Financial feasibility analysis for different retrofit strategies on an institutional building

Abstract

This study examines the energy conservation and feasibility of different envelope retrofitting measures on an institutional building. Initially, an energy consumption analysis under five different retrofitting scenarios was performed, and the profitability of each scenario is examined using a deterministic financial analysis. Then, a sensitivity analysis is conducted to identify the critical variables in the model, while a Monte-Carlo simulation is employed to develop a stochastic financial assessment. Our results imply the economic superiority of roof insulation with an expected net present value (NPV) of 15,387 Euros (with 99.56% of certainty), and an internal rate of return (IRR) of 22.60% which is significantly higher than the cost of capital (12.44%). The economic attractiveness of the roof insulation stems from its lower initial and maintenance costs and its potential to reduce the energy demand. Due to its low cost and positive NPV value, the roof insulation could be easily applied to the entire region. Given the energy conservation potential and complexity of the decision-making process in the institutional buildings, the proposed framework may benefit both the owners/companies that own these institutional buildings and stakeholders in terms of lower energy usage, cost reduction, lower greenhouse gases, better environment and improved building features.