Energy-inefficient buildings are one of the biggest polluters on our planet. Energy renovations are being carried out at an accelerating rate, which is a good thing. However, energy renovations are often incomplete, either due to inadequate project planning or financial issues. This is a big mistake, as it is likely to leave hundreds of thousands , or even millions of euros in savings potential on the table, depending on the building, and at the same time the carbon footprint of the buildings will be significantly larger.

Let’s next examine my argument about leaving savings potential on the table from an economic perspective.

Heating power requirements are often forgotten

Very often, energy renovations focus only on, for example, renewing the heating system or performing, for example, one waste heat recovery measure. There are many reasons for this, for example, decision-makers do not understand enough about energy, an operator selling a single solution has succeeded in selling their own solution to the target, one of the decision-makers has strong personal opinions in favor of a certain energy solution, people do not want to invest money or time in energy renovation project planning or simply do not see the issue as important enough. In addition, in residential properties, the competence and ingenuity of the property manager and housing association board are significant factors. As a result, it is often forgotten that energy renovations are a whole, in which the heating power requirement plays a large part.

Solutions that reduce the heating power requirement have a huge impact on the investment cost of the entire energy renovation and, above all, on the financial profitability, as the following examples show. The drop in the heating power requirement directly affects the investment and life cycle costs of the heating system. Take, for example, an apartment building built in the 1960s that had oil heating and had applied for bids to switch to geothermal or district heating. In the initial situation and in both planned solutions, the heating power requirement of the building in question was 288 kW , so the power requirement of the geothermal or district heating system is also dimensioned accordingly. What do you think will happen to the investment and life cycle costs of the property when the property undergoes a Smart Energy Renovation , i.e. artificial intelligence is allowed to calculate the optimal solution for the property from over 30,000 possible combinations of measures ? This is what was done for the property in question and the end result was an energy renovation in which a total of 20 measures were taken.

More measures don’t necessarily cost more

Thinking quickly, if an energy renovation includes more measures, its investment cost will inevitably be higher. However, this is not always the case. In the 1960s apartment building in question, the transition to geothermal heating alone would have cost €490,000 according to the bids, while the 20 measures planned by Älyenergiaremonti cost a total of €463,000, including the design costs of the geothermal heating system and Älyenergiaremonti. How is this possible?

This is possible with the help of computer calculations. There are so many variables in energy renovations that there are countless solution options and which still need to be dimensioned correctly, so that even the most skilled consultant can hardly reach the optimal solution for the site. Manual calculations can of course achieve good results, but when a computer calculates over 30,000 combinations of measures with optimal dimensions, the results are superior.

In the 1960s apartment building in question, the measures calculated by the machine reduced the heating power requirement of the site by 188 kW. In other words, 100 kW remained, or slightly more than 1/3 of the original 288 kW heating power requirement. In this case, the geothermal heating system designed for the site was also about 1/3 of the original in terms of power and drilling requirements. Naturally, this has a huge impact on the price of the geothermal heating system.

In fact, the impact on the price was so great that the cost of the Smart Energy Renovation of the property in question (20 measures, including the geothermal system and Smart Energy Renovation design costs) was ultimately €463,000. In other words, €27,000 was saved in the investment.

The impact on the life cycle costs of the site was even more significant. The 20-year life cycle cost (which includes an investment of €463k, as well as estimates of maintenance costs) turned out to be €1.515 million lower compared to the original oil heating and €515,000 cheaper than if the site had only undergone a geothermal renovation. Wow, I say!

Up to millions of euros in life cycle cost savings across the board

The apartment building in the previous example belonged to the approximately 15% category of sites where the investment cost was significantly reduced by the machine calculation of Smart Energy Renovation. In a very large number of sites, the investment costs remain more or less at the same level or increase moderately compared to the reference solutions or their combinations. Only in a few sites do the investment costs increase significantly. If this happens, the solution in question is, however, considered by the algorithm to be the most economically profitable during the life cycle. Of course, the algorithm also provides alternative solutions with a smaller increase in investment cost in these situations.

However, it can be said that Smart Energy Renovation saves very significant amounts of money during the life cycle of the solutions almost without exception. To do this, I calculated figures for the implemented projects, for which I selected 15 from which I had access to sufficiently accurate data.

There is a massive difference in the 20-year life cycle cost in these projects. On average, solutions implemented with Smart Energy Renovation save €426,000 in residential buildings. and in commercial properties €2,127,800 , when compared to the solution designed for the building. Divided per square meter, this amounts to an average of €120 . It is also significant that in only one of the properties did the life cycle cost savings fall below €100,000.

The calculation is made as follows:
20x(Energy Cost A Design Solution – Energy Cost A Smart Energy Renovation) – change in investment costs

In the calculated objects, the heating power requirement has dropped by an average of 362 kW or 49 percent from a range of 23.25% to 82.30%. This is very much in line with the fact that, for example, the average decrease in heating power requirement for all Smart Energy renovations carried out in 2020 was 53%.