Civil Engineering Reference
In-Depth Information
Given the special case of existing buildings and associated challenges to
refurbish them to NZER, this chapter identifies and classifies uncertainties that
characterize and make NZER a highly uncertain endeavor. It also provides rec-
ommendations about managing these uncertainties especially during the project
evaluation phase. It concludes by recommending a new approach to evaluate
projects under uncertainty using the option pricing theory. A case study example
illustrates the potential benefits of this approach.
2 Characteristics of Investments in NZEB Refurbishments
NZER are sustainable refurbishments that improve the existing building stock in
order to achieve energy balance through onsite or offsite renewable sources. In
general, refurbishments reset the building life, improve the energy performance, and
provide many economic, environmental, and social benefits. However, achieving
NZER requires high initial costs, compared to regular refurbishments that must be
justified by the expected additional benefits (Danfoss
2010
). Given the uncertainties
that characterize the costs and benefits of NZER, decision to finance these projects
presents a great challenge to building stakeholders and financial institutions.
The additional costs of NZER result from different design requirements to
achieve a higher energy performance and provide the required energy balance
while having to deal with existing conditions. For example, the site location and
current layout of the building can limit the ability of the building to have the
required sun exposure to generate the required solar energy for the balance. In this
case, designers might need to select more expensive insulation material with
greater thermal resistance in order to reduce the energy required in heating and
cooling of the building, or procure renewable energy offsite at higher rates. Other
examples of typical costs in a NZER project are the use of energy-efficient heating,
ventilating, and air-conditioning (HVAC) system, changes required to the building
facade, improvements to the building interiors to achieve better occupant satis-
faction and comfort, installation of solar water-heating system, and the use of high
thermal resistant construction materials to improve thermal insulation. These
highly efficient systems are often more expensive than the less efficient versions
(Fuller
2008
). Moreover, integrating all of these systems with existing building
systems might also raise the cost even more.
Thus, the building could achieve the energy balance requirement but not be
economically feasible. The implementation of these systems in existing buildings
without proven record of performance and guaranteed returns (i.e., higher rent and
energy savings) needs to be justified to all building stakeholders. The expected
high initial cost may prevent the investment, either because the stakeholder does
not have access to capital or has other high-priority investments (Fuller
2008
).
Government tax incentives have been offered by a number of European Union
(EU) countries and the USA to help with the high upfront costs of constructing
new or refurbishing buildings to achieve energy efficiency and achieve reduction
