Rooftop PV reduces building renovation costs by up to 50% – SPE

June 25, 2024 Lior Kahana

A group of scientists from the University of Cambridge have investigated the economic benefits of combining a basic energy efficiency retrofit with the installation of rooftop PV and found that solar panels can significantly reduce renovation costs.

The team conducted its analysis on two post-war apartment buildings in the German city of Aachen. The retrofit was calculated as including or excluding heat pump system.

“Construction and renovation costs increased by 43% between mid-2020 and mid-2023, while interest rates on loans for renovation work increased from around 1% to around 4%,” the scientists explain. “In this situation, the economics of energy-efficient renovations have become questionable. At the same time, however, the costs of PV have fallen in recent decades. It is therefore worth considering what the economic benefits would be of installing rooftop PV in an energy-efficient renovation of a residential building.”

The analyzed apartment buildings each consist of four apartments, two mansards, an unheated basement storage room and an unheated attic space. Each building has five electricity users: the four apartments plus the common load. In building 1, eight residents consume 10,500 kWh/year, while ten people live in building 2, consuming 11,900 kWh/year. The total living area of ​​building 1 is 350 m2 and the roof measures 50 m2, while in building 2 the living area is 280 m2 and the roof is 40 m2.

“There are four phases in the method: (a) cost estimates for the energy efficiency renovation of the two case study buildings; (b) conducting cost-benefit analyzes of two basic energy efficiency retrofits; (c) developing a software tool to estimate the likely annual savings of different sized rooftop PV systems with different magnitudes of annual electricity consumption and two different load profiles, namely for households with and without heat pumps; and (d) combining the results,” the academics explained.

Although it does not fully offset the costs of an energy-efficient renovation, installing a PV system improves financial returns by between 40% and 50%.

“Installing rooftop PV reduces losses due to an energy efficiency retrofit. If there is a heat pump, PV reduces losses even further. The larger the PV system, the greater the loss reduction, but this is limited by the available roof area,” the researchers said. “PV profits over 25 years range from approximately €25,000 ($26,853) for the smaller system in a building without a heat pump, to approximately €40,000 for the largest system in a building with a heat pump.”

Their findings were presented in the study “How photovoltaics makes energy renovation in apartment buildings more affordable”, published in the Climate Finance Journal. The study’s lead author, Ray Galvin, is affiliated with Britain’s University of Cambridge and Germany’s University of Aachen.