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Meeting Energy Concept Targets for Residential Retrofits in Germany Economic Viability, Financial Support, and Energy Savings

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Climate Policy Initiative Berlin (CPI) provides a short review of German studies on costs of thermal retrofit. It shows that the energy related incremental costs of retrofitting multi-family houses (MFH) to the energy standard for new buildings range from 80 to 185 EUR/m2, whereas the incremental costs to reduce energy demand to 55% of the energy standard for new buildings range from 105 to 230 EUR/m2. Our analysis shows that if the building owner can capture the full benefit of energy savings, then saved energy costs will exceed the cost of thermal retrofit for 5 out of 7 cost estimates (see Section 1). The German public bank KfW provides a combination of low-interest loans and grants to support thermal retrofits. According to our estimates, KfW subsidizes--on average--a third of the energy related incremental costs to reach the standard for new buildings and 50% of incremental costs to reduce energy demand to 55% of this standard. With this public support, deep thermal retrofit is economically viable for the owner of the building over the full range of cost estimates, assuming that she investor can capture the full benefits of energy savings