Towards the EPBD and ETS2 Mandates: Renewable Energy-Driven Retrofit of a Northern Hotel in Italy

The revised Energy Performance of Buildings Directive (EPBD) has introduced ambitious targets aimed at accelerating the decarbonization of the building sector. In parallel, the forthcoming implementation of the Emission Trading System for buildings and road transport (ETS2) in January 2027 adds a further dimension to the policy landscape. This study investigates three renewable energy retrofit strategies (Scenarios A, B, and C) for a hotel building in northern Italy, assessing their effectiveness in meeting the decarbonization objectives set by the EPBD and ETS2. Scenario A couples photovoltaic generation with an existing gas boiler, Scenario B integrates PV with an electric heat pump for space heating, and Scenario C implements the full electrification of both heating and domestic hot water. The results of the three scenarios are evaluated using selected metrics, such as renewable primary energy consumption (EPren), non-renewable primary energy consumption (EPnren), CO₂ emission (CO₂), carbon avoidance cost (CAC), levelized cost of energy (LCOE), net present value (NPV), and Emission Trading System (ETS)2. The results show that PV deployment alone provides economic benefits but yields limited reductions in CO₂ emissions and non-renewable primary energy consumption due to continued reliance on natural gas. The introduction of a heat pump significantly enhances environmental performance, with reduced fossil fuel consumption, increased renewable energy use, and improved cost-effectiveness of carbon avoidance. The ETS2 has no impact in the case of full electrification, as fossil fuel consumption is completely eliminated. Full electrification achieves the greatest emission reductions and the lowest non-renewable primary energy demand while offering the strongest long-term economic performance. Overall, the analysis demonstrates that combining PV systems with building electrification is essential to achieving deep decarbonization, and that fully electrified configurations present the most robust pathway for compliance with emerging ETS2 policies.