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This document is part of the work package that analyses ePANACEA’s Dissemination, exploitation and replication potential. This document builds on the project report “Description of current EPC related policy framework in implementing countries”, where the current state of policy framework in the five ePANACEA pilot countries plus Germany are presented. The focus countries are Austria (focus Styria), Belgium (focus Flanders), Finland, Germany, Greece and Spain. In this past report, the current state of different selected topic areas were described based on literature review and expert interview. This material prepared the ground for the present report. In addition, we performed internet research on EPCs issued upon real estate transactions to build an EPC database and provide an exploratory analysis. Finally, the current state and pathways of two different scenarios: moderate uptake and high uptake are described. This is the main contribution of the present report, which will have a follow up report “The potential impact of innovative EPC methods on energy savings and related investments”.

Background: Residential buildings with heat pumps show promising possibilities for demand-side management. The operation optimization of such heating systems can lead to cost reduction and, at the same time, change electricity consumption patterns, which is especially prevalent in the case of a variable price signal. In this work, we deal with the following question: How does the volatility of a variable retail electricity price change the energy consumption of buildings with a smart energy management system? Methods: In this context, we take Austria as an example and aggregate the findings of individual households to the national stock of single-family houses. This is done by simulating and optimzing heating operation in single representative buildings. The aggregation is done based on national building information statistics. Results: This part of the Austrian building stock could shift 19.7 GWh of electricity per year through thermal inertia using a real-time electricity price from 2021. We show the future potential under the assumption of three electricity price trends for 2030, representing different decarbonisation ambition levels. The trends show that higher decarbonisation levels which lead to higher electricity prices increase the incentive to shift electric loads. Conclusions: Real time pricing turns out to be an effective incentive for buildings to shift electric loads by pre-heating the building mass. However, cost savings for individuals are relatively low which is why additional monetary incentives are needed to tap into that potential. Increased daily peak-to-peak demand from these buildings has to put into perspective to the overall grid load.

Among other critical actions, putting the Energy Efficiency First (EE1st) principle into practice requires quantitative evidence on the extent to which demand-side resources (e.g. building retrofits) in various contexts are generally preferable over supply-side resources (e.g. networks). These contexts range from municipal heat planning, over electricity network investment, up to the development of high-level policy strategies for Member States and the European Union (EU) at large. In previous quantitative work, the ENEFIRST project demonstrated for the EU building sector that end-use energy efficiency measures can effectively reduce the need for energy supply infrastructures in transitioning to net-zero emission levels, while also bringing a variety of co-benefits or multiple impacts. The present report provides additional quantitative evidence on EE1st by investigating five model-based case studies. The scope of these case studies is deliberately narrower compared with the EU-wide analysis, providing opportunity for a detailed evaluation of demand- and supply-side resource options in different contexts of building types (residential, non-residential), infrastructures (electricity, district heating, gas) and local conditions (weather, costs, etc.). The key findings of the five case studies are as follows: ❶ Cumulated energy savings based on cost-optimal analysis | If carried out within the next 10 years, single stage building renovations come with a lower cost than stepwise renovations. In both cases, exhausting the potential of deep renovation by achieving the highest energy saving is critical. The results support the instrument of renovation passports for building owners to enable informed renovation decisions. ❷ Building retrofits and district heating systems | District heating networks can be economically viable in scenarios with high refurbishment rates under different climate conditions and city typologies. The network’s ability to combine multiple heat sources balances the impact of high fuel prices. Municipal heat planning can help lower total cost of heat and reduce the risk of energy poverty. ❸ Heat pumps: Efficiency, CO₂ emissions and the value of flexible heat pumps | By using buildings’ thermal mass, residential heat pumps can provide additional flexibility to the power system. Depending on the building type, envelope, and location, the flexibility potential is between 18%-35% of the heat pump energy consumption. The economic profitability strongly depends on the regulation, fees, taxes, etc. ❹ Strategic energy planning in commercial areas | Thermal retrofits for office and education buildings can cost-effectively reduce the need for individual heat supply, distributed generation, heat networks, utility-scale generation, and seasonal heat storage. Advanced retrofit packages can possibly pay off within 13 to 14 years, making building retrofits a critical demand-side resource in the scope of the EE1st principle. ❺ The trade-off between energy efficient household appliances and new electricity generation | Efficient household appliances (e.g. refrigerators) can reasonably substitute for new renewable, fossil and hydrogen-based electricity generation. Cost-effective savings are in the range of 3.8%-19.4%, compared to an inefficient base case. Ecodesign standards and labelling are key instruments to achieve these savings. In conclusion, integrated energy systems modelling is key to make the EE1st principle a reality. Practitioners can use model-based evidence to help formulate strategies and to put together a sound package of policy instruments for EE1st. At the same time, there remain critical challenges to quantitative modelling in the scope of EE1st – including the proper consideration and aggregation of multiple impacts, the selection of discount rates, and others.

The recast of the Energy Efficiency Directive proposed by the European Commission as part of the Fit-for-55 package (July 2021) states, in its new Article 3, that the Energy Efficiency First (EE1st) principle should apply to planning, policy and major investment decisions related to energy systems as well as non-energy sectors, where those sectors have an impact on energy consumption and energy efficiency. Planning practices, policies and investment frameworks shall consider energy systems as a whole, with resources available on both sides (supply and demand), and interactions between demand and supply. This means that policies and regulatory frameworks dealing with energy supply and infrastructures should consider demand-side options as alternatives to increasing supply, thereby valuing the contributions of energy savings and flexibility to energy systems and, where possible, other objectives (e.g. the reduction of greenhouse gas (GHG) emissions, improved health). On the other side, policies and regulatory frameworks dealing with energy end-use efficiency should consider their impact beyond the demand side, as they can also have an impact on supply (e.g. on the investments needed to deliver a specific level of energy services). The Energy Union put EE1st at the core of the energy transition and has enshrined it in various pieces of legislation. The Governance Regulation of the Energy Union ((EU) 2018/1999) has defined EE1st (see Article 2 (18)) and made EE1st a guiding principle for energy policies: the regulation set requirements to ensure that national energy efficiency targets are defined as part of the overall planning exercise reported by Member States in their National Energy and Climate Plans (NECPs). However, the NECPs (submitted in 2019-2020) provided limited information on how the Member States define and plan to implement the principle. The reported information was limited to: • referring to EE1st as a principle that has been considered in the preparation of the NECP • stressing the importance of energy efficiency policies and measures as “being the first pillar of the energy transition” or as the “key horizontal policy” • referring to demand-side participation in energy markets • a few countries linking energy efficiency with investment decisions or other decarbonisation measures in general (Cyprus, Ireland, Malta and Portugal) Implementing the EE1st principle has proved to be a difficult task for Member States, at least partly because EE1st is still a relatively new concept. This report provides a set of recommendations for Member States (MS) to support the implementation of EE1st in their policies. The analysis builds on previous work done in the ENEFIRST project, where policy approaches for each main policy area (buildings, the power sector, district heating) were analysed in detail, providing the basis for guidelines for integrated approaches. It takes the lessons learnt from the analysis ofthree countries (Germany, Hungary and Spain) and translates them into recommendations that are applicable to all MS. Most of the current policies are not designed around the EE1st principle, but they can be adapted to reflect EE1st, and new policies can be designed to integrate it. EE1st, however, cannot be simply mandated: its implementation requires dedicated effort from the Members States and stakeholders involved in policy design, capacity building and cross-cutting cooperation. To be effective, EE1st must be constantly considered when implementing policies at national and local level. Member States, national and local authorities need to adjust their practices and increase capacity building to secure its integration and avoid silo-thinking. Only by investing time and resources to continuously integrate EE1st in day-to-day practices, would it be possible to achieve the benefits of adopting a systemic approach to policy making that embraces EE1st and goes beyond the classic portfolio of energy efficiency policy and supply side measures. Implementing EE1st also implies a multi-level and multi-stakeholder coordination so that the decisions made by public authorities, regulated entities and market players be aligned with the overall integrated planning, and that national, regional and municipal planning be coherent. The adoption of the fit-for-55 package constitutes a distinctive opportunity to further enhance EE1st in EU legislation (e.g. Energy Efficiency Directive, Energy Performance of Buildings Directive, Electricity Directive). A full implementation of this and existing energy legislation would considerably help move the EE1st principle further, even if it is not sufficient to get it systematically implemented across all areas. The European Commission’s sectoral guidelines will still be needed. Finally, adopting EE1st as a decision and planning principle contributes to better decision-making beyond climate and energy policies: if embraced, it can improve how policies are designed and how investment decisions are assessed and made. It can also serve as a delivery mechanism of societal benefits, such as the reduction of inequalities, poverty alleviation and lowering adaptation pressures. Systematically implementing EE1st would bring benefits across all areas and enable a better management of existing resources.

The principle of Energy Efficiency First (EE1st) is gaining traction in the political debate. As set out in previous reports of ENEFIRST, the principle aims to consider and prioritise investments in demand side resources (e.g. building retrofits) whenever these cost less or deliver more value than default energy infrastructure (e.g. networks). Meanwhile, energy efficiency is increasingly associated with a variety of environmental, economic, and social benefits known as multiple impacts (MIs). It is often argued that taking thorough account of the EE1st principle in energy-related investment and policymaking means to incorporate MIs in the decision-making process to ensure a fair comparison of resource options. This concerns various decision-making instances – including the impact assessments prepared by the European Commission, infrastructure planning conducted by regulated network companies, up to individual building owners when assessing the costs and benefits of different building renovation options. However, a theoretical account of how the concepts of EE1st and MIs fit together is still missing. The objective of this paper is twofold. First, based on an expert workshop and a literature review, it aims to integrate the theoretical state of knowledge on the concepts of EE1st and MIs. This involves questions of how various MIs can be aggregated in the form of cost-benefit analysis (CBA), multi-criteria analysis (MCA) and other frameworks to inform decisions on what resource options actually provide greater value. We argue that, in itself, each of these frameworks has important limitations, which is why none of them can replace human judgement. For instance, CBA has inherent problems in coming up with robust monetary estimates of individual MIs, while MCA struggles with ensuring objectivity and representative stakeholder involvement. Another important issue is how the evaluation perspective (societal, private, etc.) affects the selection of MIs that should ideally be taken into account in quantitative assessments. Each of these perspectives is shown to have distinct application areas and practitioners should make sure to apply a consistent perspective when quantifying and aggregating MIs to compare resource options in the scope of EE1st. The second objective of this report is to address the ongoing lack of quantitative evidence on individual MIs, especially in the context of the EE1st principle. We substantiate the previously developed ENEFIRST scenarioswith bottom-up estimates of MIs. The key idea behind this so-called socio-environmental assessment is to move away from the previously used indicator of energy system cost that is limited to capital costs, fuel costs and other financial metrics. By investigating two selected types of MIs, we obtain a more comprehensive picture of the true societal value of end-use energy efficiency in the building sector. One type of MIs investigated are air pollution and climate change impacts. Even though the ENEFIRST scenarios are all set to reach the common objective of net-zero greenhouse gas emissions by the year 2050, we find significant differences in cumulative emissions and ensuing costs from both air pollutants and greenhouse gases. The inclusion of these cost estimates significantly enhances the cost-effectiveness of energy efficiency measures from a societal viewpoint. Another type of MIs in this assessment are indoor comfort improvements. A new method was developed to quantify comfort gains as a result of building retrofits for the entire building stocks of individual Member States. The results indicate significant comfort gains for countries with poor efficiency of the building stock in the base year. As a result of the modelled retrofit measures, the share of poorly heated floor space below 18°C can be reduced by more than 30 percentage points, with ensuing benefits for health, well-being and workforce productivity. In conclusion, any model-based assessment or scenarios in the scope of the EE1st principle should be substantiated with quantitative and qualitative estimates of different MIs to ensure a fair comparison of demand and supply side resources and thus to enable informed decisions on technology investment.

This report aims to develop a methodological concept for a model-based analysis of the Energy Efficiency First (EE1st) principle for the EU-27 that iscarried out and analysed in subsequent reports of the ENEFIRST project. The objective of this energy system analysis is to investigate what level of demand and supply-side resources should be deployed to provide the greatest value to the EU's society in transitioning to net-zero GHG emissions for the building sector by 2050. On the demand side, the analysis focuses on the resource option of end-use energy efficiency in buildings, investigating the contributions of thermal retrofits, efficient appliances, and other measures towards the net-zero target. On the supply side, the analysis quantifies the possible deployment and costs of various generation, network and storage options for the provision of electricity, district heat and gas products for the building sector. By determining what resource portfolio should be adopted under given framework conditions to reach the 2050 target, this analysis can help decision-makers identify priorities for policy design and technology investment. The analysis covers a set of three model-based scenarios. Each of these scenarios is geared to reach the 2050 target of net-zero emissions in the EU-27. However, the scenarios differ in terms of the contribution of different resource options towards target achievement: (1) The LOWEFF scenario assumes that energy use in buildings is decarbonized primarily via the use of renewable-based supply-side resources. (2) The MEDIUMEFF scenario is characterized by an even deployment of demand- and supply-side resources. (3) In the HIGHEFF scenario, end-use energy efficiency measures in buildings are viewed as the most favourable decarbonisation option for the European energy system by 2050, representing a future in which the EE1st principle is comprehensively applied in energy system planning and investment. To capture the interactions between the building sector and the supply side of the EU energy system, this analysis couples four bottom-up energy models: INVERT, FORECAST, ENERTILE and NETHEAT. As such, the analysis features a comprehensive coverage of the major end-uses (space heating, water heating, space cooling, electrical appliances, lighting, cooking) in residential and non-residential buildings. On the supply side, operation and investment of both power and district heating systems are explicitly modelled. To measure the performance of the three scenarios, the outputs of the analysis are analysed in two respects. For one thing, the so-called techno-economic assessment focuses on the indicator of energy system costs, indicating the sum of capital expenditures and operating expenses needed to meet the energy service demand in the building sector. Supported by additional indicators, this assessment helps determine the extent to which society is better off – in pure monetary and technical terms – if demand-side resource were prioritized in energy planning and operation. For another, the so-called socio-environmental assessment investigates selected multiple impacts of the resource configurations computed in the different scenarios. Where possible, these impacts are quantified and monetized using dedicated methodologies. In sum, this model-based analysis addresses the four criteria of quantitative assessments for the EE1st principle: (1) It features an integrated model-based appraisal of demand- and supply-side resources in the building sector and associated supply sectors (electricity, district heat, natural gas and hydrogen). (2) There is a common planning and policy objective across all scenarios of reaching net-zero GHG emissions for the EU building sector by the year 2050 while meeting demand for energy services. (3) All costs and benefits are evaluated from a societal perspective, rather than a private one. (4) A systematic appraisal framework is used to compile all relevant cost and benefit items, including a selection of multiple impacts.

The EPDB is the most important policy directive at the EU level that defines the directive of the energy performance of buildings in the EU-Member States. The EPBD 2018/844/EU Article 2e introduces the EPCs (Energy Performance Certificate of buildings and units) as an instrument to provide building energy performance information. Over the past years, EPCs have developed increasingly and still play an important role in the political context of decarbonisation of the building stock. This report presents an overview of the current policy framework of EPCs, and how some aspects of the EPBD have been implemented in the implementing countries Austria (focus Styria), Belgium (focus Flanders), Germany, Greece, Finland and Spain. To develop the present report, ePANACEA project partners were invited to respond to a questionnaire (with about 60 questions) that covered the following topic areas related to the EPCs and buildings related topics: environment, recommendations, end-user perception, technology uptake, energy assessment and rating system. By reviewing the current state, this report prepares the ground for future project activities, which are: the development of possible pathways how the policy framework could evolve in the future and the analysis and estimation of future replication potential of EPC results and the corresponding impact. That will be included in the project report “Pathways of EPC related policy framework”. Besides the description of the current state, this report also provides insights about possible future perspectives according to current national political discussions and implementing partner’s expertise. Complementary to this report, other reports also provide information about the current state: Report on the use of innovative certification schemes and their implementation Guidelines on how national EPC schemes and SRI could be linked Report on the use of (energy) data within EPC schemes Report on the current status of national plans, schemes and initiatives on building renovation passports 1st REBs conclusions report This report is structured as followed: chapter 1 presents a short introduction about the country-specific EPC framework, chapter 2 presents the current state of each topic area and in each country and chapter 3 presents the future perspectives of each area. Finally, chapter 4 presents the main conclusions of both topics.

For various planning and policy issues the estimation of future development of heating and cooling demand is of great importance. In this paper we provide exemplary model results for the development of heating and cooling demand for 31 European countries which have been developed in the project Mapping and analyses for the current and future (2020 - 2030) heating/cooling fuel development. (See Fleiter, T.; Steinbach, J.; Ragwitz et.al.). Within this article we focus on the analysis of relevafornt indicators such as the development of total heat demand, specific heat demand per m2, shares of the end use categories space heating, water heating and space cooling as well as renewable shares and CO2 emissions. Additionally to the descriptive part of this study in which we want to provide a snapshot on heating and cooling demand in the European Heating and cooling demand we also discuss potentials for additional CO2 reduction potentials of the residential building stock.