How much could green renovations save homeowners in Germany?

If you’ve been thinking about renovating your house in Germany, it’s a good time to go ahead, according to a study published Tuesday by the economic research centre Prognos AG. 

The study looked at the profitability of home renovations up until 2045 in Germany. It found that investments in energy efficiency in single family homes will ultimately save money in the long term - despite the initial investment costs.

The study was carried out on behalf of the World Wide Fund for Nature Germany (WWF).

Of course renovations require an initial investment, and costs range widely depending on the kind of upgrade. But overall the study suggests that modernisation efforts are cost-efficient in the long term. 

Even smaller renovations such as upgrading roof insulation or replacing windows could lead to savings.

As a report by German economic outlet Handelsblatt summarised: "Doing nothing is the most expensive option for action in the long run."

Save on energy regardless of your heat supply

The study found that renovations in energy efficiency save homeowners money whether they use a heat pump or a gas boiler.

So while investing in a climate-friendly heat pump is certainly a wise decision from an environmental point of view, better insulating your house could be a better place to start in terms of savings.

For example, in one case examined, the total energy costs for a single-family house with gas heating and no renovations taken are expected to amount to €89,000 by 2045.

But if that same house is renovated to the efficiency house standards EH 70 or EH 55 and a heat pump is also installed, energy costs would fall to around €65,000 - a net saving of about €24,000.

On the other hand, if the gas boiler is replaced with a heat pump but no other renovations are made, the expected savings come in just under €1,000.

Finally, if the homeowner were to buy a new gas boiler without renovating, their total costs would rise to about €94,000.

READ ALSO: How do I install a heat pump in my German property?

Apartment building renovations benefit landlords

Renovations to an apartment building with a gas boiler tend to benefit landlords but amount to raised costs for tenants, according to the findings.

Landlords tend to benefit from renovation projects on their buildings, because they can increase rents to offset investment costs according to the modernisation levy – often beyond the initial costs, amounting to a basic rent increase for tenants.

There are caps on how much rents can be raised. But all the renovation options considered by the study resulted in raised costs for tenants compared with unrenovated conditions. 

"In buildings with multiple apartments, better equity measures are needed to ensure that refurbishment is worthwhile for everyone" said Viviane Raddatz, head of climate at WWF.

How do home renovations fit in Germany’s climate plans?

Germany is aiming for climate neutrality by 2045 - including in the building sector. 

Along with transportation, building heating is a notoriously high source of energy use and carbon emissions in Germany.

Increasing energy efficiency, such as by better insulating buildings, is essential for Germany to reach its climate goals.

But the renovation rate is currently only about 0.7 percent per year, far from the government’s stated target of over two percent. 

Homeowners interested in investing in a low-energy heating system can apply for a grant to install a heat pump with Germany’s investment and development bank KfW. 

READ ALSO: Who can apply for Germany's new renewable heating grants for homes?