1. Tomáš VIMMR, Andreas ENSELING, Thomas LÜTZKENDORF,
DECISION SUPPORT TOOLS FOR ECONOMICALLY VIABLE ENERGY EFFICIENCY RETROFITTING IN THE EUROPEAN RENTAL HOUSING STOCK
Tomáš VIMMR, Andreas ENSELING, Thomas LÜTZKENDORF,
Iris BEHR, Martin VACHE, Alexandra BEER
STÚ-K, a.s.,

2. INTRODUCTION
EU project financed by HORIZON 2020 Topic: EE Improving the financeability and attractiveness of sustainable energy investments Call for proposal: H2020-EE MarketUptake Funding scheme: CSA - Coordination & support action

3. EU POLICY CONTEXT
Article 19 of the EU directive 2012/27 on energy efficiency of 25th October 2012 states, that
“Member States shall evaluate and if necessary take appropriate measures to remove regulatory and non-regulatory barriers to energy efficiency, without prejudice to the basic principles of the property and tenancy law of the Member States, in particular as regards the split of incentives between the owner and the tenant of a building (…)”with a view to ensuring that these parties are not deterred from making efficiency-improving investments that they would otherwise have made by the fact that they will not individually obtain the full benefits or by the absence of rules for dividing the costs and benefits between them (…)”.

4. OVERVIEW
Available:
Standardised EU-wide cost optimality approach on energy saving measures/costs (Art /31/EU, EN 15459)
European residential building typologies and energy saving measures/costs
Ongoing (national) research on green value issues
Missing:
Successful example of standardised integrated cost side/return- side approach on EU-level
Good knowledge of split-incentive/investment barriers and green value drivers
Transnational knowledge of best practices and regulatory issues in the EU rental market

5. Cost optimal or EN 15459 Approach
COMPARISON
RentalCal
Cost optimal or EN Approach
Rental housing perspective
Yes No
Focus on owner occupier perspective
LCC Approach as basis for investment analysis
Present value
Yes (income and costs)
Yes (but only costs)
Differentiate between costs and benefits accruing to tenants and owners
Account for direct income and uncertain income changes for investors
Account for indirect income streams such as “green rental premium” extracted from renting out an energy efficient property
Account for income taxes and other overheads
Account for lifetime of the retrofit investment
Yes (10 Years DCF)
No (lifetime approach or e.g. 30 Years)
Account market derived yield for discounting
Incorporate only specific well-defined preferences of investors
Incorporate subsidies and other governmental incentives calculations scheme
Risk analysis regarding uncertain input parameters. E.g. future energy prices or new technology
Yes (only energy prices)
Incorporate national and EU regulatory requirements such as energy labelling and carbon proofing
Account for other investment alternatives such as cost-sharing schemes between landlords and tenants
Derivation of an exit value of the property
Estimated resale price / market based
Final or Residual value

6. METHODOLOGY Knowledge dissemination and stakeholder involvement
Inventory:
Reports
Statistical data
Empirical data
Energy certificates
Own database
On site surveys
Framework Conditions:
Technical
Legal and institutional
Financial
Other data
Processing:
Data classification
Factsheets
Calculation basis
Critical discussions
Knowledge dissemination
and stakeholder involvement

7. EFFECTS OF IMPROVED ENERGY PERFORMANCE
BEFORE: Economic goals of investors focus on profit maximisation, cash flow, value stability, and performance of the buildings contained in their portfolio. NOWADAYS: Social and environmental responsibility added

8. EFFECTS OF IMPROVED ENERGY PERFORMANCE
Economic
Environmental
Social
Technical
Reduced consumption of non-renewable resources X
Reduced GHG emissions and emissions of airborne pollutants
Improved thermal comfort during winter and summer
Reduced risk of black mould formation and structural damages
Reduced heating costs and therefore stable cost of living
Value stability and performance of property market
Reduced risk of rent decrease
Improved image
Extended technical life spans of outer walls
Extended life cycles and consequently conservation of the embodied energy and resources

9. CHALLENGES
Split of incentives - calculation schemes that are able to calculate with non-deterministic relations incorporating both legal, institutional and market based factors that influence the causal relation between benefit for the beneficiary and economic advantage for the investor.

10. TOOL ARCHITECTURE

11. TOOL DEVELOPMENT CHALLENGES
Split of incentives - calculation schemes that are able to calculate with non-deterministic relations incorporating both legal, institutional and market based factors that influence the causal relation between benefit for the beneficiary and economic advantage for the investor.
Some benefits are difficult to measure - use of empirical evidence and qualitative assessments and suggest parameters where possible, but leave the final decisions to the user

12. CHALLENGES
Split of incentives - calculation schemes that are able to calculate with non-deterministic relations incorporating both legal, institutional and market based factors that influence the causal relation between benefit for the beneficiary and economic advantage for the investor.
Some benefits are difficult to measure - use of empirical evidence and qualitative assessments and suggest parameters where possible, but leave the final decisions to the user
Modelling of national legal and institutional settings that may influence the assessment of economic advantages.

13. Framework Conditions Technical Framework Legal Framework
WP2
Technical Framework
WP3
Legal Framework
WP4
Institutional Framework
WP5
Market and Financial Framework

14. Tool and Online Platform Creation
WP6
Methodology for profitability assessment
WP7
Testing for compatibility with different user groups (case studies)
WP8
Methodology available to the public through a Web Tool

15. TECHNICAL FRAMEWORK

16. TYPOLOGY APPROACH What is a TABULA /EPISCOPE typology?
A set of model buildings (types) with
common energy-related characteristics
Building types are selected to image substantial part of the building stock
Main Elements
Building type matrix
Sub-typology construction elements
Sub-typology supply systems
Energy performance calculation procedure
Software implementation

17. LEGAL FRAMEWORK
INVESTOR TYPOLOGY

18. Financial and Market Variables
Overview of Variables
Property Variables
Investor Variables
Legal Variables
Financial and Market Variables 1
Ex-Ante Energy
Consumption
Investment Horizon
(Calculation Period)
Deductibility Amount of
Energetic Measure
Direct Subsidies 2
Energy efficiency
Measure Impact
Loan-to-Value ratio
Tax Rate on Rental
Income
Credit Interest Rate 3
Ex-Post Energy
Debt Service Coverage
Ratio
Value Added Tax Rate
Interest Rate on Bank deposits 4
Property-specific
energy mix
Type of Repayment
Permissible Rent
Increase
Interest Rate for
Subsidized Financing 5
Total Area of the
Building
Role of Value Added
Tax / Deduction of Pre-Tax
Property-related
Depreciation Rates
Projection of Interest
Rate 6
Lettable Spaces
of the Building
Risk-return ratio (perception)
Reclamation
Procedures
Green Premium (on
Exit Value) 7
Investment Cost
(related to Retrofit Measure)
Cap Limits of Rent
Increases
Empirical Market
Rental Premium 8
Portion of Non-Energy
Related Investment
Costs (“Anyway Costs”) 9
Changes in Running
Costs (ex-ante vs. ex-post) 10
Vacancy Rate

19. Conclusions
Development and promotion of an innovative standardised methodology for assessing retrofits in the rental housing
Improvement of transparency in the investment conditions within the EU housing industry.
Dissemination of key insights into the 'Green Value' proposition to specific target groups.

20. PROJECT CONSORTIUM

21. THANK YOU