Factors Influencing German House Owners' Preferences on Energy Retrofits

Driven by the high energy demand for electricity, heating, and cooling, the building sector is a major consumer of fossil fuels and a major emitter of greenhousegases in Germany. Almost a third of the total energy produced is consumed in residential buildings, primarily for space and water heating. From a purely engineering perspective, the potential to reduce both Germany's fossil fuel use and greenhouse gas emissions by replacing heating equipment and improving thermal insulation of the existing building stock is considerable. The German government seeks to exploit this potential in order to achieve its climate protection goals and to secure future energy supply. In addition to regulations that specify energy efficiency requirements for existing buildings being renovated or reconstructed, such as the Energy Savings Ordinance, there are public funding programs in place that provide grants and low-interest loans for energy retrofitting activities. However, the political success in terms of raising the retrofit rate has been rather limited so far. This indicates that economic, technical, and behavioural factors influencing retrofit decisions are still not well understood and not properly addressed by current policy design.

In this paper, based on 2009 survey data of more than 400 house owners in Germany, we identify key drivers and barriers for the adoption of building energy retrofits. Our results underline the importance of financial factors in this context. It turns out that house owners for whom energy retrofits are profitable in terms of energy cost savings and payback period, and for whom there is a favorable opportunity, such as a heating system that needs replacement or a building envelope that is due for renovation, are more likely to undertake retrofit activities. The latter point seems to be of particular importance in order to explain the persistent low retrofit rate in Germany. Our results suggest that most house owners wait until building components are approaching the end of their useful life, before considering options for renovation or replacement. Through simulations, we further show that professional energy advice can provide strong incentives for house owners to retrofit their homes. In view of problems related to other policy options, energy advice thus seems to be worthy of being supported by public funding in order to stimulate building energy retrofits in an e ffective and cost-efficient way.

Achtnicht, Martin and Reinhard Madlener (2012), Factors Influencing German House Owners' Preferences on Energy Retrofits, ZEW Discussion Paper No. 12-042, Mannheim.