Germany will not be able to meet its climate targets by increasing renewable energy production alone: energy efficiency must also be progressed. The drive towards greener buildings is creating numerous opportunities in the construction and HVAC sectors.
Renovation of the solar photovoltaic system on the roof of the Südflügel Chancellery (Federal Chancellery’s south wing) is underway in the “solar government district” of Berlin. The system generates more than 200 kilowatts at peak power. © Paul Langrock/Zenit/laif
Around 35 per cent of Germany’s final energy consumption is attributable to buildings. Old buildings are responsible for two-thirds of heat consumption in the residential sector. The country has set a target of reducing the primary energy demand of buildings by 80 per cent by 2050 compared to 2008. In order to meet these targets, the annual rate of energy retrofits in existing building stock will have to double from the current 1 per cent to 2 per cent – and that in a residential construction market already expecting around 5 per cent growth in the coming years. These figures alone illustrate the potential for innovation in the sector.
The government has made substantial efforts to increase energy efficiency in new and existing buildings via a combination of regulations and generous funding programs. Between 2006 and 2016, some 4.6m dwellings received funding for energy efficient refurbishment or construction through the CO2 building renovation program. In addition, the government has passed measures to tighten minimum energy efficiency standards in new builds by 20-25 per cent as of 2016, and to increase the share of renewable energy in heat provision to 14 per cent by 2020.
Germany invests hundreds of millions of euros annually in financing the development and promotion of refurbishment technologies such as Celitement, an environmentally-sustainable cement developed by the Karlsruhe Institute of Technology, whose production uses 50 per cent less energy and emits 50 per cent less CO2 than conventional cement. Another funded project involves the development of high-efficiency vacuum insulation panels.
»Renovation rate in residential buildings must be raised to 2%.«
project manager, Agora Energiewende
Key factors driving progress
Strong demand for new housing – especially in large urban centers – continues to buoy the sector, which is expecting five per cent revenue growth in 2017. Renovation spending by households in 2015 totaled €10.7bn (a 13 per cent increase since 2008). Energy-related expenditures in existing residential buildings likewise grew dramatically in that period, rising 28 per cent to €36.4bn. The German Energy Agency (dena) reports that heating consumption declined by around 9.7 per cent between 2008 and 2015.
Insulation measures have faced criticism that they can lead to higher rents and require the use of environmentally questionable materials, claims that are dismissed by Alexandra Langenheld, energy efficiency project manager at Berlin-based Agora Energiewende. “The true driver of cost increases is not the introduction of new efficiency standards but the demand for housing in combination with a short supply in urban areas.”
There is still much to be done in order to achieve the 2050 target. “The renovation rate in residential buildings must be raised to two per cent,” Langenheld says. The sector will only be successfully “decarbonized”, she maintains, if there is “energetic renovation of existing buildings towards the minimal standards that exist for new ones.”
The challenge ahead presents opportunities for foreign investment: “meeting climate change mitigation targets will require considerable investments in both building insulation and heating systems,” she says. Although construction and heating are both highly consolidated industries in Germany, rapid growth and the vast sums being invested in efficient construction and renovation and efficient heating systems mean the sectors are attractive for new market entrants with innovative products and services.
Solar platform Sunroof © E.ON Energie Deutschland
Energy efficiency investments
The government’s push for greater energy efficiency is creating diverse opportunities for innovative companies at home and abroad.
- U.S. tech giant Google is partnering with German utility E.ON to introduce its smart solar platform Sunroof (picture above) in Germany’s residential market.
- Norwegian company Mjøsplast (part of Strukturplast) and German high-tech polymer manufacturer Covestro have collaborated to develop polyurethane foam insulation elements that have been shown to dramatically reduce energy use in homes.
- Dutch grid operator TenneT and German solar battery manufacturer Sonnen have launched a pilot project to test power grid stabilization using Sonnen’s decentralized home energy storage systems.
- Last year Sonnen raised €76m ($82m) in a funding round that added Chinese wind turbine maker Envision to a list of shareholders that includes General Electric and Czech Inven Partners.