Marginal costs and co-benefits of energy efficiency investments - The case of the Swiss residential sector

Key elements of present investment decision-making regarding energy efficiency of new buildings and the refurbishment of existing buildings are the marginal costs of energy efficiency measures and incomplete knowledge of investors and architects about pricing, co-benefits and new technologies. This paper reports on a recently completed empirical study for the Swiss residential sector. It empirically quantifies the marginal costs of energy efficiency investments (i.e. additional insulation, improved window systems, ventilation and heating systems and architectural concepts). For the private sector, first results on the economic valuation of co-benefits such as improved comfort of living, improved indoor air quality, better protection against external noise, etc. may amount to the same order of magnitude as the energy-related benefits are given. The cost-benefit analysis includes newly developed technologies that show large variations in prices due to pioneer market pricing, add-on of learning costs and risk components of the installers. Based on new empirical data on the present cost-situation and past techno-economic progress, the potential of future cost reduction was estimated applying the experience curve concept. The paper shows, for the first time, co-benefits and cost dynamics of energy efficiency investments, of which decision makers in the real estate sector, politics and administrations are scarcely aware. (c) 2004 Elsevier Ltd. All rights reserved.