Economics of Energy-Efficient Technologies in Residential Buildings


In 2010, we also undertook several exploratory studies on regulatory frameworks and the economics of energy-efficient technologies in the residential sector. Two projects shall be summarized here. One that dealt with the cost-competitiveness of micro-systems for combined-heat-and-power generation (micro-CHP) and the role of heat contractors, and another one that investigated the impacts of governmental regulation and the provision of economic incentives on the diffusion of alternative energy-efficient technologies in new residential buildings.


In this study (Schröder, 2010), we analyze the profitability of CHP plants placed in residential buildings from a contractor’s point of view. First, the legal framework of governmental incentives for feeding in power, produced by CHP systems, is discussed. The fuel-dependent governmental subsidies, and development of relative fuel prices, influence which fuel is the preferred one. In an investment analysis, we investigate various existing concepts of micro-CHP systems and compare the investment cost and energy efficiencies. After choosing the most cost-effective technology, the required incentive for the consumer to join the contract, and the expected achievable gains for the contractor, are discussed. In the end, the option of linking single combined heat and power units to a virtual power plant is elaborated.

The investigation made in this study provides an overview on the variety of factors influencing the cost-effectiveness of micro-CHP systems. The main barriers for the cost-effectiveness of micro-CHP plants are their high investment cost. Especially in one- and two-family households, profitable investments are only possible in few specific cases. Even systems such as the Whispergen and the Ecopower 3.0, which are made for smaller homes, do not create positive net present values. Viable investments in CHP systems are found to occur only in the case of an annual thermal energy consumption of more than 35,000 kWh. The classical construction of a CHP system, covering just a small part of the required thermal power in addition to a peak-load boiler, appears to be the most profitable one. It is difficult to recommend a single CHP system as the best and most costeffective for a contractor. Our study reveals that the classic combustion engine technologies outrange state-of-the-art Stirling engine technology. We find further that especially the Whispergen system, if its price decreases, will fit into the niche for thermal energy demand below 15,000 kWh/a.

The combustion engine micro-CHP systems Green Two, Ecopower 4.7 and Dachs SE show only minor differences in cost-effectiveness. Differences occur for high thermal energy demands, where Green Two becomes the most favorable system. The impact of the German Cogeneration Act (KWKG 2009) and the Renewable Energies Act (EEG 2009) on the cost-effectiveness of micro-CHP systems is not entirely positive. The main promotion by the KWKG 2009 is the subsidy for in-house electricity consumption and the clarification of legal issues concerning grid connection. On the contrary, the EEG 2009 does not increase the promotion of micro-CHP systems. The new regulation for the decoupled production and firing of biogas and the subsidies for CHP produced electricity might reflect good intention, but since no market for fed-in biogas exists, the subsidies only increase the promotion of larger CHP systems with coupled biogas production. The only micro-CHP system that is promoted by the EEG 2009 legislation is the Sunmachine. Still, our results from the investment cost calculations are not very promising.

An additional drawback for contractors arising from the EEG 2009 is the apportionment. The formerly uncertain legal situation about whether or not contractors have to pay the EEG apportionment, is solved at their disadvantage. The new payments stipulated in the EEG 2009 significantly decrease the additional subsidies by the KWKG 2009 for on-site consumed CHP electricity. Our findings show that cost-effective micro-CHP systems for thermal energy demands below 15,000 kWh/a do not yet exist. The classical combustion engines and also the new Stirling engines are still too expensive for this energy demand class. The fuel cell technology might bring an interesting new development. The first micro-CHP systems based on fuel cells will be introduced in mid-2010 and will constitute an attractive new object for further research.


Energy-efficient technologies often only diffuse the market gradually, even though their cost-effectiveness would suggest that they ought to be appealing to a rational investor. In this study (Hanbückers, 2010) we analyze the effects of alternative policy instruments on energy-efficient technologies for the example of the German Energy Saving Ordinance 2009 (EnEV 2009). The EnEV 2009 limits the primary energy demand of buildings for heating, hot water supply and cooling. Given a certain required minimum energy efficiency, energy efficiency investments can either focus on the building envelope or the installation systems. In comparison to the previous ordinance (EnEV 2007), EnEV 2009 stipulates a reduction in energy consumption by 30%.

To analyze the choices of a rationally acting investor faced with these regulations and incentives, we analyze a model type house with different insulation standards and compare it with regard to investments in installation systems and the building envelope. For different combinations of energy generation and energy-saving technologies, a costbenefit analysis in terms of energy consumption and total costs will be carried out. Assuming different future energy price scenarios the most economical investment options are pointed out, in order to deduce trends concerning the future energy supply of residential building, compared to the status quo. Thus the aim is to show possible influences on energy-efficient technology diffusion in new residential buildings caused by energy efficiency regulation.

Supervised student research (selection)

Hanbückers A. (2010). The Impact of Governmental Regulation and Economic Incentives on the Diffusion of Energy-Efficient Technologies in New Residential Buildings: The German Energy Saving Ordinance 2009 as an Example, Study thesis, Chair of Energy Economics and Management, Faculty of Business and Economics, RWTH Aachen University, July.

Schröder M. (2010). Cost Competitiveness of Competing Micro-Cogeneration Systems and the Role of Heat Contractors, Study thesis, Chair of Energy Economics and Management, Faculty of Business and Economics, RWTH Aachen University, February.