REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Dalibor VYTLAČIL Department of Engineering Informatics, Faculty of Civil Engineering, Czech Technical University in Prague

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Introduction The efforts for energy savings lead to the questions how to finance investment costs Nowadays, it is topical problem by reason of relatively low price of energies used in the houses → low financial outcome from the energy saving projects and the increase of the payback period Projects financing are based on the fact that long term goals are: obligatory goals for the governments optional for the building owners The decision of the owners is based on the project profitability. → to increase the financial output from the project or to decrease the investment costs (improving building parameters in the existing building stock) Usually we deal with description of the building stock and calculation of the potencial for energy consumption decreasing The goal of this research: the develop the dynamic model that will consider the dynamics of the systém influencing by subsidy financing

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Analysis Causal diagram with key elements

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Method System dynamics methodology Stock(t0) is the initial value of the stock element Inflow(s) are the flows to the stock element Outflow(s) are the flows from the stock element

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Method Dynamic model – building stocks

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Method Dynamic model – financing refurbisment

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Method Dynamic model – programme advertisment and information influence refurbisment

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Input parameters Simulation - time period 10 years and for two programmes with the duration of three years with the two years break. The initial value of the stock Unsatisfactory buildings (the stock of existing buildings in the Czech Republic in 2014) is 451.106 m2 The initial values built standard buildings - 3.80 m2.year-1, in low energy buildings 0.32 m2.year-1 and passive buildings 0.03 m2.year-1. The ratio among all types of buildings is changed during the observed time period. The buildings comply with our energy consumption expectation for the time period 10, 15 and 20 years.

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Results Output parameters for main stocks and flows Programme I Programme II Information about programme I Information about programme II

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Results Output parameters- ratio between complying and unsatisfactory buildings

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Results Output parameters for different subsidy amount Output parameters   Complying buildings Unsatisfactory buildings Refurbished buildings Sum of refurbished buildings [%] [106 m2] Subsidy A 16 55 447 18 24 Subsidy B 38 57 445 19 26 Subsidy C 60 59 443 22 29

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Conclusions The computer simulation by means of system dynamics methodology is the suitable tool for the prediction of the future parameters in this complex problem. It can help to understand the dynamics of interdependent system elements. The key parameter is the refurbishment rate that is influenced not only by the investor project evaluation but also by actions of the subsidy provider. With more subsidy programmes the investors create the amplification of the peak values between two consequent programmes. The reason is that investors have got used for subsidy financing and they are not willing to pay the full investment costs.

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Conclusions The model includes the last elements from the whole supply chain. The assessed changes spread among all elements and causes more problems in the elements in the beginning of the chain The unstable demand for the capacity is the main feature of the problem.

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Conclusions The funding programmes do not solve the problem with financial resources shortage of the investors. If investors do not have the rest of the investment costs they cannot use these programs. It is the important weakness of this approach. Another possibility is the loan for 80 - 90 % of the investment costs with the long term redemption. It can open the possibility of the energy savings for new building owners. New solution is the entrance of new subjects from private sector. They assure the initial capital and they provide know- how for energy savings. The building owners pay back the investment costs from savings. The private subjects are energy suppliers, banks or entrepreneurs →stable behavior

REFURBISHMENT DYNAMICS FOR SUBSIDY PROGRAMME FINANCING Thank you for your attention