Heating the outdoors: Municipalities face billions in energy renovation costs

Lolland, Guldborgsund, and Vordingborg municipalities face a significant backlog in energy improvements for public buildings. Not one of the three municipalities can boast a single building with an A or B energy rating. In other words, there is vast room for improvement.

New EU requirements dictate that three percent of the building stock must be energy renovated annually up until 2030. For the municipalities that own these buildings, this requirement may prove to be an expensive undertaking.

Up to 3,400 kroner per square meter
According to an analysis by Dansk Industri, the energy renovations required to meet EU standards for public buildings are expected to cost Denmark around 2.4 billion kroner annually. For municipalities alone, this means an annual investment need of approximately 1.8 billion kroner, a figure that could rise even further if the target energy rating is raised from B to A.

For Lolland, Guldborgsund, and Vordingborg, this means substantial expenses in the coming years. Although these municipalities may see some savings through reduced energy costs in the long run, the initial capital investment will require a solid financial commitment. For example, the analysis shows that upgrading from energy rating G to B can cost as much as 3,400 kroner per square meter.

Time is running out
According to Rasmus Brandt Lassen, Director of DI Byggeri, this is a complex challenge for municipalities, and therefore it’s crucial to get started soon:

– We’re facing a massive task to energy-renovate public buildings. A large portion currently has very poor energy ratings and is in dire need of upgrades. Beyond just meeting requirements, these energy renovations will also lead to lower energy bills and better indoor climates, he says in a press release.

– A task of this scope isn’t something that can be simply initiated with a signature. It requires planning and clarification around financing. So, it’s urgent to get moving on these many energy renovation projects, Rasmus Brandt Lassen explains.

Expensive to move up even one level
Energy ratings D and E are particularly common among public buildings in the region. In Lolland Municipality, where 47 percent of public buildings have a D rating, energy renovations within this category alone will require investments of over 1,000 kroner per square meter just to raise one energy rating level. Reaching energy rating B will demand even more resources.

Guldborgsund and Vordingborg municipalities face similar challenges. In Guldborgsund, 41 percent of the building stock is rated D, and in Vordingborg, the figure is 58 percent. For both municipalities, upgrading buildings to energy rating B will be costly, but it is essential if they are to meet new requirements while reducing energy consumption.

Costs 10 percent of the capital spending cap
The budget ceiling, known as the capital spending cap, may come under pressure as renovation needs increase. For municipalities like Lolland, Guldborgsund, and Vordingborg, the annual requirement for energy renovations will mean that about 10 percent of their capital spending limit is used on energy improvements—a significant portion of a limited budget. The challenge is that while these investments must be made now, the savings will only appear over time, which puts pressure on local budgets.