increasing deployment of particular types of improvement measures (whether individual
technologies or a package of measures), no Member State currently has the policy measures in place
to gear up renovation activity to the extent required to effect a transformation in national building
renovation activity.

BPIE analysis indicates that delivering the long term renovation strategy will require a fundamental review
of the policy landscape and the introduction of new policies and measures on a scale not previously
witnessed. For this reason, BPIE has developed a checklist of possible actions which, together, provide a
solid policy framework on which to base the renovation strategy - see table overleaf.

The suggested list of measures may not be applicable in all Member States, and it is unlikely that all could
be introduced within a single policy cycle. Nevertheless, the list illustrates the wide range of actions that
should be given serious consideration to facilitate a successful delivery of the renovation potential.

22 | A guide to developing strategies for building energy renovation

Checklist of actions to underpin the renovation strategy
Establish support across the political spectrum for deep renovation of the building stock
Establish an independent committee to monitor and report progress on the strategy on an ongoing basis, including making
recommendations for improvements and periodic updates
Undertake systematic appraisal of barriers to renovation in each segment of the market and develop policy responses to address
each barrier
STRATEGIC

Establish objective to eradicate fuel poverty through energy performance improvements to the housing stock
Develop holistic cross-policy targets that integrate with and deliver on goals in related fields, e.g. sustainable urbanisation,
resource efficiency, sustainable construction etc.
Establish a wide stakeholder group as a forum for consultation, policy formulation and feedback on practical issues and barriers to
renovation
Demonstrate leadership through accelerated deep renovation of public buildings, thereby developing supply chain capacity and
providing a knowledge base for private/commercial renovation activity

Identify trigger points and develop respective regulation that could be used to encourage, or require, building energy
LEGISLATIVE & REGULATORY

performance improvement41
Design Energy Efficiency Obligations that encourage the delivery of deep renovation
Facilitate the upgrade of all social housing to high energy performance levels
Address restrictive practices concerning local deployment of low/zero carbon technologies to ensure that a positive environment
for buildings integrated renewables is established
Remove or implement measures to overcome restrictive tenancy laws which disincentivise or otherwise inhibit energy
performance improvement
Mandate improvement of least efficient stock to higher energy performance level, e.g. through restrictions on sale or rental of
buildings in lowest energy performance categories

Develop renovation standards that are progressively and regularly strengthened in response to experience and new
technological solutions
TECHNICAL

Analyse potential for district heating systems to provide efficient, low carbon energy
Ensure proper monitoring and enforcement of compliance with building codes
Develop packaged solutions that can be readily replicated in similar building types
Introduce quality standards/certification systems for installers & products (including packaged solutions)

Secure sources of finance, including those identified in EED Article 20 and EU/international funding sources, and develop
mechanisms that effectively leverage private capital
Factor in monetary value of co-benefits (e.g. health, employment) in public funding decisions
FISCAL/FINANCIAL

Develop funding vehicles, tailored to specific market segments, that provide a simple (“one-stop-shop”) and commercially
attractive source of finance for deep renovation
Develop mechanisms to encourage deep renovation via third party financing, e.g. ESCOs, EPCs
Strengthen energy/carbon pricing mechanisms to provide the right economic signals
Remove fossil fuel subsidies to eliminate perverse incentives that discourage investment
Consider ”bonus-malus” mechanisms, e.g. property taxation systems (which reward high energy performing buildings while
penalizing poorly performing ones) and energy pricing

Establish publicly accessible databases demonstrating energy performance of renovated buildings and information on how to
undertake deep renovation
CAPACITY BUILDING
COMMUNICATION /

Gear up skills and training programmes covering the key professions and disciplines
Establish knowledge and experience-sharing networks across regions/Member States
Encourage development of local supply chain industry for maximising macro-economic benefits and to minimise embedded CO2
emissions
Develop promotional and dissemination activities that sensitise building owners to opportunities for deep renovation and that
provide stepwise support throughout the renovation process
Communicate regularly and publicly on progress with the renovation strategy

Support research, development and demonstration projects into new & improved technologies and techniques to deliver deep
R&D

renovation, including how to scale up best practice to multiple buildings

41
Example trigger points include: Audits; Issue of Energy Performance Certificates; Boiler & air conditioning inspections; Change of ownership or tenancy; Change of building use;
Other building work (e.g. extensions)

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EED provides further reference points for Member States to gear their policy package towards the delivery
of the long term building renovation strategy, including:

• Article 3 (Energy efficiency targets) – A significant component of each country’s target is likely to
be required through energy savings in the building stock.
• Article 5 (Exemplary role of public bodies’ buildings) – The 3% central government buildings
renovation target provides the ideal platform on which to build a national renovation strategy.
• Article 7 (Energy efficiency obligation schemes – EEOs) – While most existing obligation
schemes have been successful in achieving the “low hanging fruit” of low cost measures with
rapid paybacks, the opportunity exists for Member States to design EEOs that encourage the
development of whole building (or even community-wide) solutions that deliver deep renovation.
• Article 8 (Energy audits and energy management systems) – Energy audits can be the
instrumental first step to stimulate investment in energy savings. Member States should consider
what support measures need to be put in place to ensure that audits lead to deep renovation.
• Articles 9 (Metering), 10 (Billing information) and 12 (Consumer information and
empowering programme) – Raising awareness of the cost saving potential of building renovation
can be achieved through judicious use of the regular communication channels (i.e. meters and
energy bills) to bill payers, as well as through other ways of engaging with building owners
and energy consumers.
• Article 14 (Promotion of efficiency in heating and cooling) – Provision of heating and/or cooling
from a high efficiency cogeneration plant, whether large or small scale, could be an important
component of a deep renovation, particularly at community scale through a district heating system.
• Article 15 (Energy transformation, transmission and distribution) – Regulatory structures,
tariffs and incentives in the energy supply system need to be assessed to ensure they are
conducive to investment in demand side energy saving measures, including the connection of
micro-energy generators such as buildings integrated renewable technologies and combined heat
and power systems.
• Article 16 (Availability of qualification, accreditation and certification schemes) – Concern
over the competence of equipment installers can be a significant barrier to undertaking renovation.
The existence of an effective national quality scheme, backed up by guarantees of workmanship
and performance or technologies, can help to address this barrier and overcome inertia.
• Article 17 (Information and training) – The availability of trustworthy information and advice,
as well as an adequately trained workforce, is a necessary prerequisite to a scaling up of national
renovation activity.
• Article 18 (Energy services) – For some sectors, notably the non-residential market, provision of
energy services and financing of measures through energy service companies (ESCOs), and energy
performance contracts (EPCs), can be an effective way of stimulating the uptake of energy saving
measures. However, several Member States have reported that the treatment of such contracts in
the public sector as public debt is a significant barrier to their wider deployment. Even in territories
where there is a thriving market for ESCOs, consideration should be given to structuring contracts
such that they achieve deep renovation, including the implementation of higher cost measures,
rather than simply focusing on those which achieve the greatest return to the ESCO/EPC provider.
• Article 19 (Other measures to promote energy efficiency) – The main thrust of this Article is the
review and removal of barriers, both regulatory and non-regulatory, which, as mentioned earlier, is
a key component of the renovation strategy.

24 | A guide to developing strategies for building energy renovation

 • Article 20 (Energy efficiency national fund, financing and technical support) – With the
need for large scale investment in the building stock in order to deliver the potential benefits,
development of appropriate financing vehicles and other technical support measures are a pre-
requisite for a successful and effective renovation strategy.
Furthermore, EPBD contains a number of measures that are complementary to the renovation strategy,
as summarised below.

• Article 4 (Setting of minimum energy performance requirements) – The need to ensure that
minimum energy performance requirements are set with a view to achieving cost-optimal levels
applies to existing as well as new buildings. Minimum energy performance requirements need to
be reviewed and updated at least every five years, taking into account technological development
in building materials and systems.
• Article 7 (Existing buildings) – When buildings undergo major renovation, the energy
performance of the building or the renovated part need to be upgraded in order to meet minimum
energy performance requirements.
• Article 8 (Technical building systems) – The overall energy performance of efficient, appropriately
sized and controlled equipment providing heating, hot water lighting, air conditioning and
ventilation is a key component of reducing energy consumption, particularly in non-residential
buildings such as offices, hospitals and hotels. Automation and active, intelligent systems can
enhance the savings achieved. Member States are required to set technical building system
requirements accordingly.
• Article 9 (nearly Zero-Energy Buildings) – The requirement for Member States to draw up
national plans for increasing the number of nearly zero-energy buildings has the greatest synergy
with the renovation strategy and reinforces the key message about the level of ambition (i.e. energy
saving) that should be sought when renovating buildings.
• Article 10 (Financial incentives and market barriers) – In a similar vein to Articles 19 & 20 of
EED, the importance of addressing market barriers and providing appropriate financial incentives
is fundamental to improving the energy performance of the building stock.
• Articles 11-13 (Energy Performance Certificates) – An effective EPC regime raises awareness as
to the actual energy performance of buildings and the opportunities to improve performance.
• Articles 14-16 (Inspection of heating and air conditioning systems) – The inspection regime
provides the basis for identifying opportunities to improve or upgrade the performance of these
essential energy systems.
• Article 17 (Independent experts) – Having a suitably trained cadre of experts, qualified within
the framework of a recognised independent certification/accreditation system, is another
key component of ensuring the correct certification of buildings and energy systems and the
identification of renovation opportunities.

In addition to the complementary nature of the various provisions in EED, EPBD and other EU legislation
to support a holistic approach to developing renovation strategies, Member States should consider the
role that national legislation such as energy planning or regional development plans can play in support
of the renovation objective.

Overall, the policy appraisal phase might take around 4-6 months, though this could run concurrently
with the technical & economic appraisal.

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PHASE 4
DRAFTING & CONSULTING ON THE RENOVATION STRATEGY

This phase brings together the technical and economic appraisal undertaken in phase 2 with the review
of policy options in phase 3 in order to generate a range of possible future pathways or roadmaps for the
long term renovation of the national building stock. Depending on the timing and strength of different
policy levers, different rates of renovation can be modelled and the resulting investment and benefits
horizons profiled and quantified.

Clearly, the building stock in any given territory is not a homogeneous entity, so the response to particular
policy signals will vary according to building ownership and type. Some measures may have no impact
on a particular sector. For these reasons, the policy options need to be mapped against the energy saving
potentials in different building sectors identified in phase 2 in order to ensure that, ultimately, measures
are brought to bear to influence the renovation rate, and depth, across all building sectors.

Given the requirement in Article 5 of EED for national governments to demonstrate an exemplary role
through renovation of 3% of the central government estate annually, with effect from 1st January 2014,
it is likely that Member States will need to prioritise this sector in the national renovation strategy. At the
same time, Member States are advised to apply a similar level of ambition throughout the rest of the
public sector, both regionally and locally, including to the significant property portfolios such as health,
defence, education, public administration and leisure services. Publicly owned or managed housing
stock should also be in the vanguard of the renovation strategy, given the ability of central government
to influence this sector directly.

Ultimately, all sectors need to be addressed through policies and measures to stimulate building
renovation. By focusing initially on the public sector, Member States will facilitate the build-up of the
necessary skills, expertise and workforce that will be required to renovate the larger privately owned
stock. The residential sector is predominantly privately owned in all Member States, though the picture
is more mixed as regards the non-residential sector (Figure 12). It is the privately owned stock, together
with mixed tenure ownership, that has traditionally been the most difficult to influence in terms of
undertaking building renovation work, yet this is the most important sector given its size and energy use.

26 | A guide to developing strategies for building energy renovation

 Figure 12 – Ownership profile of buildings in selected countries: residential (left hand) and non-
residential (right hand) (Source – BPIE)

ES GR

S
GR
South

CY DK

North & West

IT FR
MT AT
NO
NO
FI
DK
BE
LV
North & West

IE
LT
FR
SI

Central & East

UK
RO
AT
SK
NL
CZ
CH
HU
BG
RO
EE
BG
EE
Central & East

0% 20% 40% 60% 80% 100%

HU
SI
PL
Private
SK
LV Public
CZ Mixed
0% 20% 40% 60% 80% 100%

Based on the analysis undertaken in the previous phases, the renovation strategy should aim to be a
comprehensive document that brings together, in a strategic and holistic way, the full range of levers
and tools that can be brought to bear in order to effect a significant and sustained increase in both the
rate and the depth of renovation of the national building stock to improve its energy performance. Many
of the necessary levers are already in place, but may be under-utilised or otherwise not as effective as
they might be. These include provisions in existing directives such as ecodesign42, labelling43 and high
efficiency boilers44, as well as measures such as the EU-US Energy Star Agreement45 on high efficiency
office equipment and other voluntary initiatives at EU or Member State level.

Once the strategy has been drafted, perhaps with a range of options, it is highly recommended that a
consultation exercise be undertaken with the key national stakeholders. Representatives from the entire
value chain, from the research community and professional service providers through to energy utilities,
equipment manufacturers, installation companies and bodies representing skills and training, need to
be included within the scope of the consultation. Given the comments made earlier on the importance
of identifying sources of finance, the finance community will be a key stakeholder group, not just during
the consultation process but on an ongoing basis thereafter.

In terms of timescales, compiling the draft strategy and then undertaking the public consultation could
take up to 4-5 months.

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PHASE 5
FINALISATION, PUBLICATION & DELIVERY

Taking on board the feedback from the public consultation might require a further 1-2 months before
governments are in a position to publish the national renovation strategy by the deadline in Article 4 of
30th April 2014.

At this point, the risk is to consider that the exercise has been completed, whereas in reality, this is the
time to mobilise the necessary resources to implement the strategy. At government level, the launch of
the strategy should mark the commencement of the policy revision process which, depending on the
particular legislative mechanisms in a given country or region, could take several months or even years
before the necessary measures have been enacted or restrictive legislation repealed. Notwithstanding
the time taken for new legislation to be developed, governments need to make clear to stakeholders
their intentions regarding the delivery and implementation of the renovation strategy, and demonstrate
their own commitment and contribution to the strategy by instigating the renovation of the public estate.

For industry, the main issue is to respond to the signals, targets and measures within the strategy and
gear up for the increased activity of the coming years. In some Member States, existing fora are already
in place to do so while in others, it would be appropriate to consider establishing a government-industry
task force with the remit to take on board the downstream delivery and implementation actions.
Communication with the respective target audiences will also be required.

Equally important is the long term dimension of the renovation strategy. EED requires that national
renovation strategies be reviewed and updated every three years. Such a review needs to be grounded
in a sound evaluation of the impact of policies and measures to date, and an appraisal of further options
to amend the policy landscape.

28 | A guide to developing strategies for building energy renovation

CONCLUDING REMARKS
Long term strategies for mobilising investment in the renovation of national building stocks provide a
potential springboard for Member States to achieve multiple benefits. The requirement contained in
Article 4 of the Energy Efficiency Directive is both:

• Timely in that renovating the building sector is the key to achieving a wide range of benefits;
• Necessary in that it is clear that existing drivers are insufficient to achieve the potential.

Given the long term nature of the renovation process, the strategy needs to be seen as a living document
that is regularly reviewed and updated. The period to 2020 will be a steep learning curve for many
Member States. It is a period in which policy packages will need to be tried and tested, and for learning
and sharing of experience across the EU. Building owners will need to be sensitised to the importance
of building renovation, while the supply chain will need to gear up to be in a position to deliver the
increased activity levels.

Beyond 2020, by which time Member States should have broadly established the necessary policy
framework, effort will need to be focused on maintaining the momentum of renovation activity alongside
continual improvement through the deployment of new energy saving technologies and techniques.

In summary, Member States should envisage an ambition level for a renovation strategy that:

• Sets out a long term framework to 2050 for the renovation of the nation’s building stock to very
high energy performance levels;
• Mobilises building owners, whether individuals, corporate entities, public sector or real estate
portfolio holders, to undertake deep renovation of their buildings;

• Mobilises the supply chain, from manufacturers and installers to professional service providers, to
invest in the equipment, services, and a suitably skilled workforce necessary to deliver high quality
renovations;
• Mobilises the investment community to develop financial products and vehicles to fund the
programme of building renovations and upgrades;
• Stimulates research and development into techniques and technologies that deliver greater energy
savings at lower cost, and to provide solutions that are appealing to building owners;
• Achieves energy savings and CO2 reductions consistent with the 2050 Low Carbon Economy
Roadmap, as a key contribution to national, EU and international targets;
• Delivers a host of other economic, environmental, societal and energy system benefits;
• Is evaluated on an ongoing basis and reviewed/updated every three years;
• Meets the requirements of Article 4 of the EED.

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ANNEX 1
ENERGY EFFICIENCY DIRECTIVE: ARTICLE 4 - BUILDING RENOVATION

For ease of reference, the text of Article 4 of the EED is reproduced below.

Member States shall (a) an overview of the national building stock based, as appropriate, on
establish a long- statistical sampling;
term strategy for
(b) identification of cost-effective approaches to renovations relevant to
mobilising investment
the building type and climatic zone;
in the renovation of
the national stock (c) policies and measures to stimulate cost-effective deep renovations of
of residential and buildings, including staged deep renovations;
commercial buildings,
both public and private. (d) a forward-looking perspective to guide investment decisions of
individuals, the construction industry and financial institutions;
This strategy shall
encompass: (e) an evidence-based estimate of expected energy savings and wider
benefits.

A first version of the strategy shall be published by 30 April 2014 and updated every three years thereafter
and submitted to the Commission as part of the National Energy Efficiency Action Plans.

ANNEX 2
STEPWISE SUMMARY OF THE TECHNICAL AND ECONOMIC APPRAISAL

1) GATHER NATIONAL DATA ON THE BUILDING STOCK

Note - Where data exist at a sub-national level (e.g. by region) it is useful to retain this breakdown

a) Identify main building categories, for example46:

i. Single-family houses
ii. Blocks of flats/apartments & other multi-residential dwellings
iii. Offices
iv. Educational buildings
v. Hospitals/health establishments
vi. Hotels & restaurants
vii. Sports facilities
viii. Warehouses & retail premises
ix. Other types of energy-consuming buildings

b) Identify key age bands which have a material bearing on building energy performance, e.g.:

i. Traditional construction types, including historic/heritage buildings (typically pre-1900)

ii. Buildings constructed prior to regulations on energy performance (e.g. 1901-1960)
iii. Early phase building regulations (1961-1990)
iv. Mid phase building regulations (1981-2000)
v. New (2001-2012)

46
These are the building categories identified in Annex 1 of EPBD

30 | A guide to developing strategies for building energy renovation

c) Identify main climatic zones which have a material bearing on building energy performance

d) Quantify the number, type, size (treated floor area) of each combination of building type and
age band. On an illustrative basis of 9 building types and 5 age bands, this results in a matrix of up to
45 combinations. However, it will be possible to group many of the non-residential building types/age
bands, so the number of combinations will in practice be less than this.

e) Ownership and Tenure

i. Identify the split by owner – public, private or mixed

ii. Identify the split by tenure – owner occupied, rented, mixed

f) (if appropriate) Split by location:

i. Urban
ii. Suburban
iii. Rural

g) Identify the energy use and performance characteristics of each building combination:

i. Construction type and U-value of main building elements:

1. Floor
2. Walls
3. Windows & External Doors
4. Roof
ii. Air infiltration rate
iii. Technical building systems (in all cases, please identify typical replacement lifecycles):
1. HVAC system type/performance level/controls
2. Hot water provision
3. Lighting systems/controls
iv. Maintenance regimes (e.g. mandatory annual safety checks/servicing)
v. Energy use for:
1. Heating
2. Cooling
3. Hot water
4. Lighting
5. Appliances
vi. Energy carriers
1. Gas (natural gas or LPG)
2. Liquid fuels (oil etc.)
3. Solid fuels (coal etc.)
4. Renewable fuels
a) Solar hot water
b) Solar PV
c) Wind
d) Heat pump (type and Coefficient of Performance)
e) Biomass
f ) Biogas
g) Other (specify)
5. District heating (identify energy carriers)

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2) APPRAISE RENOVATION OPTIONS
a) Identify opportunities for retrofit of energy efficiency measures for each building category:

i. Fabric measures
ii. Windows
iii. HVAC plant - heating/cooling/hot water
iv. Air infiltration
v. Lighting
vi. Appliances

b) Identify opportunities for retrofit of renewable energy measures:

i. Solar hot water

ii. Solar PV
iii. Passive solar
iv. Shading
v. Wind
vi. Heat pumps
vii. Biomass
viii. Biogas

c) Identify the opportunity to connect to a district heating system;

d) Identify packages of measures that can achieve at least 60% energy saving, or at least up to the
prevailing energy performance requirements for new buildings of the same category

e) Determine whether deep renovations are undertaken as a single package, or staged over a
period of time

f) Identify cost effectiveness of the different packages of measures using cost optimality
methodology:

i. Costs – the total installed cost of renovation measures, less any avoided cost due to end-of
life replacement or by undertaking renovation alongside other building maintenance, new
construction or modernisation measures
ii. Consider the transaction costs, including costs of temporary relocation of occupants
iii. Quantify, wherever possible, the following benefits (and identify the beneficiary – building owner,
building occupier, society at large):
Economic Benefits: Energy Cost Savings; Economic Stimulus; Impact on GDP; Property Values;
Industrial Competitiveness; Impact on Public Finances; Energy Import Bill
Societal Benefits: Reduction in Fuel Poverty; Health Benefits; Increased Comfort/Productivity
Environmental Benefits: Carbon Saving; Air quality improvement
Energy System Benefits: Energy Security; Avoided New Generation Capacity; Reduced Peak
Loads

32 | A guide to developing strategies for building energy renovation

g) From the above cost appraisal, determine a prioritised set of renovation packages for each building
category, and a timeline for implementation.

i. Consider the exemplary role of the public sector (at all tiers of government, as well as public
services such as public housing, defence, health and education) in leading the drive towards deep
renovation, and in exerting influence of citizens and businesses
ii. Consider targeting the least energy efficient building stock as a priority
iii. Consider different scenarios as to the rate of change of key parameters

3) MAP OUT THE INVESTMENT HORIZON

a) Quantify total annual investment requirements, mapped out over the period to 2050, in order to
deliver the identified renovation opportunities

b) Identify existing sources of funding for building energy renovation

i. Owners’ private equity

ii. Public purse
iii. EU Structural/Cohesion funds
iv. Banks and other sources of finance, e.g. pension funds, investment trusts

c) Identify possible new funding sources and mechanisms to meet the investment profile from the
above list

4) QUANTIFY THE EXPECTED BENEFITS

a) Identify the attractiveness, to building owners, of their direct energy cost saving benefits

b) Identify the societal benefits arising from deep renovation

c) Identify ways in which externalities (e.g. societal benefits from reduced CO2 emissions, increased
energy security etc.) can be internalised for the benefit of the investor

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ANNEX 3
REFERENCES AND FURTHER READING

a) Reports quantifying the multiple benefits of investing in sustainable energy renovation of

buildings

Consumer Focus – “Jobs, growth and warmer homes - Evaluating the Economic Stimulus of Investing in
Energy Efficiency Measures in Fuel Poor Homes” http://www.consumerfocus.org.uk/files/2012/11/Jobs-
growth-and-warmer-homes-November-2012.pdf

Copenhagen Economics – “Multiple benefits of investing in energy efficient renovation of buildings -

Impact on Public Finances” http://www.renovate -europe.eu/uploads/Multiple%20benefits%20of%20
EE%20renovations%20in%20buildings%20-%20Full%20report%20and%20appendix.pdf

E3G – “The Macroeconomic Benefits of Energy Efficiency - The case for public action” http://www.e3g.
org/images/uploads/E3G_The_macroeconomic_case_for_energy_efficiency-Apr_2012.pdf

IEA - “Spreading The Net: The Multiple Benefits Of Energy Efficiency Improvements” http://www.iea.org/
publications/insights/ee_improvements.pdf

KfW – “Impact on Public Budgets of KfW Promotional Programmes in the Field of Energy-Efficient
Building And Rehabilitation” http://www.kfw.de/kfw/en/KfW_Group/Research/PDF-Files/STE_Research_
Report.pdf

Marmot Review Team – The Health Impacts of Cold Homes and Fuel Poverty http://www.
instituteofhealthequity.org/projects/the-health-impacts-of-cold-homes-and-fuel-poverty

SEAI – “Economic Analysis of Residential and Small-Business Energy Efficiency Improvements” http://
www.seai.ie/Publications/Statistics_Publications/Energy_Forecasts_for_Ireland/Economic_Analysis_of_
Residential_and_Small-Business_Energy_Efficiency_Improvements.pdf

SEAI – “The case for sustainable energy”, http://www.seai.ie/Publications/Statistics_Publications/EPSSU_

Publications/The_Case_for_Sustainable_Energy.pdf

US Environmental Protection Agency – “ Assessing the Multiple Benefits of Clean Energy: A Resource for
States” http://epa.gov/statelocalclimate/resources/benefits.html

UK Department of Energy & Climate Change – “Final Stage Impact Assessment for the Green Deal and
Energy Company Obligation” http://www.decc.gov.uk/assets/decc/11/consultation/green-deal/5533-
final-stage-impact-assessment-for-the-green-deal-a.pdf

34 | A guide to developing strategies for building energy renovation

b) Other useful source material

BPIE – “Europe’s Buildings Under the Microscope” http://bpie.eu/eu_buildings_under_microscope.html

BPIE – “Financing energy efficiency in European buildings” http://bpie.eu/financing_energy_efficiency.html

BPIE – “Cost Optimality” http://bpie.eu/cost_optimality.html

BPIE’s Data Portal on Energy Performance of Buildings - www.buildingsdata.eu

ECF publications list: http://www.europeanclimate.org/en/publications/energy-efficiency

GBPN - “Best Practice Policies for Low Carbon & Energy Buildings” http://www.globalbuildings.org/
global-projects/

RAP – “Residential Efficiency Retrofits” http://www.raponline.org/docs/RAP_Neme_

ResidentialEfficiencyRetrofits_2011_05.pdf

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Buildings Performance Institute Europe (BPIE)
ISBN: 9789491143076
Rue de la Science 23
1040 Brussels
Belgium
www.bpie.eu
www.buildingsdata.eu