Rooftop PV reduces building retrofitting costs by up to 50%

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A scientist from Cambridge University has investigated the economic benefit of combining a basic energy-efficiency retrofit with the installation of rooftop PV and has found solar arrays help to reduce retrofitting costs considerably.

The team conducted its analysis on two postwar apartment buildings in Germany’s city of Aachen. The retrofit was calculated as including or excluding a heat pump system.” I used a very precise computer simulation for particular buildings, and the program could be modified for any building and location if you wanted precise results,” lead author, Ray Galvin, told pv magazine.

“Construction and renovation costs increased by 43% between mid-2020 and mid-2023 while loan interest rates for renovation work increased from around 1% to around 4%,” the scientists explained. “In this situation, the economics of energy-efficiency renovation have become questionable. At the same time, however, the cost of PV has been falling over the past few decades. It is therefore worth considering what the economic benefits would be of installing rooftop PV when doing an energy-efficiency retrofit of a residential building.”

The apartment buildings analyzed each have four apartments, two mansards, an unheated storage basement, and an unheated attic space. Each building has five electricity users—the four apartments plus the common load. In Building 1, eight occupants consume 10,500 kWh/year, while in Building 2, ten people live, which uses 11,900 kWh/year. The total living area of Building 1 is 350 m2, and its roof measures 50 m2, while in Building 2, the living area is 280 m2, and the roof is 40 m2.

Cost of energy saved

Image: University of Cambridge, Journal of Climate Finance, CC BY 4.0

“There are four phases in the method: (a) cost estimates for energy efficiency renovation of the two case study buildings; (b) performing cost-benefit analyses of two basic energy-efficiency retrofits (c) developing a software tool to estimate likely annual savings from a range of sizes of rooftop PV system with different magnitudes of annual electricity consumption and two different load profiles, namely for households with and without heat pumps; and (d) blending the results,” explained the academics.

However, although it does not fully offset the costs of an energy efficiency renovation, installing a PV system improves the financial return by between 40% and 50%.

“Installing rooftop PV reduces the losses from an energy-efficiency retrofit. If there is a heat pump, PV reduces the losses even further. The larger the PV system, the greater the loss reduction, but this is limited by the roof area available,” the researchers added. “The gain from PV over 25 years ranges from around €25,000 ($26,853) for the smaller system on a building without a heat pump, to around €40,000 for the largest system on a building with a heat pump.”

Their findings were presented in the study “How photovoltaics make energy refurbishment more affordable in apartment buildings,” published in the Journal of Climate Finance. The research's lead author, Ray Galvin, affiliated with the United Kingdom’s University of Cambridge and Germany’s Aachen University.

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