Is the Energy Transition of Housing Financially Viable? Unlocking the Potential of Deep Retrofits with New Business Models
Abstract
1. Introduction
2. Literature on Value Proposition and Business Models for Residential Retrofit
3. Methodology
4. Data Selection and Source
- Pi is the natural logarithm of the price of a dwelling expressed in EUR/sqm;
- β0 is the constant of the model;
- βi represents the marginal price of the characteristic;
- Xi is the numerical value of the observed variables, including EPC;
- ei represents a random error.
- Ce is the cost of energy consumption;
- EPgl,nren is the overall non-renewable energy performance index (kWh/sqm year);
- Pg is the price of non-renewable energy (EUR/kWh);
- EPgl,ren is the overall renewable energy performance index (kWh/sqm year);
- PUN is the price of renewable energy (EUR/kWh);
- S is the surface area of the building unit (sqm).
5. Analysis and Results
Model | Functional Form | Typical Application |
---|---|---|
Power Law Model | Strong economies of scale, manufacturing, and industrial production [23,101] | |
Learning Curve Model | Learning effect in production costs, renewable energy, and aerospace [127,129,130] | |
Logarithmic Cost Function | Gradual cost reduction, industrial processes with limited scalability [128,131] |
6. Discussion of the Results
7. Conclusions and Policy Implications
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
Appendix A
Variables | Categories | Milan | Udine | ||
---|---|---|---|---|---|
n | % | n | % | ||
Zone | Central zone Semicentral zone Suburban zone | 209 224 440 | 23.9 25.7 50.4 | 151 160 93 | 37.4 39.6 23.0 |
Proximity to infrastructure | Up to 200 m From 201 to 500 m Over 500 m | 265 518 90 | 30.4 59.3 10.3 | ||
Typology | Villa Apartment | 0 873 | 0.0 100.0 | 24 380 | 5.9 94.1 |
Property class | Luxury Prestigious Ordinary Economic | 53 469 283 19 | 6.1 53.7 32.42.2 | 15 152 222 15 | 3.7 37.6 55.0 3.7 |
Number of bathrooms | One bathroom Two bathrooms Three bathrooms Four bathrooms | 489 295 86 2 | 56.0 33.8 9.9 0.2 | 179 193 32 - | 44.3 47.8 7.9 - |
Energy class | A4 A3 A2 A1 A+ A B C D E F G | 7 8 12 11 6 24 22 20 87 130 182 362 | 0.8 0.9 1.4 1.3 0.7 2.7 2.5 2.3 10.0 14.9 20.8 41.5 | 21 2 5 4 8 4 26 31 52 91 91 69 | 5.2 0.5 1.2 1.0 2.0 1.0 6.4 7.7 12.9 22.5 22.5 17.1 |
Maintenance status | New—under construction Excellent—renovatedGood—habitable Poor—to be renovated | 48 346 357 110 | 5.5 39.6 40.9 12.6 | 31 116 234 23 | 7.7 28.7 57.9 5.7 |
Variables | Milan | Udine | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
n | Mean | S.D. | Min | Max | n | Mean | S.D. | Min | Max | |
Unit value | 873 | 6324.9 | 2999 | 1307 | 21,883 | 404 | 1655.4 | 649.8 | 523.0 | 4063 |
Zone | 873 | 2.26 | 0.821 | 1 | 3 | 404 | 1.8564 | 0.765 | 1 | 2 |
Proximity to infrastructure | 873 | 1.80 | 0.606 | 1 | 3 | 0 | - | - | - | - |
Typology | 873 | 1.00 | 0.000 | 1 | 1 | 404 | 0.9406 | 0.237 | 0 | 1 |
Property class | 824 | 2.33 | 0.628 | 1 | 4 | 404 | 2.5866 | 0.626 | 1 | 4 |
Number of bathrooms | 873 | 1.54 | 0.680 | 0 | 4 | 404 | 1.6361 | 0.625 | 1 | 3 |
Energy class | 871 | 10.36 | 2.270 | 1 | 12 | 404 | 9.2995 | 2.756 | 1 | 12 |
Maintenance status | 861 | 2.61 | 0.778 | 1 | 4 | 404 | 2.6163 | 0.711 | 1 | 4 |
Surface | 873 | 108.09 | 57.371 | 19 | 482 | 404 | 128.73 | 66.716 | 23 | 490 |
Energy Consumption Ec = (EPgl,nren × Pg + EPgl,ren × PUN) × S | |
EPgl,nren | 313.6 kWh/sqm·y 1 |
EPgl,ren | 5.8 kWh/sqm·y 1 |
Pg | 0.078 EUR/kWh 2 |
PUN | 0.081 EUR/kWh 3 |
Surface (S) | 70 sqm |
Ec | 1745 EUR·y |
Owner–Tenant | Entrepreneur–Developer | |||||||
---|---|---|---|---|---|---|---|---|
Milan | Udine | Milan | Udine | |||||
[EURsqm] | [€] | [EUR/sqm] | [€] | [EUR/sqm] | [€] | [EUR/sqm] | [EUR] | |
Hard costs | 1400 | 98,000 | 1400 | 98,000 | 1400 | 98,000 | 1400 | 98,000 |
Soft costs | 168 | 11,760 | 168 | 11,760 | 224 | 15,600 | 224 | 15,600 |
Total costs | 1568 | 109,760 | 1568 | 109,760 | 1624 | 113,600 | 1624 | 113,600 |
Δ price premium from G to A | 1078 | 75,481 | 502 | 35,135 | 1078 | 75,481 | 502 | 35,135 |
Avoided cost of rent for the accommodation | 59 | 4147 | 21 | 1496 | - | - | - | - |
Avoided cost of moving | 43 | 3000 | 43 | 3000 | - | - | - | - |
Avoided cost of energy consumption | 499 | 34,907 | 499 | 34,907 | - | - | - | - |
Avoided cost of extraordinary maintenance | 70 | 4870 | 70 | 4879 | - | - | - | - |
Financial benefits | 1749 | 122,405 | 1134 | 79,409 | 1078 | 75,481 | 502 | 35,135 |
Bank | 20-Year Green Mortage Fixed Rate [%] |
---|---|
Casa Banca delle Terre Venete Credito Cooperativo | 2.70 |
Banca delle Terre Venete Credito Cooperativo—Gruppo Bancario Cooperativo Iccrea | 2.70 |
Banca Monte dei Paschi di Siena | 3.50 |
Banca Sella—Gruppo Banca Sella | 2.99 |
Banco BPM—Gruppo Banco BPM | 3.40 |
Banco di Desio e della Brianza—Gruppo Banco Desio | 3.40 |
Banco di Sardegna—Gruppo BPER | 2.80 |
Bcc Milano—Gruppo Bancario Cooperativo Iccrea | 3.50 |
BNL—Gruppo BNP Paribas | 2.80 |
BPER Banca—Gruppo BPER | 3.06 |
CrediFriuli—Gruppo Bancario Cooperativo Iccrea | 2.70 |
Crédit Agricole Italia—Gruppo bancario Crédit Agricole Italia | 2.60 |
ING | 3.20 |
Intesa Sanpaolo—Gruppo Intesa Sanpaolo | 3.20 |
UniCredit | 3.40 |
Average rate | 3.06 |
Owner–Tenant | Entrepreneur–Developer | |||
---|---|---|---|---|
Equity [%] | Debt [%] | Equity [%] | Debt [%] | |
Financial structure | 20 | 80 | 30 | 70 |
Capital weight | 3.81 a | 3.06 | 8.00 | 3.06 |
WACC | 3.21 | 4.54 |
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Owner–Tenant | Entrepreneur–Developer | |
---|---|---|
Economic benefits | Δ price premium from G and habitable to Class A and renovated | - |
Financial benefits | - | Δ price premium from G and habitable to Class A and renovated |
Avoided cost of energy consumption | - | |
Avoided the cost of moving | - | |
Avoided the cost of rent for the alternative accommodation | - | |
Avoided cost of extraordinary maintenance | - |
Model | R2 | Rq Adjusted | F | df1 a | df2 b | p-Value |
---|---|---|---|---|---|---|
Milan | 0.626 | 0.623 | 192.859 | 7 | 807 | <0.001 |
Udine | 0.429 | 0.420 | 49.7 | 6 | 397 | <0.001 |
Predictors xi | xi | Milan | Udine | ||
---|---|---|---|---|---|
βi | VIF | βi | VIF | ||
K | 10.306 | - | 8.421 | - | |
Zone | 2 | −0.314 | 1242 | −0.041 | 1.11 |
Proximity to infrastructure | 3 | −0.076 | 1061 | - | - |
Typology | 1 | - | - | - | - |
Property class | 3 | −0.17 | 1408 | −0.132 | 1.34 |
Number of bathrooms | 1 | 0.064 | 2413 | 0.150 | 2.01 |
Surface | 70 | −0.001 | 2496 | −0.002 | 1.96 |
Energy class | 12 | −0.027 | 1409 | −0.037 | 2.13 |
Maintenance status | 3 | −0.036 | 1381 | −0.103 | 2.29 |
Milan | Udine | |
---|---|---|
Vm ante unit: Class G and habitable | 4925 EUR | 1312 EUR |
Vm post unit: Class A and renovated | 6003 EUR | 1814 EUR |
Vm ante: Class G and habitable | 344,723 EUR | 91,844 EUR |
Vm post: Class A and renovated | 420,204 EUR | 126,979 EUR |
From G and habitable to Class A and renovated | 75,481 EUR | 35,135 EUR |
21.90% | 38.26% |
Owner–Tenant | Entrepreneur–Developer | |||
---|---|---|---|---|
Unit Value [EUR/sqm] | Total Value [EUR] | Unit Value [EUR/sqm] | Total Value [EUR] | |
Hard costs | 1400 | 98,000 | 1400 | 98,000 |
Soft costs | 168 | 11,760 | 224 | 15,600 |
Total costs | 1568 | 109,760 | 1624 | 113,600 |
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Micelli, E.; Giliberto, G.; Righetto, E. Is the Energy Transition of Housing Financially Viable? Unlocking the Potential of Deep Retrofits with New Business Models. Buildings 2025, 15, 1175. https://doi.org/10.3390/buildings15071175
Micelli E, Giliberto G, Righetto E. Is the Energy Transition of Housing Financially Viable? Unlocking the Potential of Deep Retrofits with New Business Models. Buildings. 2025; 15(7):1175. https://doi.org/10.3390/buildings15071175
Chicago/Turabian StyleMicelli, Ezio, Giulia Giliberto, and Eleonora Righetto. 2025. "Is the Energy Transition of Housing Financially Viable? Unlocking the Potential of Deep Retrofits with New Business Models" Buildings 15, no. 7: 1175. https://doi.org/10.3390/buildings15071175
APA StyleMicelli, E., Giliberto, G., & Righetto, E. (2025). Is the Energy Transition of Housing Financially Viable? Unlocking the Potential of Deep Retrofits with New Business Models. Buildings, 15(7), 1175. https://doi.org/10.3390/buildings15071175