Economic efficiency of thermal insulation aimed at saving energy: a critical assessment

The economic efficiency of thermal insulation is often subject to intense criticism, and can be controversial. Increasingly, negative reports in the media are casting doubt on the financial justification for adding thermal insulation to buildings. In order to investigate the economic efficiency of such measures while avoiding miscalculations or pseudo-calculations, an extremely wide range of parameters must be considered. A distinction must be made when renovating old buildings between 'business-as-usual' costs and energy-related costs; the former are incurred because ageing building elements will usually require renovation. The calculations to establish economic efficiency may use the static or dynamic method, but only the latter can account for the changes over time in major calculation parameters (such as energy prices and real interest rate level) over the building's useful life. This useful life is normally a single generation of active service, lasting 30 years. That is long enough for government subsidies and tax amortisation options to change significantly. It is therefore unsurprising, with so many calculation parameters and the change in these over time, that the results of economic efficiency calculations vary greatly. The amortisation period is normally between 2 and 15 years; it can extend to 30 years, in extreme cases. It will however always fit within a single 30-year useful life. This requires a rise in the current annual rate of renovation, to at least 3%.