A methodology for evaluating the cost-effectiveness of residential building stocks retrofits in Italy and Denmark

Buildings are at the centre of our social and economic activity. Not only do we spend most of our lives in buildings, we also spend most of our money on buildings. The built environment is not only the largest industrial sector in economic terms, it is also the largest in terms of resource flow1. The rising energy costs, the growing concern about environmental issues and the approaching exhaustion of world energy resources are urging the entire European Community and the several national governments to improve energy management. Special attention is usually paid to public administrations, as European and national legislations often point out that these bodies must provide energy efficiency measures, as well as for the reasons mentioned above, also in order to represent an example for the entire community and for citizens as well. But it is also very important to find out how to foster and encourage energy efficiency improvements and saving measures in private dwellings to achieve the double advantage of reducing the global energy consumption level within the private sector and increasing investments, favoring the creation of additional cash flows as well. The possible combination of such multiple benefits makes the building sector a crucial field for policy makers at EU and national levels. Hence a policy framework that supports national markets in unlocking these potentials is strongly needed. With overall European policy aimed at significantly decarbonizing its economy by 80% to 95% by 2050, the building sector must undoubtedly play a key role. And any strategy to tackle the challenge in this field will clearly require both a significant amount of financial investments and long-term political commitments. The main goal of the present research is to propose an optimized methodology and cost effective decision-making process - based on the main facts emerging from the adoption of the key energy policies and financial instruments currently in force at European level (particularly in Italy and Denmark) - also to outline the next policy steps in improving the energy performance of buildings. After a global overview of the policies adopted at European level, the analysis focuses on the two different regulations implemented at the national level by Italy and Denmark. Furthermore, to define the best mixture of energy retrofit measures for the different geographical areas of Italy - applying a methodology based on simple and available data to improve residential buildings' energy efficiency - the work started with the analysis of the several reports produced by ENEA (the Italian Research Agency for Energy Efficiency) since year 2007. These were based on the data collection performed in order to assess the effectiveness of the Italian government’s financial policies established to support energy saving actions in private dwellings. The first steps of such a top-down analysis are then carried out both through manual cost/benefit spreadsheets, as well as with the implementation of a linear programming analysis tool. The study defines different linear programming models, depicting different optimization problems (e.g. energy saving maximization vs. retrofit cost minimization), along with the respective different background scenarios. Such investigations are therefore carried out through the implementation and development of Dantzig's simplex algorithm. Moreover, to carry out a global comparison between the overall Italian and Danish situations, also achieving a deeper single-dwelling-focused analysis, further studies are developed through a Building Energy Optimization tool, implementing the EnergyPlus dynamic energy simulation software. Thence, the research moves on to a more specific analysis, shifting to a bottom-up approach and involving in the enquiry a comparison between the different assessment settings (climatic, political, economic, cultural) depicted both by Italy and Denmark. Two different dwelling models are defined for the above countries, focusing the analysis on those building typologies most representative of such European nations and thence different retrofit solutions are depicted and analyzed. The results obtained by means of this dynamic assessment are then used to group the respective energy savings vs. retrofit cost considerations within a global cost-effectiveness assessment. Finally, some “guidelines” are outlined to address the challenge of renovating the existing building stock, also in order to keep pace with the aims of both the nations and the European Union.