Business models for full service energy renovation of single-family houses in Nordic countries

Abstract

In Nordic countries significant primary energy saving potential exists in houses built before 1980. These old houses need to be renovated, which provides an opportunity for implementation of energy efficiency measures. However, there are several economic and market hindrances and the renovation markets are dominated by handicraft-based individual solutions. In this paper we have analyzed the opportunities for implementation of one-stop-shop business models where an overall contractor offers full-service renovation packages including consulting, independent energy audit, renovation work, follow-up (independent quality control and commissioning) and financing. A comparative assessment of emerging business models in the Nordic countries shows that different types of actors can provide such a service. Financing is included in some models. There are differences in how customers are contacted, while the similarities are on how the service is provided. Even though there is strong business potential for one-stop-shop energy renovation concept, still it has been somewhat difficult to start or run such a business. Various options to overcome the hindrances to promote energy efficient renovation of detached houses are discussed.

Introduction

In the context of climate change and energy supply security there is a great need for improved energy efficiency of European building sector which accounts for about 40% of the final energy in the European Union [1]. Many countries have introduced energy efficiency standards for new buildings, but it is important to target also the existing buildings as the addition of new buildings to the existing stock happens slowly. In Nordic countries (Denmark, Finland, Norway and Sweden) single-family houses, which constitute about 40% of the number of dwellings, offer significant potential for energy efficiency improvements [2]. For example, in Denmark the average yearly final energy use of existing houses for space heating and hot water purposes is 135 kW h/m² (Table 1), while the requirement for a typical new house is a maximum of 60 kW h/m².

In the Nordic countries typical single-family houses with large primary energy saving potential are those from the 1960s and 1970s, since they were built in large numbers just before the tightening of the insulation standards in the late 1970s, and because electric heating is prevalent in those houses (except for Denmark). Swedish Energy Agency reported that during 1998–2007 annually about 1.3%, 1.1% and 2% of Swedish detached houses installed energy efficient windows, improved attic/wall insulation, and installed a new type of heating system, respectively [3]. Major share of such installations were done in the houses built during 1940s and very little in the houses from 1960s/1970s [3].

Tommerup et al. [2] have used the WinDesign calculation tool to analyze primary energy efficiency potential of typical single-family houses in the Nordic countries. It was found that renovation measures together with the use of a bedrock heat pump in typical Swedish, Norwegian and Finnish single-family houses can reduce the primary energy use by more than 80% for space and hot water heating. The primary energy savings of renovation measures depends mostly on energy supply system; higher when replacing resistance heaters with bedrock heat pump (analysis for Sweden, Norway, and Finland) than replacing a gas boiler with an efficient gas boiler as in the analysis for Denmark. However, when there is a possibility for a house to connect to district heating system, preferably biomass-based, with cogeneration of district heat and electricity then maximum primary energy savings can be gained by replacing resistance heaters with such a system [4].

However, there are economic and market hindrances to diffusion of energy efficiency renovation, and the renovation market is dominated by a craftsman based approach with individual solutions. Implementing one-stop-shop business models for energy renovation of single-family houses, where a single actor can offer full-service packages including consulting, independent energy audit, renovation, follow-up independent quality control and commissioning, and financing, may help overcome some of the hindrances. The idea is to strive for implementation of energy efficiency measures that are best in a holistic and long run perspective.

In this paper¹ we outline the hindrances to energy efficiency measures, discuss the emerging one-stop-shop models, and suggest marketing and policy measures to facilitate energy efficiency renovation of detached houses in the Nordic countries. The content of this paper is a comprehensive summary of eight detailed reports prepared for the three year (2009–2012) Nordic project “SuccessFamilies” (Successful Sustainable Renovation Business for Single-Family Houses). Apart from literature review and own analysis, the reports were based mainly on discussion with industry representatives, public agencies and researchers, who participated in seminars/workshops in Denmark (1), Finland (2), Norway (2), and Sweden (1). Gathering opinion of stakeholders is an integral part of marketing and social science research.