For an economic assessment of insulation measures (resulting from lower U-values), not only investments but also the operational cost savings achieved (energy costs) are relevant. The methodology chosen, which is analogous to that of the previous Ecofys reports (Ecofys reports III to VI), allows comparison of the different costs over the whole life cycle of energy saving measures. The main elements of these life cycle costs are capital costs and annual running costs.

Capital costs result from the investment in energy-saving measures. To compare the investments with the annual running costs the investments are converted into constant annual capital costs. Therefore the investment costs are multiplied by the equivalent annual cost factor or annuity factor, which is based on the lifetime of the measure and a selected interest rate:

Symbol |
Parameter |
EU 15 + Norway + Switzerland |
NEW12 |
---|---|---|---|

a | Annuity factor | 0,0578 | 0,0726 |

i | Interest rate | 4% | 6% |

n | Service Lifetime | 30yrs | 30 yrs |

The chosen interest rates and service lifetimes are consistent with the previous Ecofys studies on the cost-effectiveness of energy-efficiency measures in the EU building stock (Ecofys III to V). The applied interest rates are default social interest rates.

It is however important to note that the applied social interest rates may differ significantly from interest rates or expected returns on investment for individuals or companies, i.e. the cost optimum for society is often different from an investor’s optimum. Public policy usually attempts to minimise costs to society.

The report differentiates between the investment costs in fixed costs and additional costs per centimetre of insulation, as shown in the following equation.

IC | Investment costs |

IC_{f} |
Fixed costs |

IC_{add} |
Additional costs per cm insulation |

d | Thickness of insulation |

The “fixed” costs per m2 represent the part of the total costs that are necessary to carry out the insulation measure, regardless of the thickness of insulation that is applied. These are for example cost for fixings, preparation of the surface etc. The fixed costs per m2 are very much dependant on the insulation technique, for example insulation in wood frame facades or inclusion in a thermal composite system. The investments (cost per m2) referred to include material and labour costs as well as appropriate taxes (VAT).

The additional costs per centimetre of insulation are the costs necessary for every additional centimetre. The investments (cost per m2) referred to include material and labour costs as well as appropriate taxes (VAT).The costs per additional centimetre thickness can be assessed, for example, by looking at the total costs of a insulation system with 10 cm and with 30 cm and dividing the difference in costs by 20 (increase in insulation thickness). The result can be considered to be the same for both retrofit and the new buildings^{(4)}. The fixed costs however may be different for new buildings and for retrofit.

For the annual operation costs the energy cost savings for heating and cooling are taken into account. Therefore the energy savings are multiplied by the respective energy costs, which are specified in section 5.3.

The energy-savings of different insulation measures for heating applications are calculated according to the following equation:

ΔE | [kWh/m^{²} a] |
Energy-savings (per m2 surface area of the construction element) |

HDH | [kKh/a] | Thousands of Heating Degree Hours (per year) = HDD*24/1000 |

ΔU | [W/m²K] | Difference in U-values before and after retrofit |

η | [-] | Efficiency of heat generation and distribution |

To evaluate the energy saving for cooling purposes in hot climates, calculations have been performed with the thermal simulation programme TRNSys.

To find the economic optimum of insulation measures, it is common to use graphs which represent the life cycle costs which vary depending on the insulation thickness. Usually these graphs show a minimum at a certain applied insulation thickness which is the economic optimum, leading to a specific U-value of the component; the optimal U-value.

In the following chapters the graphs show the economic optimum value in case insulation is applied to external walls, roof and ground floor. The optimal U-values based on cost efficiency have been calculated for 100 cities in Europe.

^{4} An exception is the insulation of cavity walls in retrofit applications (quite common e.g. in The Netherlands and the UK), which is done by filling the existing air gap.