Development of an optimization-based methodology for subsidy programs of residential buildings

Applied Thermal Engineering, vol. 260, pp. 124880

Abstract

The success of the energy transition in the building sector depends not only on the technical feasibility but also on the economic viability of energy modernization measures. Subsidy programs for building owners and energy prices significantly influence this economic viability, thereby affecting the adoption of low-emission energy systems in buildings. In order to achieve national climate targets, an efficient allocation of funds to modernization measures that reduce building emissions is necessary. In this context, the question arises as to how funds should be used from the perspective of a funding agency in order to achieve a cost-effective steering effect with regard to the achievement of climate goals. Against this background, this study presents a novel two-stage optimization approach to determine cost-effective subsidy strategies. In the upper level, the government aims to reduce subsidies to achieve CO 2 targets. In the lower level, individual building models optimize their total costs by upgrading the heat conversion technology or insulating the building envelope. To achieve feasibility, the lower model is implemented into the upper model as a discrete set, resulting in a single-stage problem. The model determines the minimum subsidy rates that make the purchase of the technologies and measures profitable for the building owner, depending on a CO 2 target set by the government. The results show that the introduction of subsidy programs has a significant steering effect on emissions savings. The targeted promotion of low-emission heat supply technologies, such as heat pumps, with up to 40 % subsidy quota in combination with subsidies for insulation measures significantly contributes to their installation in existing buildings. This contributes to the achievement of climate protection goals, especially when considering the future expansion of renewable energies in the electricity mix. With the current cost and emission factors of pellets, the promotion of pellet heating can further contribute to strong emission savings. The approach presented highlights the critical role of economic incentives in guiding emission reductions and achieving climate change goals. • Game theory-based calculation of subsidies for building modernization. • Bi-level optimization including objectives of building agents and funding agency. • Reformulation into single-level MILP for enhanced solvability. • Application to the German residential building stock. • Required subsidies: Heat pumps 40 %, windows 60 %, wall insulation 20 %.

Authors 4

1. Nico Fuchs corresponding Aachen Institute for Energy Efficient Buildings and Indoor Climate E.ON Energy Research Center

   RWTH Aachen University

   Affiliation as printed

   Institute for Energy Efficient Buildings and Indoor Climate, E.ON Energy Research Center, RWTH Aachen University, Mathieustraße 10, Aachen, 52074, North Rhine-Westphalia, Germany

2. Jonas Baumgärtner Aachen Institute for Energy Efficient Buildings and Indoor Climate E.ON Energy Research Center

   RWTH Aachen University

   Affiliation as printed

   Institute for Energy Efficient Buildings and Indoor Climate, E.ON Energy Research Center, RWTH Aachen University, Mathieustraße 10, Aachen, 52074, North Rhine-Westphalia, Germany

3. Laura Maier Aachen Institute for Energy Efficient Buildings and Indoor Climate E.ON Energy Research Center

   RWTH Aachen University

   Affiliation as printed

   Institute for Energy Efficient Buildings and Indoor Climate, E.ON Energy Research Center, RWTH Aachen University, Mathieustraße 10, Aachen, 52074, North Rhine-Westphalia, Germany

4. Dirk Müller Aachen Institute for Energy Efficient Buildings and Indoor Climate E.ON Energy Research Center

   RWTH Aachen University

   Affiliation as printed

   Institute for Energy Efficient Buildings and Indoor Climate, E.ON Energy Research Center, RWTH Aachen University, Mathieustraße 10, Aachen, 52074, North Rhine-Westphalia, Germany