Economic Mechanisms for Renovating Residential Buildings

Economic Mechanisms for Renovating Residential Buildings
Prof. Ofira Ayalon

One of the areas that affects most the consumption of natural resources and energy in the world in general and in Israel in particular is the residential buildings, due to population growth and the concentration of residents in cities and buildings.

Lior Shmueli of EcoFinance Ltd. was selected by the Ministry of Housing to examine and recommend economic mechanisms to finance the implementation of cost-saving technologies in upgrading of residential buildings. Professor Ayalon served as an academic consultant in this research.

The work included an examination of the prevailing economic mechanisms around the world, examination of technological means and their costs and benefits in terms of energy conservation and efficiency, and recommendations for implementing similar mechanisms, adapted to the Israeli economy. The study looked at 21 systems and technologies for achieving savings; 3 different types of apartments were tested; and a potential savings analysis was conducted on 4 climatic zones (A-D).

The study shows that the cost of upgrading apartments and implementing a "basic technology package" for saving energy costs reduces the operating expenditure by 15-29% in in the base scenario, and the average return of investment in this project is 7.75 years.

Due to the complexity of the renovation and the high costs, it is recommended that in order to promote the implementation of energy saving measures and systems in residential buildings, they should be executed as part of renovations that are already being carried out (e.g., the strengthening structures project National Plan #38 or upgrading the fronts of buildings).

It has now been decided to adopt the report's recommendations. The Ministry of Housing and the Ministry of National Infrastructures, Energy, Water have allocated a budget for conducting a pilot study in a public housing structure, in Beit She'an, in order to examine the benefits of the energy upgrade of the building.


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