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Barriers to Energy Efficiency in the Spanish and Dutch Building Sectors

Università Ca’ Foscari Venezia (UNIVE), ENGAGE for ESG Consortium Partner, recently concluded a research report on the risks and opportunities for long-term adoption of energy efficiency in green investments.

Amongst other things, the research shows interesting findings regarding the major energy efficiency barriers identified in Spain and Netherlands either by on-field studies published by the CUES Foundation (funded by the European Institute for Technology (EIT) within the Horizon 2020 framework) or by relevant experts.

Besides the large coverage of experts and concerned parties’ perceptions, the CUES studies present the advantage of encompassing both partial (simple) retrofit and deep (comprehensive) retrofit interventions, but also new construction activities.

Barriers to Energy Efficiency in the Spanish Building Sector

The CUES study (Ostermeyer et al., 2020) dedicated to Spain proposes a thorough analysis of building market characteristics, the economic and legislative background conditions, the mechanisms affecting the demand for energy efficiency (EE) solutions as well as their implementation.

The authors identify several financial, behavioral, information barriers, but also barriers related to the market structure. More precisely, the major factors hindering EE include:

  • Economic barriers. As described by Figure 1, the largest share of demand side actors indicated the high initial capital costs, budget limitations, but also the limited involvement of financial institutions as the major barrier to EE technologies adoption. (Financial barriers)
 
Figure 1: Barriers for not implementing more energy-efficient and low carbon technologies in retrofit projects (a) and in comprehensive retrofit projects (b) in Spain.
Figure 1
Source: Ostermeyer et al. (2020)
  • Technical barriers. As summarised by Figure 1, this is the second most relevant type of barrier indicated by the interviewed stakeholders. However, the provided details tend to demonstrate that this category also encompasses rather behavioral barriers, since it regroups considerations such as: “Lack of trust in the announced technical benefits of the available options”, “The original state was already very energy efficient / low carbon” etc. Besides the uncertainty on the achieved energy savings, this group of hindering factors also includes the technical impossibility to install or adopt some EE technologies. (Technical and behavioral barriers)
  • The structure of the residential market and its typical high share of common ownership (Figure 2). More than half of the country’s housing units are in apartment blocks with 5 or more dwellings per building, which involves a longer and more difficult decision-making process concerning the implementation of EE measures. (Organisational/building complexity barriers)
Figure 2: Distribution of residential buildings by type and construction period, in Spain
Figure 2
Source: Ostermeyer et al. (2020)
  • Long pay-back periods for façade elements: insulation, high-performance windows. Despite the consensus on the relevance of building envelope enhancements for improving buildings’ energy efficiency, most of the measures concerning façade elements are hindered in favor of more affordable measures (upgrade of the roof or attic, installation of new heating or energy generation system). (Upfront costs and affordability of energy renovations and lack of lifecycle costs (LLC) perspective)
  • The highly fragmented structure of the renovation market, since 80% of the sectoral turnover is generated by craft companies with less than 10 employees. The predominance of small structures involves a restricted level of interdisciplinary interactions and thus limits the possibility to implement integrative EE approaches. The latter is further fostered by strictly specialised training activities with limited interdisciplinary interactions.  (Fragmented structure of the sector and Lack of standardized practices and industrialized fast-track solutions for energy renovations in building)
  • Lack of sufficient information / knowledge among consumers, tenants, and building owners. Despite a rather non-negligeable knowledge and awareness among both enablers (engineers, architects, construction companies, etc) and demand side stakeholders (private owners, investors, housing companies, etc.) concerning EE technologies, as described by Figures 3 and 4, maintenance works are often assimilated to costs rather than investments. Furthermore, there is a lack of public awareness on the impact of EE measures on living conditions and on property valuation. (Information barriers)
Figure 3: Familiarity of enablers with energy efficiency technologies, in Spain
Figure 3
Source: Ostermeyer et al. (2020)
Figure 4: Familiarity of demand side actors with energy efficiency technologies, in Spain
Figure 4
Source: Ostermeyer et al. (2020)

Barriers to Energy Efficiency in the Dutch Building Sector

Similarly to the Spanish case study, Ostermeyer et al. (2019) propose an extensive evaluation of the construction and renovation building sectors in the Netherlands. While some of the identified energy efficiency barriers are common to both countries, several others are very specific to the local regulatory and market conditions:

  • Economic barriers. Based on the questionnaire-led survey, economic or financial barriers are selected by the consulted stakeholders, as one of the most prominent obstacles for EE technologies spread (Figure 5). The higher prices compared to standard technology is raised as one of the most relevant issues. (Financial barriers)
Figure 5: Barriers for not implementing more energy-efficient and low carbon technologies in retrofit projects (a) and in comprehensive retrofit projects (b) in Netherlands.
Figure 5
Source: Ostermeyer et al. (2019)
  • Long payback periods are also included under the economic hurdles, but they refer also to the LLC perspective discussed previously. (Upfront costs and affordability of energy renovations and LLC perspective)
  • Lack of subsidies. The stakeholders participating in the study have indicated insufficient level of subsidies as one of the major barriers to EE technologies implementation in the Netherlands (especially for the development of district heating and heat pump use). (Limited public funds)
  • Technical barriers. As summarised by Figure 5, alongside the economic barriers they represent the two most important obstacles identified by the questioned stakeholders. They include the impossibility to choose more appropriate available technology (“The technology chosen was the best available technology”). (Technical barriers)
  • Lack of sufficient information/ knowledge among enablers / demand side stakeholders concerning most EE technologies. As indicated by Figure 6, most of the enablers present a limited level of familiarity with several EE technologies. Geothermal energy systems and district heating concentrate being at the lowest levels and wood-based heating systems and low-carbon materials use benefit from a higher degree of familiarity.

The situation is quite similar on the demand side. Figure 7 presents even lower degrees of familiarity compared to the enablers’ perspective. The highest levels of experience relate to insulation activities and high-performance windows. (Information barriers)

Figure 6: Familiarity of enablers with EE technologies, in Netherlands
Figure 7
Source: Ostermeyer et al. (2019)
Figure 7: Familiarity of demand side actors with EE technologies, in Netherlands
Figure 6
Source: Ostermeyer et al. (2019)
  • Fragmented market structure. An extremely consequent share (97%) of the companies involved in construction activities employ less than 10 people. The predominance of small structures hinders interdisciplinary interactions and reduces the possibility to implement integrative EE approaches. (Fragmented structure of the sector and lack of standardized practices and industrialized fast-track solutions for energy renovations in building)

 

In brief, the CUES studies on the renovation and building markets in Spain and the Netherlands tend to highlight the predominant relevance of

  • economic/ financial barriers (high upfront costs, limited public financial support, long pay-back periods)
  • behavioral obstacles (mistrust in EE technologies, poor involvement)
  • information, technical, and organisational/building complexity barriers (related to the building stock structure).

ENGAGE for ESG: Helping Overcome Energy Efficiency Barriers

ENGAGE partners Unión de Créditos Inmobiliarios (UCI) and Woonnu (WOO) will play a key role in overcoming the identified EE barriers as project pilots when they begin submitting data via the ENGAGE Templates in June 2024.

Thanks to the enhanced transparency achieved through the ENGAGE Templates and the ENGAGE Portal with regard to sustainability data and risks related to mortgages and home renovation loans, it is expected that financial institutions will be encouraged to increase their offer of sustainable products. At the same time, borrowers will be eligible for more favourable financing terms and conditions for the acquisition of energy efficient dwellings or the renovation of existing buildings.

You can learn more about the ENGAGE Pilot Partners via the interviews below with Cátia Alves (UCI) and Hendrik-Jan Luikinga (WOO):

The ENGAGE H2 2024 Webinar Series

The ENGAGE Consortium’s Navigating Data Extraction and Technology for EU Taxonomy Alignment on Residential Buildings Webinar Series’ explores strategies for lending institutions to align their mortgages and home renovation loans with the EU Taxonomy. Please click below to register for the webinars.
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55%

To achieve the proposed 55% emission reduction climate target by 2030, around EUR 275 billion of additional investments are needed per year.

Source: A Renovation Wave for Europe – European Commission

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