A critical review of evaluation methods to assess the profitability of energy efficient refurbishments and constructions.

In the recent years, the scientific debate on the evaluation of the profitability of energy-efficient constructions and refurbishments has reached maturity. Several studies have faced the issue by focusing on the comparison between the costs incurred to improve building energy efficiency and the expected savings. Moreover, different methods and criteria to evaluate the cost-effectiveness of such works have been proposed. The most widespread criteria are the Simple Payback Time (SPBT), the Net Present Value (NPV), and the Internal Rate of Return (IRR). More recently, the importance of the Cost-Optimal methodology has grown significantly. The first criterion presents several simplifications, which make it not completely able to model all the aspects related to energy efficiency investments. NPV and IRR, on the contrary, allow to consider variables such as the financing structure; nevertheless, their implementation is complex and time-consuming. The last method, which relies on the Life Cycle Cost Analysis, allows to compare the cost-optimal level of minimum energy performance for different energy efficiency measures, without, however, dealing with the profitability of the investment itself from a business-oriented perspective. Besides the aforementioned framework, the Cost of Conserved Energy was proposed in 1984 as a simplified statistic for the comparison of retrofit investments with energy purchase. Based on the same rationale, more recently, the Energy Cost Efficiency Index has been developed. Both of them allow to consider, during the evaluation process, several assumptions about the uncertainty of future energy prices and different approaches to the investment. The aim of the research is to provide a critical review of the above mentioned indicators for evaluating the profitability of energy efficiency investments, and compare them by assuming a set of criteria that represent their ease of implementation, the stage of the design and construction process in which they can be better applied, the accuracy of the outcomes, and so forth. The different methods are then applied to a number of case studies representative of various construction and refurbishment typologies, in order to highlight their strengths and weaknesses by comparing the outcomes. The research highlights that simplified methodologies can lead to results comparable to those deriving from the application of more sophisticated techniques, whether some boundary conditions are defined. Keywords: Buildings energy efficiency, investments profitability, evaluation methods.