EU directives have been revised and a range of rules and obligations have rightly been set to steer the transition to a more sustainable economy. The Energy Efficiency First principle has almost become a religious mantra across all sectors and industries. All demographic projections show that the number of households will continue to rise in many European countries and housing needs will increase proportionally.  This will inevitably require new ways of building homes based on the Energy Efficiency First principle.

As one of the biggest energy consumers, cities, and the residential sector in particular, are reinventing themselves with innovative models to decentralise energy production and balance consumption needs. To this end, the EU is supporting the demonstration of Positive Energy Buildings (PEBs) and Neighbourhoods (SPENs[1]), in other words, buildings and neighbourhoods that produce more energy than they consume (i.e. surplus renewable energy). As the meeting place between buildings, people and nature, cities and neighbourhoods go beyond energy efficiency to serve a broader social welfare purpose.

Exploring energy-efficient solutions at the neighbourhood level

While individual (micro) and societal (macro) benefits have already been quantified in many studies, the neighbourhood level has not received enough attention. The EU-funded projects syn.ikia, CULTURAL-E and EXCESS explore the multiple benefits (non-energy impacts) that PEBs and SPENs can bring neighbourhood level. While the above-mentioned projects are demonstrating that PEBs and SPENs can have a positive impact on the greenhouse gas emission reduction, energy savings and renewable energy production, they can also contribute to better social cohesion, reduction in energy poverty and improvement in health and well-being of occupants as well as the wider public health.

For example, in the UK the Warm and Well programme supported by the National Health Service (NHS) has offered energy efficiency advice and has supported in the installation of over 60,000 renovation measures (i.e., loft insulation, cavity wall insulation, boilers, heating systems, solar photovoltaics and solid wall insulation. This just shows how strong is the connection between an energy-efficient home and public health.

PEBs and SPENs can also generate a positive economic impact both at micro and macro level. They have the potential to produce a significant amount of energy that can be traded within the neighbourhood boundaries, and thereby reduce the peaks in load demand. This can result in significant savings in grid investments as well as other positive macroeconomic effects such as improved competitiveness and productivity derived from technological development and inter-sectoral collaboration. Projects complying with the EU taxonomy or ESG finance, are bound to become an investible asset and for the financial sector and attract new financial streams.

For the building owners, investing in PEBs and SPENs will bring lower operational and maintenance costs that will pay off for initial capital costs in time. Their energy systems with double or triple functions (e.g., PV panels that function as cladding or shading elements) drive significant cost savings.

Having said that, SPENs and PEBs can also have adverse effects such as gentrification and, over time, the displacement of low-income residents. In a market economy, real state captures values associated with decent housing (liveability, comfort, energy rating, community) raising house prices and rents.

Often, the quantity of highly valuable property features in a given neighbourhood is closely correlated to its wealth. Without consideration of equity in access to energy-efficient homes and neighbourhoods, inequalities will only be reinforced.

Who should benefit from PEBs and SPENs?

If we attach a price tag to health and well-being, only residents with a high purchasing power will benefit from a home. This would only reinforce urban inequalities and create segregation, concentrating wealthier (more willing to pay) residents in plus energy areas and neglect vulnerable neighbourhoods. Therefore, PEBs and SPENs strive to regenerate and create buildings and neighbourhoods that are liveable, inclusive and affordable places for diverse communities.

Multiple benefits mainly focus on the positive impacts of SPEN to drive investors, developers, market uptake and policy.

What becomes clear is that PEBs and SPENs will inevitably trigger different interests for the private market and the public and non-for-profit sector.  Thus, regulated policies and business models will need to balance and distribute the socio-economic costs and benefits of such projects evenly.

Nevertheless, there is currently no straightforward methodology available to account for the social welfare benefits of PEBs and SPENs for decision-makers in building sector. The use of different terms, the lack of data and diverse measurement practices is slowing down any progress in this area. Other critical issues include the lack of awareness about the benefits of such approaches from occupants, as well as the difference in real estate market and affordability objectives. The social cost benefit analysis (S-CBA) could be an appropriate quantification method as it takes into account the welfare economics principles around investment choices.

To this end, the syn.ikia project is developing a web application tool for decision-makers (e.g. policy makers, developers, investors etc.) to better identify the multiple benefits of PEBs and SPENs and apply them to policy-making, investment programmes and development projects.

More updates on the progress of the Multiple Benefits tools will be shared soon.

[1] As defined in the syn.ikia’s evaluation framework, a Sustainable Plus Energy Neighbourhood (SPEN) is a highly energy efficient and energy flexible neighbourhood with a surplus of energy from renewable sources.

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