The Impact of Political Instruments on Building Energy Retrofits : a Risk-Integrated Thermal Energy Hub Approach

Title data

Ahlrichs, Jakob ; Rockstuhl, Sebastian ; Tränkler, Timm ; Wenninger, Simon:
The Impact of Political Instruments on Building Energy Retrofits : a Risk-Integrated Thermal Energy Hub Approach.
In: Energy Policy. Vol. 147 (2020) . - 111851.
ISSN 0301-4215
DOI: https://doi.org/10.1016/j.enpol.2020.111851

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Abstract in another language

Thermal building retrofits are one of the key approaches to mitigate greenhouse gas emissions. Nevertheless, the current rate of retrofits in Germany is around 1%, and the building sector lags behind environmental goals of saving damaging emissions. A potential reason inhibiting investments is the financial risk connected to thermal building retrofits. While recent research focuses on various political instruments to promote environmental investments, their influence on the financial risk of energy efficiency investments has scarcely been considered. In this study, a method to include risk in the financial evaluation of thermal building retrofits is developed. With this method, named as the Risk-Integrated Thermal Energy Hub, the impact of various political instruments such as emission taxes, subsidies, and energy efficiency insurances on investment decisions of homeowners is analyzed. Based on real-world data of 342 one and two-family houses in Germany, this study illustrates how political instruments influence the financial risk and return of example building retrofits. The findings reveal the effectiveness of energy efficiency insurances in mitigating risk, by promoting environmentally friendlier investments relatively cost-efficient compared to subsidies. Further, this case study indicates that emission taxes need to exceed 140€ per CO2 ton to significantly impact investment decisions.