Encouraging deep renovation of residential buildings is necessary and worthwhile

2021. 2. 17.

The Hungarian Institute of Energy Efficiency (MEHI) has prepared a study entitled Hungarian Renovation Wave on the various benefits of a largescale building renovation program in Hungary. The study is based on a representative residential survey that examined the willingness of Hungarian homeowners to renovate their homes and their sensitivity to the introduction of certain financial incentive measures.

There is now a broad consensus among researchers that energy efficiency is one of the most cost-effective means of achieving climate goals, with many positive spill-over effects in addition to energy savings and emission reductions. Without deep renovations in residential buildings with the greatest potential for energy savings, it is not realistic to achieve energy consumption and emission reduction targets, carbon neutrality by 2050. At the same time, this is the area where no breakthrough has been achieved in recent years, either at EU level or in Hungary. The study explores the reasons for this and the incentives for scaling up building renovations.

In November 2020, MEHI carried out a representative population survey with the following research questions. We looked at what energy refurbishments owners have made on their residential properties over the past five years, what investments they plan to make in the next 5-year period, how they plan to finance it, what motivates them most, and how much more investment would be implemented if certain support and incentive instruments were available.

Summarizing the results, we see that although the number of building energy retrofits has increased significantly in recent years and more and more people are planning energy efficiency upgrades, individual measures and partial renovations still dominate, measures are typically carried out without an energy plan, resulting in no significant energy savings.

Looking at the renovation plans from the survey, a large-scale residential energy efficiency market seems to emerge for the next five years, with an investment value of nearly HUF 3,000 billion. It would be important to carry out renovations in a way that the associated energy saving potential can be exploited as much as possible. It would be necessary to introduce a financial support scheme in which the conditions are set in such a way as to encourage renovators to make complex investments, and subsidies should be linked to the depth of renovation.

Financing deep renovations can be a huge financial burden for the state on the one hand, and it can also bring multiple benefits due to the wider effects of the measures on the other. The study examined six forms of support incentives (grants, VAT rebates, loans and one-stop-shops): it assessed the extent to which renovators would expand their energy efficiency upgrades, calculated the public finance outcome of these subsidies, their impact on employment and the amount of energy and CO2 savings they can achieve.

We also received unexpected results and interesting facts both in the popularity of the various support forms and in the impact on the government budget balance. Each of the forms of support examined in the study is suitable for economic recovery, but the different types have different advantages if we analyse their feasibility, monitoring of energy savings, economic whitening, or their impact on public revenues. In each case, however, if energy efficiency aspects appear in a subsidy as the main incentive for deeper renovation, we can expect several broad positive effects in addition to economic recovery, energy and CO2 savings.

 

The implementation of the representative survey was supported by: