Energy System Refurbishments It Is a Long Way from Pilot Projects to Common Practice

Energy System Refurbishments It Is a Long Way from Pilot Projects to Common Practice Antti Kurvinen, M.Sc. (Tech.), e-mail antti.kurvinen@tut.fi Juhani Heljo, M.Sc. (Tech.), e-mail juhani.heljo@tut.fi Jaakko Vihola, M.Sc. (Tech.), e-mail jaakko.vihola@tut.fi Tampere University of Technology Faculty of Built Environment Construction Management and Economics FI 33101 TAMPERE, Finland www.tut.fi/ee Abstract Authorities in many countries have set objectives for emission reduction, and energy consumption of buildings has an essential role in achieving those target levels. At the moment, a big part of Finnish building stock is facing refurbishment needs. To transform the existing building stock towards energy-efficiency, it is of importance that all economically profitable energy saving measures would be executed within the refurbishments actions. However, in many cases the full energy saving potential is not exploited in refurbishment projects. During the last years, numerous pilot projects have shown how energy consumption can be remarkably decreased. However, even in the case of all pilot projects had succeeded, their accelerating impact on refurbishment projects energy-efficiency would not have been enough to decrease the energy consumption of the whole building stock level so much that the set emission saving objectives would be achieved. Such macro scale impact is our target. In addition to successful pilot projects, there have been also cases, in which the impacts have not been as positive as expected. Disappointments together with noticeably higher investment costs, as compared to basic solutions, slow down the popularity of energy saving refurbishments much more than good examples are able to accelerate it. In such climate conditions as Finland achieving nearly zero-energy level in refurbishments is so expensive that it is hard to give economically profitable reasons for decision-making. Hence, it would be more beneficial option to concentrate on ensuring that as big part of the economically profitable energy saving measures as possible would be executed within refurbishments. If this opportunity is not used now, it will soon be too late. Because investors will always require profitability for their investments, it is important to use systematic methodology in energy saving measure related decision-making. In this way the effective allocation of financial resources can be ensured and energy economically profitable measures will probably be executed.

2 Introduction and Background A big number of different energy refurbishment pilot projects have been executed during the last years. These pilot projects have an important role as source of practical data and experiences applicable in other projects. However, when the main goal is to achieve a considerable decrease in energy consumption of buildings, executing pilot projects is not enough. The gained results so far are indicating that there is a long way from the current energy refurbishment pilot projects to widely executed energy refurbishments which can have impacts of macro scale i.e. on building stock level (Heljo et al 2012). The outcomes and impacts of these projects are not always as positive as expected. For instance, real energy savings may turn out to be lower than the calculated gains, which means lower economic profitability. These kinds of negative pilot experiences can cause significant delays in putting energy refurbishments into practice Real estate owners become more suspicious and careful when making their investment decisions. This is a very unfortunate, but still understandable phenomenon. A simple and reliable decision making methodology is needed for improving the current situation. This methodology should be able to provide reliable data for decisionmaking and be able to describe energy saving measures effects in graphic detail. In the Finnish climate conditions achieving nearly zero energy level in refurbishments is troublesome. There are many reasons behind this problem. For example, cold winters, common fear of moisture effects caused by additional insulation and lack of economic reasons. Practice has shown that even all the economically profitable energy saving measures are often not executed within refurbishment projects. Taking into account that in the Finnish climate, refurbishments towards close to the zero energy level also require the use of economically non-profitable energy saving measures, the challenge to overcome is even bigger. A methodology to assist energy saving measure related decision-making is shortly presented in this paper. Also one related pilot project will be presented. The focus is not only on the project itself, but also on its affects on real estate owner s common practices. Methodology Financial resources and their effective allocation have a very important role in decisionmaking. However, in many cases decisions in relation to the energy saving measures seem to be made based on subjective feelings. This is naturally highly irrational, whereas the ultimate target should be decisions making practice based on real facts. A systematic decision-making methodology in relation to the energy saving measures is presented in figure 1. In the first two phases, the basic solution of the refurbishment is usually defined on the basis of the structural and physical minimum requirements of the building. The third phase is to find out all reasonable system alternatives, e.g. for heat generation. In the fourth phase, profitability of energy saving measures in case of each system alternative (different energy cost) is studied. Profitability of energy saving measures is mainly estimated on the basis of internal rate of return, but also value factors should be taken into consideration. System alternatives together with the profitable energy saving measures form alternative total solutions. Affordability of these alternative solutions is estimated in the next

3 phase on the basis of life-cycle costs and value factors. The final decision is made on the basis of total solutions affordability. 1. BASIC INFORMATION AND OTHER FACTORS CONTROLLING AFFECTING FACTORS THE CHOICES DEFINING DEFINING THE NEED THE BUILDING FOR NEW RESOURCES BUILDING OR OR REPAIR REFURBISHMENT NEEDS RESOURCES AVAILABLE AVAILABLE LIMITATIONS LIMITATIONS SET BY BY LEGISLATION LEGISLATION AND AND STATUTES NATIONAL RELATING BUILDING TO CODE BUILDING ALTERNATIVE OPERATION COURSES ALTERNATIVES OF ACTION 2. PLANNING DEFINING A OF BASIC SOLUTION PRELIMINARY DESIGN OF BUILDING PRELIMINARY DESIGN BASIC SOLUTION ALTERNATIVE 3. CHOICE FINDING OF OUT SYSTEM TECHNICAL ALTERNATIVES SYSTEM ALTERNATIVES ON THE SYSTEM LEVEL 1 n Air conditioning Heat generation e.g. eg. district heating Air conditioning Heat Heat generation e.g. eg. electric district heating 4. CHOOSING STUDYING PROFITABILITY THE STRUCTURES OF ENERGY AND HVAC SAVING EQUIPMENT MEASURES 1 n 1 n Measure Investment Measure Measure Investment Investment Measure Investment e.g. eg. wall e.g. eg. heat e.g. eg. wall e.g. eg. heat insulation insulation recovery insulation recovery recovery insulation recovery Integral Total solution alternative 1 1 Integral Total solution alternative n n 5. COMPARISON COMPARING TOTAL OF SYSTEM SOLUTIONS TOTALITIES AND DECISION AFFORDABILITY COMPARING ESTIMATES THE ON INTEGRAL THE BASIS OF LIFE-CYCLE SOLUTION COSTS AND ALTERNATIVES VALUE FACTORS DECISION DECISION Figure 1. Phases of systematic decision-making (Heljo & Aalto 1984, p. 12).

4 This methodology takes the limited financial resources as a driving constraint and assists their allocation as effectively as possible. The methodology also aids to ensure that all possible energy saving measures that are economically profitable will be assessed and also probably executed within refurbishments. This is important, because practice has shown that all the profitable measures will not be executed on the basis of feeling-based decision-making. The presented methodology has been shown in several forms in different studies (Heljo & Aalto 1984; Abel 2010; Kurvinen 2010; Vihola 2010) and is being further developed in ongoing projects (Kurvinen & Heljo 2011; Abel 2010). Case Project Housing Foundation of Tampere (VTS) is a non-profit social housing company that owns many housing blocks in Tampere district in Finland. The foundation actively develops its business operations and it has taken part in many research projects. In 2004 VTS executed an energy saving pilot refurbishment project, which was related to SUREURO research project (Heljo & Peuhkurinen 2004). At the moment, results and methodologies of SUREURO project are applied and further developed in EVAKO research and development project, which pilot case is an area of 13 housing blocks owned by VTS Homes (Kurvinen & Heljo 2011). Two three-storey housing blocks owned by Housing Foundation of Tampere (VTS) were refurbished during the SUREURO project. The refurbished buildings were built in 1971 and the project objective was to decrease energy consumption by 40 %. The following alternative refurbishment and complementary building solutions were studied in the projects Solution 1 refurbishment of present houses (no complementary building). Solution 2 refurbishment of present houses and building additional storeys on them. Solution 3 refurbishment of present houses, building additional storeys on them and building a five-storey extension. The 2 nd of the above mentioned alternative solutions was executed.

5 To evaluate how the set energy saving objective could be achieved, alternative calculations were prepared. The estimated effects of different energy saving measures are presented in figure 2. It is important to notice that energy saving calculations have been carried out in old buildings without taking space changes and extensions into account. Mechanical Exhaust Ventilation 417,0 MWh 1191,0 MWh Structural elements 616,0 MWh Windows 276,0 U = 2,7 Doors 67,0 U = 2,7 Walls 119,0 U = 0,41 Ground floor 91,0 U = 0,50 Roof 63,0 U = 0,35 Household water 158 MWh 197 l/p/d Saving 24,8 % Saving 42,3 % Saving 47,6 % 896,1 MWh Structural elements 321,3 MWh Windows 145,5 U = 1,4 Doors 30,5 U = 1,4 Walls 73,6 U = 0,25 Ground floor 36,6 U = 0,25 Roof 35,1 U = 0,16 Ground floor 36,6 U = 0,25 Mechanical Exhaust Roof 35,1 U = 0,16 Ventilation 417,0 MWh MVHR (efficiency 50 %) 208,0 MWh Household water 158 MWh 197 l/p/d A) Before refurbishment B) Basic solution of refurbishment 687,1 MWh Structural elements 321,3 MWh Windows 145,5 U = 1,4 Doors 30,5 U = 1,4 Walls 73,6 U = 0,25 Household water 158 MWh 197 l/p/d 624,4 MWh Structural elements 321,3 MWh Windows 145,5 U = 1,4 Doors 30,5 U = 1,4 Walls 73,6 U = 0,25 Ground floor 36,6 U = 0,25 Roof 35,1 U = 0,16 MVHR (efficiency 50 %) 208,0 MWh Household water 95 MWh 118 l/p/d C) B + MVHR 50 % D) B + C + water saving 197 l/p/d 118 l/p/d Figure 2. The estimated effects of different energy saving measures in the pilot case. Note! Electricity consumption increases 30 40 MWh/year (it is not shown in the figure, but it is taken into account in operation costs). (Heljo & Peuhkurinen 2004, part B p. 10.) When exploiting the earlier presented methodology, the starting point for selection of energy saving measures is that basic solutions are in the first place based on other factors than energy economics. The basic solution of the refurbishment is usually defined on the basis of the structural and physical minimum requirements of the building. Energy-efficiency of the basic solution can be improved by executing different energy saving measures. To be able to choose the most profitable measures, it is important to study their economic effects. In this pilot case, profitability of different measures is studied on the basis of the calculated internal rates of return. Internal rates of return are presented in figure 3. District heating is a natural heat generation system for this pilot case, and thus effects of other heat generation systems were not studied. To define the real energy economical optimum for execution of energy saving measures, the improvements of energy-efficiency were studied stepwise. By using this methodology, limited financial resources can be allocated as effectively as possible. For example, in the pilot case adding the insulation thickness of the upper floor from 150 mm to 200 mm proved to be profitable, but increasing thickness up to 250 mm turned out to be unprofitable.

6 Selection of structural- and HVAC-technical Pay Internal Choice energy saving measures in back rate and structure- and equipment phase time (real) order (phase 4 in choice process) Price of heating energy 40 EUR / MWh Price of electricity 70 EUR / MWh y % Measure Measure Description of energy number number saving measure of alteration Wall 1 B Wall Extra insulation of walls 80 mm (U=0,25) Wall 2 WallExtra insulation 100 mm (U=0,21) 2 Wall 1-2 Wall Change of extra insulation 80-100 9 10,6 % Wall 3 Wall Extra insulation 150 mm (U=0,17) Wall 2-3 Wall Change of extra insulation 100-150 89-3,4 % Win 1 B New window U=1,8 Win 2 New window U=1,4 Win 1-2 Change of window U=1,8-1,4 7 13,7 % Win 3 New window U=1,0 1 Win 2-3 Change of window U=1,4-1,0 6 16,8 % Ufl 1 B UflY Extra insulation of upper floor 150 mm (U=0,168) Ufl 2 Ufl Extra insulation 200 mm (U=0,140) 4 Y 1-2 Ufl Change of extra insulation 150-200 13 7,3 % Ufl 3 Ufl Extra insulation 250 mm (U=0,120) Y 2-3 Ufl Change of extra insulation 200-250 38 0,3 % Vent 1 B Renovation of old output-ventilation system Vent 2 Concentrated input/output ventilation 5 Vent 1-2 Concentrated ventilation instead of renovation 14 6,1 % Vent 3 Deconcentrated input/output ventilation Vent 1-3 Deconcentrated ventilation instead of renovation 20 3,0 % Water Measuring of water consumption (50% saving) 8 9,1 % 3 Figure 3. Profitability of studied energy saving measures. (Abbreviation B=basic solution). Number 1 always means basic solution. Numbers 2 and 3 are energy saving measures. Markings 1 2, 2 3 and 1 3 indicate changes between measures. (Heljo & Peuhkurinen 2004, part B p. 27.) According to the energy economical studies, objective of 40 % decrease in energy consumption can be achieved, so that the result is economically profitable. If examined energy saving measures are arranged in profitability order, and all the profitable measures were executed, estimated energy savings in total would be 44 %, which means the set objective would be achieved. Measured energy consumptions before and after pilot refurbishment are presented in figure 4. The measured numbers show that the realized energy saving was not as notable as could be expected on the basis of estimated values. The realized saving in heating energy consumption was only 27 %. In addition to that real estate electricity consumption increased after refurbishment by 45 %. This means only about 22 % decrease in total energy consumption. Hence, the objective of 40 % decrease in total energy consumption was not achieved in practice.

[kwh/sqm, a] 7 300 Heating energy consumption before and after refurbishment 2001 2008 272 274 276 250 200 196 204 201 150 100 50 0 REFURBISHMENT 2001 2002 2003 2006 2007 2008 Figure 4. Measured heating energy consumption before and after refurbishment. Measured energy consumptions are normal year corrected. Square metres in figure are floor area square metres. (Heljo et al. 2012.) The fact that the estimated energy savings did not completely come true was, of course, a disappointment. In this pilot case, there are many reasons, which decreased the total energy savings. One of the most important reasons is increased level of ventilation. During the refurbishment project old mechanical exhaust ventilation system was replaced with mechanical ventilation system with heat recovery. This refurbishment measure brings a better indoor climate, but at the same time, it causes increase in the level of ventilation. It is also possible that before the refurbishment the level of ventilation was significantly lower than the estimated value, which would explain a big part of the difference between the reality and estimated energy savings. Other faced problem is resident complaints, which VTS has received concerning moisture between window glasses. On the outermost surface of the window, moisture and frost would be acceptable. However, when moisture is observed between the glasses, there is something wrong. HVAC specialists have doubt that the problem occurs in the pilot case because of the insufficient low pressure in the building. It has also been doubt that structures would have got wet during the construction process, which may also cause moisture problems. The described case project is a good example of a pilot project that did not fulfil all the expectations. Because of the noticeable additional investment costs and caused problems, as a whole, this construction project has been considered unprofitable. Even if decisions were made according to the earlier presented methodology, still a great amount of uncertainties remain involved in the refurbishment projects. On the other hand, it is good to remember that if decision-making is feeling-based the amount of uncertainties is even bigger. In other words, the methodology does not solve all the problems, but it is still a valuable tool for decisionmaking. The presented methodology is being further developed in an ongoing EVAKO research and development project. The objective is to develop economic decision-making criteria for

Annual Energy Cost Savings [ /sqm, a] 8 housing companies. The criteria is developed in the first phase of pilot case, and will be put into practice in the second phase. In figure 5 it is shown how the effects of energy saving measures can be described in graphic detail. By using this kind of graph, it is easy to make clear the economical effects of measures. The information of the figure is related to EVAKO project s pilot case. 5 Total Profitability of Energy Saving Measures (average lifetime 32 years; energy price 0,10 /kwh) 20 % 8 % 6 % 4 % 2 % 0 % 4 3 MVHR (efficiency 60 %) 2 1 Exterior Walls Supplementary insulation +100 mm 0 Figure 5. Total profitability of energy saving measures. The graph contains lots of essential information additional costs, annual energy cost savings and internal rate of return. (Kurvinen & Heljo 2011, p. 11.) Conclusions New Windows (U=1,2 U=1,0) Roof Supplementary insulation +200 mm 0 20 40 60 80 100 120 140 160 Additional Cost [ /sqm] During the last years, numerous pilot projects have shown how energy consumption can be remarkably decreased. However, in many cases the full energy saving potential is not exploited in refurbishment projects. In addition to successful pilot projects, there have been also cases, in which the impacts have not been as positive as expected. Disappointments together with noticeably higher investment costs, as compared to basic solutions, slow down the popularity of energy saving refurbishments much more than good examples are able to accelerate it. In such climate conditions as Finland achieving nearly zero-energy level in refurbishments is so expensive that it is hard to give economically profitable reasons for decision-making. Hence, it would be more beneficial option to concentrate on ensuring that as big part of the economically profitable energy saving measures as possible would be executed within refurbishments. (Kurvinen 2010; Vihola 2010). Because investors will always require profitability for their investments, it is important to use systematic methodology in energy saving measure related decision-making. In this way the effective allocation of financial resources can be ensured and energy economically profitable measures will probably be executed. The methodology does not solve all the problems, but it is still a valuable tool for decision-making.

9 References Aalto, R & Heljo, J. 1984. Energy Saving Choices in Buildings (in Finnish). Helsinki, Rakentajain Kustannus Oy. 289 p. + appx 10 p. Abel, Enno. 2010. Economic Evaluation. BELOK Total Project Increasing Energy- Efficiency in Swedish Non-Residential Buildings (in Swedish). [PDF]. Referred 5.10.2011. Accessible at http//www.belok.se/docs/kortrapporter/lonsamhetsmodell.pdf. 17 p. Heljo, J. & Peuhkurinen, T. 2004. Impacts of Major Refurbishments and Extensions on Energy Consumption and LCC in Blocks of Flats (in Finnish). Tampere, Tampere University of Technology. Department of Construction Management. Report 20045. 41 p. + appx 3 p. Heljo, J., Kurvinen A., Vihola J. 2012. Improving Energy-Effectiveness of Current Building Stock (in Finnish). Tampere, Tampere University of Technology. Department of Construction Management. Report draft. Kurvinen, A. 2010. The Systematics of Energy Economical Choices in Refurbishment Projects of Residential Houses (in Finnish). Accessible at http//webhotel2.tut.fi/ee/materiaali/evako/ee2_diplomityo_kurvinen.pdf. Master s thesis. Tampere, Tampere University of Technology. Department of Civil Engineering. Construction Management and Economics. 109 p. + appx 32 p. Kurvinen, A. & Heljo, J. 2011. Economic Decission Making in Suburban Refurbishment Projects (in Finnish). Referred 5.10.2011. Accessible at http//webhotel2.tut.fi/ee/materiaali/evako/ideapankki_kannattavuusmalli_2011_05_03.pdf. Department of Civil Engineering. Construction Management and Economics. 13 p. Vihola, J. 2010. The Systematics of Energy Economical Choices in New Building of Low- Energy Residential Blocks (in Finnish). Accessible at http//webhotel2.tut.fi/ee/materiaali/ee3_diplomityo_vihola.pdf. Master s thesis. Tampere, Tampere University of Technology. Department of Civil Engineering. Construction Management and Economics. 85 p. + appx 21 p.