GRAYNA OWCZARCZYK-SZPAKOWSKA, MICHAŁ RUSTECKI
AN ANALYSIS OF THE THERMORENOVATION OF RESIDENTIAL BUILDINGS
Summary
This article presents a problem considering the rational management of thermal energy in residential buildings. It shows the process, legal and technical norms and sources of financing thermorenovation investments. It describes the results of the eco-nomic analysis of thermorenovation carried out in some residential buildings. Keywords: thermorenovation, energy efficiency, economical efficiency, central heating 1. Introduction
During the age of globalization, being up to challenges of balanced development is possible because of integration of the economic, social and environmental policies. At the current level of civilization, one of the basic economic problems is a limitation of resources. For that reason, in accordance with the fundamental principle of economics, it is necessary to have rational manage-ment; this means that the needs of the present generation should be satisfied without limiting the opportunities for the next generation. Each property manager is obliged to show the rational usage of resources, namely energy from heat. For that reason, the article presents an operating issue con-cerning the rational management of heat energy in residential buildings. The article describes the process of thermomodernization as appropriate and rational management methods of this resource. The article also presents the results of analysis concerning economic and environmental efficiency of thermomodernization in selected residential buildings.
2. Balanced architecture and an energy-efficient building
Social interest in energy-efficient (balanced) architecture tends to grow. The reason for this state of affairs is energy carrier’s prices, which rise systematically and rapidly. Balanced architecture is directed not only toward the efficient use of energy produced, but also to improving environmental relationships throughout all exploitation phases of a building [1]. It is estimated that the construction sector is responsible for 40% of the consumption of the energy produced, of which the far greater part is used in the exploitation of the building [6]. It should be noted that in Poland from 1995 to 2005 there was a decrease in primary energy consumption in households. This was the result of thermorenovation works, and in 2005 the primary energy consumption stood at about 33% of the energy produced.
An energy-efficient building is the one in which the demand for heat is much lower than is expected in accordance with the already existing regulations. According to technical norms, an en-ergy-efficient building should have a heat consumption not exceeding 50% of the typical heat con-sumption for a normative building [4, 145]. An important feature of a house is to provide its resi-dents with thermal comfort – cool in the summer and warm in the winter [5, 416]. The basic feature
of such a building is thermal insulation designed and made in a way that eliminates any possible thermal bridges. The correct orientation of the building according to the four directions of the world is very often highly underestimated. The maximized utilization of solar energy should be a major principle. Placing windows and balconies on the south (about 75% of the building’s surface) and the west side (about 15%) will ensure that the building will take advantage of the sun as a free energy source. However, placing windows on the north side of a building is inadvisable. Unfortunately, such location is not always possible. It also happens that insulation is limited by a number of obsta-cles, such as adjacent tall buildings or trees.
3. Legal regulations concerning thermal protection of buildings and energy savings
European Union laws that relate closely to improving energy efficiency in the construction sec-tor are:
Directive 2002/91/EC of the European Parliament and Council of December 16, 2002 on the energy performance of buildings [8],
Directive 2006/32/EC of the European Parliament and Council of April 5, 2006 on energy end-use efficiency and energy services [9],
Any action aimed at sustaining the thermal protection of the building and saving energy, which is required from an investor, owner or manager, is described in detail in:
Construction Law Act [11],
Regulation of the Minister of Infrastructure of April 15, 2002 on the technical conditions to be met by buildings and their location [10],
Construction/architecture standards.
4. Heat losses
Excessive heat consumption in a building is an outcome of heat loss. A large number of build-ings in Poland do not have the required thermal insulation. This condition is then caused by the building codes at that time that did not put up very stringent requirements in this area as it is currently the case.
This fact has contributed to large heat losses caused by the external walls, flat roofs, basements ceilings and windows, which in addition to low-grade heat quality are often draughty, and, in some cases, the surface area is too large. No less important than the previous one – the next cause contrib-uting to heat loss is the condition of the heating system, local heat sources (boilers) and heat distri-bution centres which supply heat from the municipal heating network. Internal installations are very often poorly insulated and neglected, which can cause dysregulation and clogging due to firm sedi-ment.
In the building with poorly made insulation or equipped with used and inefficient installations rooms may be under-temperature despite great heat consumption and high costs. In many cases, poorly isolated outer walls in the winter can be very cold (inside the building), which can cause moisture from the air to condense on their surface, which creates conditions for mold and fungi growth. Low temperature, moisture and mold can have a negative impact on residents’ health.
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5. Thermorenovation
Thermorenovation assumes building improvements, which in consequence will have an affect on lowering the need for the final energy provided by the technical systems for heating and ventila-tion, the heating of service water, cooling, illuminaventila-tion, etc. and an overall or partial change of the energy source for renewable energy sources. Any action leading to a reduction in energy consump-tion can be called thermorenovaconsump-tion [7].
Thermorenovation is also the sum of all technical procedures that rely on adapting the building to the new requirements for thermal protection and energy saving. An additional warming of the building and improvement of heating and hot water installations achieve this. The aim of this project is to reduce heat loss and lower operating costs of the building.
The building’s thermorenovation project is the implementation of specific technological im-provements, resulting in improving energy efficiency and lowering exploitation costs. These en-hancements include:
Warming of the walls, roof and the flat roof; Modernization of windows and the outer doors; Rationalization of heat installation in the building;
Modernization of systems providing hot service water and installation of devices leading to lowering water usage;
Improving the performance of the ventilation system.
6. Financing sources and the process of implementation of thermorenovation investments Thermorenovation of the building is an investment in a property, which leads to an increase in the value of assets and provides an adequate return to an investor in the form of lowering a building’s usage costs.
Resources for financing thermorenovation projects can come from different sources and flow in distinct forms:
own funds,
bank loans (the owner, before entering a loan, can face doubts regarding the risk and costs of repayments; such doubts can be dispelled with the understanding that the bank loan can finance thermorenovation, which will lower heating costs and the savings can be used for the instalment),
Thermal Efficiency Improvement and Renovation Fund,
other (European Union resources distributed by the European Regional Development Fund and the European Social Fund; ESCO Formula (Energy Saving Company) – these are pri-vate companies that finance and carry out construction works on behalf of an investor who does not meet the credit terms or fears the risks of investing, in exchange for receiving funds in an appointed period of time – funds which are generated by lowering usage costs of the building and will be a return on an investment and profit; environmental purpose funds of the National or Regional Fund for Environmental Protection and Water Manage-ment.
Investors implementing thermorenovation projects can be assisted by the Thermal Efficiency Improvement and Renovation Fund [2]. It was created by the National Economy Bank (Polish BGK) and operates on the basis of the Act on supporting thermal efficiency improvement and renovations
Studies & Proceedings of Polish Association for Knowledge Management No. 67, 2013
of November 28, 2008 [12]. Its purpose is to financially support investors who accomplish the ther-morenovation of a building with the use of loans obtained from the commercial banks (those that the National Economy Bank entered into an agreement with). The Act specifies that the primary source of funding thermorenovation is a bank loan, and as a result of state aid, the investor may receive a ‘thermorenovation bonus’, which allows repaying part of a loan taken for investment pur-poses. The thermorenovation bonus is aimed at the owners or building managers (investors) of: residential buildings, multiple occupancy buildings, buildings owned by local government units, the local district heating network, a local heat source, with the exception of budget units and financial companies [3].
The investor requesting the thermorenovation bonus is required to submit (to a crediting bank): an application for credit,
an application for a thermorenovation bonus grant, a document confirming an energy audit.
The warranty for acquiring the bonus is to accomplish an energy audit, which shows that the thermorenovation project will reduce the annual demand for energy use [13].
The bonus amount depends on the result of an energy audit, which is subject to verification by the BGK. Therefore, an energy audit must be consistent with the principles of accuracy and fairness. The sum of the thermorenovation bonus is 20% of the amount of a loan used for the completion of thermorenovation, but not more than [13]:
16% of the actual cost incurred in the project and
twice the expected annual savings in energy costs, determined on the basis of an energy audit.
If the above conditions are met, the National Economy Bank provides information on the grant and its amount to the investor and the crediting bank. The commercial bank opens a credit line and charges a commission from the investor for receiving a premium of 0.6% of the amount of the bonus and it passes it on to National Economy Bank; the investor may then start the thermorenovation. If the works are completed on time and in accordance with the project, then the National Economy Bank pays the bonus to the crediting bank, which lowers the amount of the loan by the amount of the bonus.
7. Thermorenovation efficiency of residential buildings – results of the study
The subject of research is the analysis of the efficiency of the thermorenovation investment in the residential buildings in terms of energy and economy. The aim is to assess the cost-effectiveness of the thermorenovation. The main problem of the research is to answer the question: What kind of economic effect does the thermorenovation of a residential building bring? The subject of the study is 3 multi-family and multi-storey residential buildings managed by the housing community M.S.M. Zrzeszeni in which thermorenovation was carried out from 2005–2011. Those buildings were com-pared with 3 other buildings that did not have thermorenovation carried out:
Building on street 1 and a building on street 1a, Building on street 2 and a building on street 2a, Building on street 3 and a building on street 3a,
Data on individual buildings and the scope of thermorenovation works are presented in the fol-lowing tables.
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Table 1. General information on buildings No. 1,2,3.
Building 1 2 3
Floors 3 + P 4 + P 4 + P
Number of staircases 8 2 3
Number of flats 70 38 56
Flats surfaces 4432.85 m2 2228.70 m2 3284.40 m2
Number of premises None 1 4
Premises surfaces None 128.00 m2 253.00 m2
Total surface of premises 4432.85 m2 2356.70 m2 3537.40 m2
Surface of belonging rooms 391.22 m2 193.20 m2 257.99 m2
Total shares of rooms 4842.07 m2 2549.90 m2 3795.39 m2
Total surface 6028.37 m2 2983.88 m2 4287.95 m2
Surface of a built-up area 1270.5 m2 670.98 m2 1005.20 m2
Source: own calculations based on data from M.S.M. Zrzeszeni.
Table 2. The scope of thermorenovation works in buildings 1, 2, 3
Building The scope of thermorenovation works Gross cost [PLN] 1 Insulation of flat roof, developing the project of insulation and
insulating the gabled walls (427 m2), insulation of the gabled
walls (673 m2), insulation of the longitudinal walls and
replace-ment of windows at the staircases, execution of the project and regulation of the internal heating system (hydraulic regulation of the internal heating system, regulation of an internal heating system, replacement of the riser valves).
767 560.49
2 Insulation of flat roof, insulation of the gabled walls, insulation of the longitudinal walls of the building along with the recon-struction of the windows at staircases, executing an audit and regulation of the internal heating system (audit, regulation of the heating system).
315 616.71
3 Insulation of flat roof, insulation of the gabled walls, insulation of the longitudinal walls of the building along with the recon-struction of the windows at staircases, executing an audit and regulation of the internal heating system (audit, regulation of the heating system).
468 244.23
Source: own calculations based on data from M.S.M. Zrzeszeni.
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7.1. The analysis of the energy efficiency of the buildings
The study was conducted during three heating seasons, which set out the consumption and costs of central heating of the buildings. This article presents only the analysis of the buildings’ energy efficiency, which refers to the statement of energetic and economic balances of the central heating system in the heating season of 2010–2011, after a complete finish of thermorenovation works. The analysis compares upgraded buildings with non-upgraded ones, in both cases similar in volume, yardage and the amount of flats. The results of this analysis will help to identify both energy and economy effects of the thermorenovation project in the three described objects. Balance of the cen-tral heating system is shown in the tables (Tables 3–5).
Table 3. Balance of the central heating system in buildings No. 1 and 1a during heating season 2010–2011
Building 1a Building 1
Price of GJ (PLN) 39.22 39.23
Ordered capacity (MW) 4.56 3.36
Expenditure of C.O. (GJ) 2 273.90 1 860.53
The amount of heat needed to heat up 1m2 (GJ/m2) 0.4834 0.3198
Fixed cost of heating up 1m2 (PLN) 11.31 10.95
Variable cost of heating up 1m2(PLN) 18.62 12.17
Total cost of heating up 1m2 (PLN) 29.93 23.12
Fixed costs of C.O. (PLN) 53 198.17 63 705.46
Variable costs of C.O. (PLN) 87 581.78 70 803.23
Total cost of C.O. (PLN) 140 779.95 134 508.69
Source: own calculations based on data from M.S.M. Zrzeszeni.
Table 4. Balance of the central heating system in buildings No. 2 and 2a during heating season 2010–2011
Building 2a Building 2
Price of GJ (PLN) 34.96 34.96
Ordered capacity (MW) 2.45 1.95
Expenditure of C.O. (GJ) 1354.00 1 099.00
The amount of heat needed to heat up 1m2 (GJ/m2) 0.5502 0.4663
Fixed cost of heating up 1m2 (PLN) 11.4 9.39
Variable cost of heating up 1m2 (PLN) 18.67 15.8
Total cost of heating up 1m2 (PLN) 30.07 25.19
Fixed costs of C.O. (PLN) 26 866.38 22 129.41
Variable costs of C.O. (PLN) 43 999.59 37 235.86
Total cost of C.O. (PLN) 70 865.97 59 365.27
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Table 5. Balance of the central heating system in buildings No. 3 and 3a during heating season 2010–2011
Building 3a Building 3
Price of GJ (PLN) 34.96 34.96
Ordered capacity (MW) 3.42 2.66
Expenditure of C.O. (GJ) 2 016.00 1 551.00
The amount of heat needed to heat up 1m2 (GJ/m2)
0.5728 0.5015
Fixed cost of heating up 1m2 (PLN) 11.4 8.7
Variable cost of heating up 1m2(PLN) 19.4 14.59
Total cost of heating up 1m2 (PLN) 30.80 23.29
Fixed costs of C.O. (PLN) 40 124.58 30 775.38
Variable costs of C.O. (PLN) 68 282.18 51 610.67
Total cost of C.O. (PLN) 108 406.76 82 386.05
Source: own calculations based on data from M.S.M. Zrzeszeni.
The overall energy balance in the residential buildings (1, 1a, 2, 2a, 3, 3a) throughout the ex-amined heating seasons 2008–2011 is shown in the table (Table 6).
Table 6. The overall energy balance in the residential buildings No. 1, 1a, 2, 2a, 3, 3a
Building Balance [PLN] 1 1a 17 453.56 - 18 968.64 2 2a 7 046.54 - 1 635.23 3 3a 8 878.87 - 2 710.17 Source: own calculations based on data from M.S.M. Zrzeszeni.
The thermorenovation works carried out in buildings No. 1, 2 and 3 in terms of energy turned out to be fully justified:
it generated profit in the form of lowering the total heating costs (fixed and variable) from 7046.54 PLN in building No. 2 to 17453.56 PLN in building No. 1;
it reduced the demand for heat in the form of ordered capacity from 9.3% in building No. 3 to 27.04% in building No. 1;
it increased the thermal comfort of flats; it reduced operating costs for the buildings.
The analysis comparing the costs of heating upgraded buildings with non-upgraded ones proved the validity of the actions taken. Despite the increase in the heat transfer price, in buildings that had undergone thermorenovation, we could observe savings in the form of lowered total heating costs and a decrease in ordered capacity. If the building manager did not carry out thermorenovation works, the situation would be quite different, as evidenced by the balance of non-upgraded buildings
Studies & Proceedings of Polish Association for Knowledge Management No. 67, 2013
(1a, 2a, 3a). In those buildings throughout three heating seasons, there has been an increasing de-mand for heat, and the consequence of this is a rise in the total cost of heating by 1635.23 PLN in building 2a and up to 18968.64 PLN in building 1a.
7.2. The analysis of the economic effectiveness of the buildings
To analyse the cost-effectiveness of thermorenovation in residential buildings, three economic effectiveness indicators were used:
Simple Pay Back Time – SPBT, Net Present Value – NPV, Internal Rate of Return – IRR.
Assumptions necessary to calculate all of the above indicators are compared in a tabular form: Table 7. Data on the buildings for the ratio analysis
Building 1 Building 2 Building 3
Investment expenditure (PLN) 767 856.49 315 616.71 468 244.23
Surface of the building (m2) 5 817.85 2 356.7 3 537.4
Annual savings in heating costs (PLN) 17 453.56 7 046.54 8 878.87
Discount rate (%) 5 5 5
Inflation rate for the heat carrier (%) 5 5 5
The rate of heat savings (%) 25 20 20
The investment period (years) 20 20 20
Source: own calculations based on data from M.S.M. Zrzeszeni.
Simple Pay Back Time – SPBT is calculated on the basis of the data presented in Table 7, taking into consideration investment expenditures and annual savings in heating costs. The results of cal-culations for the analysed buildings are presented in the form of graphs. In building No. 1, the in-vestment expenditure in the amount of 767 856.49 PLN, with the expected annual savings in the amount of 17 453.56 PLN, should return within 12 years of the life of the building. A detailed in-vestment payback period is shown in Graph No. 1.
Graph 1. Expenditure payback period for building No. 1 SPBT
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Source: Own calculations based on data from M.S.M. Zrzeszeni.
For building No. 2, the investment expenditures in the amount of 315 616.71 PLN, with the expected annual savings in the amount of 7 046.54 PLN, should return within 15 years, as presented in Graph No. 2.
Graph 2. Expenditure payback period for building No. 2 Source: own calculations based on data from M.S.M. Zrzeszeni.
For building No. 3, the investment expenditures in the amount of 468 244.23 PLN, with the expected annual savings in the amount of 8 878.87 PLN, should return within 16 years, as presented in Graph No. 3.
Graph 3. Expenditure payback period for building No. 3 Source: own calculations based on data from M.S.M. Zrzeszeni.
Net Present Value – NPV, was calculated on the basis of the flow of savings streams and the formula below:
SPBT
SPBT
Studies & Proceedings of Polish Association for Knowledge Management No. 67, 2013
NPV results for buildings 1, 2 and 3: NPV 1 = 797 865.27 PLN NPV 2 = 48 910.51 PLN NPV 3 = 1 062.13 PLN
A positive value indicates that the thermorenovation in the buildings can be assessed positively. Internal Rate of Return – IRR is the interest rate by which the profitability of an investment can be determined. It is defined by the formula below:
IRR results for the analysed buildings: IRR 1 = 10.55 %
IRR 2 = 6.25 % IRR 3= 5.02 %
In each of the analysed buildings, the IRR rate is higher than the border 5% rate. It means that those investments are profitable.
8. Conclusions
In this paper, based on the study, we can conclude that thermorenovation is a cost-effective investment, both in economic and ecological terms. The collected results are the best evidence. They confirm the objectives and theoretical goals for carrying out thermorenovation works – these include eliminating heat losses for the building and rational energy management. The consequence is a de-crease in the demand for the required power capacity for the building. This contributes directly to lowering exploitation costs of the building. It also brings environmental benefits through reduced CO2 emission. The study results were as follows (Table 8):
Table 8. The results for thermorenovation efficiency indicators Building Indicator 1 2 3 SBPT (years) 12 15 16 NPV(PLN/m2) 137.14 20.75 0.13 IRR (%) 10.55 6.25 5.02
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Based on the analysis of the efficiency of thermorenovation investments for three residential buildings, it can be concluded that:
• All thermorenovation investments are cost-effective. They differ in the scale of efficiency due to the size of investment expenditure, savings in heating costs, and heat savings growth rate;
• Payback period ranges from 12 to 16 years (the shortest, 12 years in building No. 1). It is caused by high annual heating costs savings (at 17 453,56 PLN) and reducing the demand for heat by 25 %;
The most effective investment project, according to the NPV ratio, is the one carried out in building No. 1 (137.14 PLN/m2);
Internal Rate of Return confirms the NPV result; the most profitable investment is the ther-morenovation of building No. 1;
A positive environmental effect has been obtained, which means that the buildings met the terms of energy-efficient (balanced) architecture. The consequence reduces the need for the amount of heat required by the building. This contributes directly to lowering building op-erating costs and environmental benefits through reduced CO2 emissions.
To summarize, the investment efficiency showed that in each of the analysed buildings, the thermorenovation project was cost-effective and beneficial. Due to the account of profitability and on the basis of selected methods, we can observe that the best and most profitable investment was building No. 1. It was carried out with the use of the biggest investment expenditures, but at the same time with high energy cost savings and a high rate of heat saving. The least effective invest-ment was building No. 3. This is due to the high investinvest-ment costs disproportionate to the amount of energy costs savings and rate of heat savings.
Bibliography
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ANALIZA EFEKTYWNOĝCI TERMOMODERNIZACJI BUDYNKÓW MIESZKALNYCH
Streszczenie
W artykule zaprezentowano problem dotyczący racjonalnego gospodarowania energią cieplną w budynkach mieszkalnych. Przedstawiono proces, unormowania prawne i techniczne oraz Ĩródła finansowania inwestycji termomodernizacyjnych. Opisano wyniki analizy ekonomicznej przeprowadzonych prac termomodernizacyj-nych w wybratermomodernizacyj-nych budynkach mieszkaltermomodernizacyj-nych.
Słowa kluczowe: termomodernizacja, efektywno energetyczna, efektywno ekonomiczna, centralne ogrzewanie
Grayna Owczarczyk-Szpakowska Michał Rustecki
