Marginal costs and co-benefits of energy efficiency investments: The case of the Swiss residential sector
Section snippets
Introduction and scope
In Switzerland—like in many other countries of the temperate zone—large and mostly untapped energy efficiency1 potentials lie, amongst others, in decreasing space heating requirements, which make up approx. 50% of the useful energy and approx. one-third of the final energy demand. Useful energy requirements for space heating of existing buildings could be reduced by approx.
Costing methodology of the marginal cost concept
How much more does a greater insulation thickness or a more energy efficient window cost? How much energy efficiency can be gained and what further cost reductions can be reached through additional insulation? What is the cost of conserved energy? How do these costs compare to the conserved costs of energy (heat) generation? To answer these questions, we define the marginal cost of energy efficiency (mcEE, Eq. (1)) and the average cost of energy efficiency (acEE, Eq. (2)). The two approaches
Marginal costs of energy efficiency—the building owners’ perspective
For façade companies working on compact façades and ventilated façades, and for roofing companies, costs were inquired with regard to insulation thickness (see Fig. 1 as example). Next to the insulation material as a function of the insulation thickness, also additional cost components, such as mechanical structures, labour costs, etc. were included. The insulation thickness was varied from the currently common insulation thickness in Switzerland (10–12 cm) up to 30–35 cm. Both the total costs
Ancillary benefits (co-benefits) of thermal insulation investments
In addition to the above-described direct and indirect economic effects of energy efficiency measures, a comprehensive economic assessment has to include ancillary benefits and co-benefits. One can distinguish private and public co-benefits. In this section, the private ones are presented. In the following, some examples are used to illustrate how the inclusion of such benefits into the business economic assessment can reduce the net marginal costs (see Fig. 7):
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For the quantification of the
Marginal cost curves—the energy economics perspective
The energy economics perspective differs from the business economics one, on having different optimisation goals. From a public economy and welfare point of view, optimal energy efficiency level is obtained if the marginal cost of different options (to reach a certain goal) are equal. It is important to notice that marginal costs (and not average costs) should be compared. For national goals, nationwide marginal cost curves are a suitable instrument to determine reduction potentials (of say
Conclusions and further perspectives
The present analysis of the residential buildings stock and the possible thermal insulation measures with their cost structures and ancillary benefits demonstrate a complexity of the examined subject, which has been greatly simplified in previous energy economic analyses and models and by environmental interest groups. On the one hand, this led to an underestimation of the costs of conserved energy, i.e. if only insulation material costs are taken into account. On the other hand, the too
Acknowledgements
The author gratefully acknowledges the financial support to this project provided by the Swiss Federal Office of Energy (BFE) in Berne through its research program ‘Energiewirtschaftliche Grundlagen’ (EWG), and valuable comments and support received from his colleagues Sharon Nutter, Reinhard Madlener, Shonali Pachauri and—last but not least—Eberhard Jochem.
Appendix Glossary
- A
- area of the building envelope, weighted according to SIA/380/1.
- CHF
- Swiss Francs, currency of Switzerland. 1 CHF≅0.66 Euro, 1 CHF≅0.67 US$, periode 2002 to 2003.
- CP
- construction period of the buildings considered.
- ERFA
- referenced energy floor area. Sum of the heated floor (dwelling) areas.
- FE
- final energy (energy input).
- g-value
- fraction of solar energy that transmits through transparent construction elements into the building (−), if 100% of the solar energy that hits the element gets into the
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