Multiple benefits of renovation in buildings - PU Europe

Multiple benefits of investing in energy
efficient renovation of buildings
Figure 5 Effects of energy efficient renovation of buildings
Source: Copenhagen Economics
Energy savings through reduced energy consumption is a direct benefit stemming from
increased energy efficiency. In privately owned buildings the benefits will typically accrue
to the owner or the user of the building, 8 while in publicly owned buildings the benefits
will accrue to the public or the users of publicly rented apartments. Given the proper distribution
of benefits between public entities, this will improve public budgets. The benefit
from energy savings implicitly also includes the avoided capital cost of building additional
power plants, as these capital costs are included in the price of electricity. The same applies
to investments in new grid capacity, which is included in the grid tariffs paid by consumers.
9
As energy efficient renovation of buildings will reduce energy consumption, it will have a
negative effect on public budgets through reduced tax revenue from energy consumption
taxes.
The European Member States are currently subsidising both fossil fuel consumption and
deployment of renewable energy technologies. By reducing energy consumption through
8 We will discuss the principal agent problem related to owners/tenants in the section related to reduced energy consumption
below.
9 Over time, consumers will pay for both the variable costs and the capital costs of energy production plants. By considering the
retail price of electricity when we calculate the benefits from reduced energy bills, we therefore include the capital
cost of new energy production infrastructure.
11