Analysing the house-owners’ perceptions on benefits and barriers of energy renovation in Swedish single-family houses

Accepted Manuscript

Analysing the house-owners’ perceptions on Benefits and Barriers of energy renovation in Swedish Single-Family Houses Shoaib Azizi , Gireesh Nair , Thomas Olofsson PII: DOI: Reference:

S0378-7788(18)33831-3 https://doi.org/10.1016/j.enbuild.2019.05.034 ENB 9195

To appear in:

Energy & Buildings

Received date: Revised date: Accepted date:

18 December 2018 18 April 2019 13 May 2019

Please cite this article as: Shoaib Azizi , Gireesh Nair , Thomas Olofsson , Analysing the houseowners’ perceptions on Benefits and Barriers of energy renovation in Swedish Single-Family Houses, Energy & Buildings (2019), doi: https://doi.org/10.1016/j.enbuild.2019.05.034

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ACCEPTED MANUSCRIPT Highlights  Homeowners are differently driven to undertake energy renovation as their perceptions on benefits and barriers differs from each other.  Personal and ‘house-related’ factors can be used to distinguish different groups of homeowners.  The benefits that homeowners are interested may not be energy related although can eventually lead to energy savings.

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 Some benefits are generally accepted to be important as extraneous motives while homeowners do not base their decision on them.

Analysing the house-owners’ perceptions on Benefits and Barriers of energy renovation in Swedish Single-Family Houses

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Shoaib Azizi, Gireesh Nair, Thomas Olofsson Department of Applied Physics and Electronics, Umeå University

Abstract

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Single-family houses offer a large potential for energy savings by energy renovation (ER). Homeowners’ motivation to implement ER derives from the benefits and barriers they perceive. Benefits are the positive consequences that can motivate homeowners to act and barriers are the challenges that demotivate them to undertake ER. Different benefits and barriers do not homogenously affect every homeowner. Identifying motivating benefits and demotivating barriers for each specific group among homeowners can shed lights on ER decision-making and enable policies that are more effective. The objective of this study is to contextualize the implementation of ER by understanding how the perceived benefits and barriers influence homeowners. This study links the expected consequences, which are benefits and barriers to the influential factors on ER, which are used to group the homeowners.

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The analysis is based on a questionnaire survey mailed to 1550 owners of single-family houses in northern Sweden. The perceptions of homeowners on benefits and barriers of ER are significantly different between the groups that are motivated and unmotivated to implement ER. Despite the perceived importance of some of the benefits such as energy cost reduction, they may not be determinative for the homeowners’ decision to undertake ER. The homeowners are more likely to implement ER for reasons other than energy use reduction such as for improving the indoor environment. The barriers such as the difficulty of finding a low-interest loan and reliable information sources are found to impede the intention to implement ER among different groups. Policy implications to facilitate ER in single-family houses are discussed. Keywords: energy efficient renovation, investment decision, perceptions, implementation, house-owners, Sweden

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Introduction

It is estimated that up to 80% reduction in energy use is possible for the buildings in Europe [1]. The Energy Efficiency Directive (EED) and the Energy Performance of Buildings Directive (EPBD) are two major policy instruments which influence the energy efficiency in the building sector in the EU [2,3]. The EPBD entails that by 2020 all new buildings should be in nearly zero energy building (nZEB) level. The existing buildings undergoing major renovation should only fulfill the minimum requirements for energy performance with regard to feasibilities [4]. Sweden thrives to

ACCEPTED MANUSCRIPT be a pioneer in tackling climate change [5], and following the EU 20-20-20 climate goals, has set even more ambitious targets to reduce CO2 emissions [6]. The majority of the housing stock, which will be used in the coming decades in Sweden, already exist. This is supported by the low annual rate of construction of new dwellings in Sweden that reached 1% in 2017, at its peak within the last two decades [7]. Aging of the existing buildings provides an increasing need for renovation and thereby a significant opportunity to improve energy efficiency. Despite the potential, the low rate of energy renovation across Europe signifies the challenges of existing buildings in achieving the set goals for energy efficiency for the year 2020 [8]. Several EU member states have already revised their energy efficiency targets leading to only a 16.9% reduction in primary energy consumption instead of 20% by 2020 [9].

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Single-family houses constitute a large share (about 45%) in the Swedish housing stock with nearly 2 million dwellings [10]. Approximately, 80% of energy use in the Swedish housing sector is related to space heating and domestic hot water consumption while the rest is used for lighting and electrical appliances [11]. Renovation of single-family houses, usually, cannot be forced upon by regulations and it is an optional decision by the owners. Compared to multi-family dwellings which are often managed by municipality companies, private companies or housing associations [12], owners of single-family houses have more freedom on investment decisions. Accordingly, energy efficiency improvement through renovations in existing single-family houses is linked to the house owners’ views and perspectives towards such measures. The house owners are important actors and the main focus group in the efforts to improve energy efficiency in existing single-family houses [13].

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Energy renovation is a major renovation that substantially improves the energy efficiency of the house. In other words, a major renovation, which consists of energy efficiency measures (EEMs) is energy renovation. Hence, adoption of EEMs is the key determinant to transform a non-energy renovation to an energy renovation. Whether homeowners adopt the EEMs or not, depends on the consequences they expect from their decisions. The inclusion of EEMs in the renovation package might be due to reasons and motivations that are not directly related to energy although, in the end, the energy efficiency of the house will also improve. Several studies across Europe tried to address the economic viability of energy renovation (ER) asserting its profitability through energy savings [14,15]. At the same time, several studies identify economic considerations and the household’s financial constraints as the major barriers to undertake energy renovation [16]. Research studies, in the past, gave a lot of attention to economic aspects while the complexity of human behaviour and social aspects of energy renovation were mostly overlooked [17]. Moreover, economic aspects are often the focus of energy policies such as energy performance certificate (EPC) mandated by EPBD in Europe. EPC is meant to influence the market value of a house by informing the potential tenants and buyers about the energy performance of a building unit [18]. Nevertheless, the homeowners consider the energy efficiency measures as not just investment measures but also as consumer goods that are being used to satisfy their needs [15]. In fact, implementation of energy efficiency measures (EEMs) such as new windows or new space-heating system associate with feelings of comfort and convenience which corresponds to consumer goods besides an investment [19]. The economic considerations are an important aspect of renovation while there are other aspects that also need to be considered. For policymakers to have a comprehensive view of ER, it is crucial seeing not just particulars, but also the overall complexity. The decisions to undertake energy renovation may be constituted from the combination and alliance of several needs including economic and non-economic motives [15]. Similarly, there are economic and non-economic barriers to ER [8]. Research has found that decisions to undertake ER are driven by the consequences that decision-makers perceive [20]. The consequences are mainly the benefits they want to avail and the barriers are those that they might face during or after implementation. Nevertheless, the benefits and barriers may be perceived differently by different groups of homeowners. Accordingly, the effect of benefits and barriers of ER on different groups of homeowners’

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decisions to undertake ER may vary. Friege and Chappin [21], state that research on understanding the decisions on ER is still in its infancy because there is limited known basis supporting the decision-making. Current policy initiatives do not consider the large social differences among the homeowners and the differences in the characteristics of their houses. Policy schemes address the homeowners as a homogenous group while categorizing them to create targeted policies may lead to a larger number of ER implementation. The hypothesis of this study is that different groups of homeowners can have significantly different perceptions of the benefits and barriers of ER that can explain why their motivation to implement ER differ. Moreover, some benefits and barriers may be more crucial/important for a certain group to implement ER. The objective of this study is to contextualize the implementation of ER by linking the expected consequences, which are benefits and barriers to the influential factors on ER, which are used to group the homeowners. Understanding how the perceived benefits and barriers influence different homeowners could lead to devise more effective strategies to increase the adoption rate of ER in the residential sector.

Socio-behavioural aspects of energy renovation

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A traditional strategy to foster sustainability has been information intensive campaigns based on the simplified assumption that increased awareness and knowledge will lead to appropriate behaviour change [22]. Over the time, such strategies showed their ineffectiveness which led some of the researchers to utilize and adapt the concepts from social and behavioural science into environmental related fields, to devise behaviour change tools [23]. Understanding or intervening the individual’s interactions with energy systems entails integrated knowledge and insight from multiple disciplines [17]. As the need to change the trajectory of energy systems was sensed, the policymakers have gone beyond the natural sciences, mainly to economics, overlooking the human factor [17]. Fulfilling the targets to reduce greenhouse gas (GHG) emissions in the residential sector requires understanding and managing the factors driving energy use in the households within energy social science domain [17]. The field of energy social science deals with human causes of energy phenomena and the need for it was recognized several decades ago, mainly after the energy crisis in the 1970s [24]. Despite this recognition, the social aspects have been relatively overlooked and our understanding of the decisionmaking process on ER is still undeveloped [21].

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Major investment decisions are mainly associated with expected decision consequences while behavioural models in the environmental domain such as Theory of Planned Behaviour (TPB) and Norm-Activation model (NAM) treat them as minor predictors [20]. Kastner and Stern suggest that behavioural models like TPB and NAM may not comprehensively model major investment decisions despite its proven usefulness in explaining several ”curtailment” behaviours [20]. A model that focuses on the consequences of investment measures (such as implementing ER) can lead to a better understanding of the homeowners’ investment decisions. In order to design a strategy to change a behaviour, an important early stage on influencing potential adopters is to identify the consequences associated with the selected behaviour [25]. The consequences include the benefits motivating people to act and barriers hindering them to adopt the behaviour. Typically, benefits are the individuals’ motivations and reasons for adopting a behaviour. On the other hand, barriers are those aspects that inhibit the behaviour and could lead to difficulties impairing the adoption [23]. Figure 1 presents a schematic representation, from a social marketing campaign model, on how the interplay between benefits and barriers might lead or prevent to adopt a behaviour (action). Increasing the benefits and decreasing the barriers for a sustainable behaviour would yield improved adoption rate [26]. The benefits and barriers are often different even for seemingly similar behaviours [27]. Moreover, the potential adopters of a behaviour (e.g. the implementation of ER) may perceive

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different benefits and barriers associated with that behaviour [23]. Based on such perceptions, the adopters may be more/less motivated to adopt a behaviour, such as the implementation of ER.

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Figure 1. A conceptual representation of the role of benefits and barriers in social marketing campaigns, adopted from Schultz [25] (Figure 1-A: when a behaviour is prevented, Figure 1-B: when a behaviour is adopted)

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Development of tailored strategies entails setting criteria to distinguish important groups of homeowners. The factors influencing homeowners’ decision to implement ER can be set as criteria to distinguish different groups of homeowners. Buser and Carlson [28] introduced a “socio-material” approach to highlight the importance of human dimensions, the performative role of building and the interactions of building with residents in ER decisions. Azizi et al. [29] categorized the important factors in personal and building-related factors and examined their influence on the adoption of different EEMs. Similarly, Nair et al. in a Swedish study, categorized the important factors related to the implementation of ER into personal factors and contextual factors [30]. They considered the demographic background as influential personal factors. The influential contextual factors include building age, thermal comfort, previous investment and perceived annual cost [30]. Influential factors on ER may depend on regional-specific characteristics such as economy, culture, and climate [21].

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Wilson et al. found that the property and household characteristics influence the renovation decisions, however, they argued such factors cannot directly explain renovation decisions without considering the underlying causal mechanisms [31]. The influential factors are stated by many studies to be important while at the same time, as per Schultz [25], homeowners’ decision to implement ER is driven by the benefits and barriers they perceive for ER. What is missing in the studies on ER implementation is the linkage between the influential factors and the expected consequences, which are benefits and barriers of ER. In other words, the influential factors might affect energy renovation decision while the primary influence of such factors is on what homeowners are motivated by (benefits) and what they try to avoid (barriers) when they think of ER. Mortensen et al. tried to cover this gap by examining whether different groups of homeowners, based on their demographics, are homogenous in their motivations [13]. They concluded that Danish homeowners, based on their position in life such as age, number of children, etc. have different motivations for energy renovation.

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Benefits and barriers related to energy renovation

Energy renovation is usually initiated due to a combination of several motivating benefits [15]. Some of them may not solely lead to energy efficiency improvement but are still important since they assist in triggering the initiation. Zundel and Stieß found in a German study that economic benefits such as payoff of the investment are an important benefit that motivates homeowners to undertake ER [15]. However, economic benefits such as energy cost savings should be considered just one aspect when evaluating the viability of ER [19].

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Increase in the market value of the house is reported to be another important benefit that could drive homeowners to undertake ER [15]. Moreover, Zundel and Stieß found that technological novelty by installing up-to-date technology could be a motive to undertake renovation [15]. The perceived benefit of technological novelty is also mentioned in another study being referred to as the “attraction of modern technology” [32]. Improving comfort level along with availing positive health effects are found by Organ et al. to be important motives behind ER [33]. These two are usually interlinked and can be considered together as improvement in the indoor environment (IE). Some examples of IE qualities that can be improved are thermal comfort, noise level, ventilation, etc. Mortensen et al. in a study in Denmark found “to get a better-looking house” and improvement in “architectural quality” are other important motives in a major renovation [16]. In this paper, these two aspects together are categorized as improvement in the aesthetics of the house. The same study also found functionality and minimizing the maintenance can be important for the homeowners. In addition, environmental awareness is found to lead the homeowners to perceive environmental and climate protection as a motive to undertake energy renovation [32]. Considering the multiple benefits mentioned here, energy renovation seems to be essentially a sensible decision, however, there are several barriers offsetting the positive consequences.

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The barriers related to ER have long been investigated in the research. The difference between the energy efficiency potential and what is achieved in practice is known as the energy efficiency gap [34]. Researchers, in the past, assumed energy renovation as an investment by calculating the economic benefits. Observing the energy efficiency gap lead them to introduce barriers that homeowners incorporate in their economic calculations. Uncertainties and risks with the profitability of investment were found to partly explain the energy efficiency gap [34]. According to [35], the initial investment in energy renovation outplay the gains over the lengthy operation period. In other words, losses loom larger than gains [35]. Usually, the homeowners underestimate the energy saving potentials, which may lead them to think that energy renovation has low cost-effectiveness [15]. Corresponded to the high investment required for energy renovation, lack of affordable financing or low-interest bank loan is found as another economic related barrier [8].

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Implementation of ER often requires extensive information on the services, products, and processes. Some studies underline the importance of information, which should be easy to access, tailored and relevant to homeowners’ life [35]. In other words, the information should be communicated in a way that is comprehensible for the homeowners. Moreover, the lack of trustworthy information is considered as a major barrier for energy renovation [8]. The hassles like dirt and stress, which disturb the occupants’ routine life and cause inconvenience, inhibit homeowners motivation to renovate [36]. In addition, renovations may be time-consuming to be arranged and implemented while some homeowners do not have enough time to deal with it [15].

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Methodology

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This study is based on empirical data from a mail-in questionnaire survey. The questionnaire was pilot tested by eight homeowners and one expert outside the project, who was a municipality energy advisor, in order to ensure the validity of the content. The test panel was asked to respond to the questionnaire and provide their comments and feedback, which lead to some modifications to improve the clarity of the questionnaire. The questionnaire was mailed to 1550 house owners, in spring 2017. The addresses were randomly selected from 7 municipalities in the two counties, Västerbotten and Norrbotten, in northern Sweden. The addresses were received from a public organization, Statens personadressregister (SPAR) with multiple criteria to ensure they belong to single-family house owners who reside in their houses. The criteria include: (i) the person is currently registered in the municipality, (ii) the person is above 18 years old and (iii) the house address is within the municipality. The respondents were ensured that their response would not reveal their identity. The questionnaires did not have any tracking number to increase the respondents’ trust in anonymity.

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Homeowners were grouped by using the important factors related to ER identified by other researchers that were categorized as demographic and ‘house-related’ factors. The demographic factors include gender, age, income, marital status, education, occupation and number of children in the household. The ‘house-related’ factors include size, age, house ownership, tenure period, intention to sell the property, and respondents’ previous experience to adopt EEMs. Chisquare test was used to determine which of these factors have a significant influence on homeowners’ intention to implement ER. Subsequently, the significant groups related to the influential factors were determined by post-hoc analysis of chi-square results. Significant groups are the groups of homeowners that are significantly likely or unlikely to implement ER. These groups can show how the difference in perceived benefits and barriers can influence the intention to implement ER. In this paper, the groups that are significantly more likely to implement ER are considered as motivated (Figure 1-B) and the groups who are significantly less likely to implement ER are considered as unmotivated (Figure 1-A) groups. The motivated and unmotivated groups, related to each of the influential factors are compared to find whether their perceptions differ on benefits and barriers of renovation. The two-step analysis allows to evaluate the difference in the perceptions of just two motivated and unmotivated groups to facilitate the exposure of relations and the reliability of the analysis.

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EEMs are the main components of an ER that differentiate it from a “non-energy” renovation. In order to examine the intention of respondents to implement ER, they were asked about their intention to implement major renovation and their interest to adopt energy efficiency measures (EEMs). The measures considered in this study are some of the common EEMs in the singlefamily houses [37–39]. They include measures such as changing the windows, improving attic insulation, improving façade insulation, installing ventilation system with heat recovery, installing solar photovoltaics (PV) and changing the heating system to ground-source or airsource heat pumps. Moreover, these measures were validated for their local relevance by interviewing a municipality energy advisor. The questionnaire was divided into 4 sections. The first section was about the demographic background of the respondents. The second section contained the questions about the house attributes and the respondents’ interactions with their house. The third section included questions on the respondents’ knowledge and attitudes towards different aspects of energy renovation. The

ACCEPTED MANUSCRIPT questions about the respondents’ attitudes and opinions were asked on a 5-point Likert scale. For example, to understand respondents’ perception on the importance of energy-cost reduction in renovation we asked the question “How important is it for you to reduce your energy cost if you conduct a major renovation in your house?”. The responses rate after one reminder was 29%. Since a large percentage of the sample did not respond to the survey, there may be a non-response bias that was not assessed which is a limitation of this study.

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Data analysis consisted of several steps and applying different statistical tests relevant to the type of variables. First, the responses were analysed descriptively to group the homeowners and to rank the benefits and barriers of ER based on homeowners’ perceptions. The chi-square test of comparison was conducted to find the factors that have a significant influence on the implementation of ER. When the chi-square test disclosed a significant relation, the analysis followed up by conducting post-hoc analysis, which provides further detail on the relation between two variables. Post-hoc analysis of chi-square results reveals which groups encompass the significance. By using the adjusted residuals, the analysis measures how significant the “cells” are to the chi-square result in a contingency table [40]. The final step included analysing the Likert-scale responses meant to reflect the perceptions of homeowners on the benefits and barriers of ER. The non-parametric test of “Mann-Whitney U” was used to investigate whether or not the differences in perceptions of motivated and unmotivated groups were significant.

Results and discussion

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The majority of the respondents were above 55 years old (59%) and there was an adequate representation of female homeowners (45%). The household annual income was normally distributed in the sample with the largest income group (32% of respondents) having 500,000 to 750,000 SEK per year. A considerable number of respondents (35%) studied 3 or more years in university while 11% did not have a high school diploma.

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Nearly, one-third of the surveyed respondents (30%) expressed their intention to renovate their houses in the next 3 years (until 2020). Out of those intended to implement renovation, 80% expressed their interest to implement one or more energy efficiency measure(s) (24% of the total population). This study considers this group to have the intention to undertake an ER since renovation does not necessarily lead to energy efficiency improvement unless it includes energy efficiency measures.

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5.1 Influential factors on homeowners’ intention to implement energy renovation

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Table 1 presents the percentage of homeowners in different groups who intend to implement ER against demographic and ‘house-related’ factors. The chi-square test showed that some of the demographic and ‘house-related’ factors significantly influence the homeowners’ intention to implement ER. The post-hoc analysis indicated the specific groups within the influential factors that were more/less likely to implement ER. The groups with the highest percentage were often more likely to implement ER (motivated group) compared to the other groups and conversely, the groups with the lowest percentage were less likely to undertake ER (unmotivated group). Based on the results of post-hoc analysis, Table 1 presents the motivated and unmotivated groups related to each influential factor with the signs “+” and “-”, respectively. The results for demographic factors presented in the left column of Table 1 shows that gender and marital status did not have a significant influence on ER implementation. Homeowners’ age was found to be significant and 42% of the homeowners between 18 and 45 years old expressed

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their intention to implement ER while only 8% of homeowners above 65 years had such intention. 31% of the homeowners with household annual income between 500,000 and 750,000 Swedish krona (SEK) planned to implement ER while two highest and lowest income groups with 8% and 14% were less likely to implement ER. It was found that among the households that had children, 41% had intention for ER. The post-hoc analysis showed they were significantly more likely to implement ER whereas only 17% of those without children had the intention to implement ER. It was also found that those with higher education level were more likely to implement ER. Approximately, 29% of homeowners who studied 3 or more years in university had the intention to implement ER while only 8% of homeowners who did not finish high school had such intention. Occupation was also found to have a significant influence on homeowners’ intention to implement ER. 32% of homeowners with full-time job expressed their intention to implement ER in the next 3 years in contrast with only 11% of those who were pensioners. Post-hoc analysis of chi-square results showed that homeowners with a full-time job were significantly motivated and pensioners were significantly unmotivated to implement ER. However, no statistically significant relationship was found for unemployed/part- time group on their intention to implement ER.

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Table 1. Influence of demographic and ‘house-related’ factors on homeowners' intention to implement ER Percentage intending to implement ER a

Demographic factors Gender

‘house-related’ factors

Percentage intending to implement ER a

Intention to sell the house*

Female (N=198)

24%

Male (N=244)

24%

18-45 (N=98)

42%

46-55 (N=83)

+

33% 24%

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56-65 (N=108) >65 (N=154)

8%

-

Annual household Income (SEKc)*

500-750 k (N=137)

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750-900 k (N=81)

14%

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<350 k (N=65) 350-500 k (N=94)

15%

-

No (N=378)

26%

+

Size

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Age (yr)*

Yes (N=62)

>900 k (N=55)

+

30% 8%

-

Marital status

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Living with a partner (N=383) Single (N=52)

<100 (N=56)

29%

101-150 (N=223)

22%

151-200 (N=105)

22%

>200 (N=44)

32%

Age of house (yr)*

26% 31%

(m2)

<25 (N=32)

0%

26-40 (N=98)

26%

41-55 (N=132)

30%

56-70 (N=87)

22%

>70 (N=90)

24%

+

Experience to adopt EEMs in last 3 years* 25%

Yes (N=116)

31%

+

21%

No (N=325)

21%

-

Children below 18 years old*

Ownership

No (N=302)

17%

-

Respondents owns with his/her partner (N=351)

25%

Yes (N=121)

41%

+

Respondents is the sole owner (N=87)

20%

Education*

Tenure period (yr)*

Primary or secondary school (N=50)

8%

High school or vocational school (N=179) University less than 3 years (N=54) University equal or more than 3 years (N=154)

29%

+

-

1-3 (N=39)

56%

25%

4-10 (N=83)

28%

22%

11-20 (N=106)

27%

21-30 (N=81)

19%

32%

+

31-40 (N=85)

18%

>40 (N=46)

4%

Occupation* Full time, paid job (N=230)

-

+

-

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25%

Pensioner (N=167)

11%

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Significant result of chi-square tests are shown by “*” when p<0.05 a Significant groups (p<0.05) resulted from post-hoc analysis of chi-square tests are highlighted and shown by “+” when a group is more likely to implement ER and “-“ when a group is less likely to implement ER c Swedish Krona *

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The analysis for the ‘house-related’ factors is presented in the right column of Table 1 showing that house size and ownership (whether single or shared ownership) did not influence the homeowners’ decision for ER. The homeowners who intended to sell their houses within the next 3 years were significantly less probable to plan ER in the same period. Age of the house is another important factor found to influence the ER decision. The homeowners whose houses were built between 1977 and 1992 (41-55 years old) were significantly more probable to have a plan for ER while those with new houses which were less than 25 years old were less likely to have such a plan. Homeowners’ recent experience (in the last 3 years) in adopting at least one of the six EEMs mentioned in Section 4 was found to influence their future decisions to implement ER. 31% of respondents with such experience expressed that they have planned for ER compared to only 20% of those without that experience. Another ‘house-related’ factor investigated in this study was the tenure period, which was found to influence homeowners’ ER decision-making. The homeowners with short tenure period, less than 3 years, were significantly more likely to implement ER, while those with long tenure period of more than 40 years were less likely to implement ER.

5.2 Perceived benefits and barriers as the drivers of ER decisions

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The factors discussed in the previous section could facilitate in “grouping” the homeowners who were more likely and/or less likely to undertake ER. However, such grouping may not explain the reasons for homeowners’ preferences to (not) implement ER. The homeowners’ decision to ER may often be driven by their perception of the benefits and barriers of ER. In this section, two groups (motivated and unmotivated based on their intention to undertake ER) for each of the influential factors in Table 1 were statistically tested to compare their perceptions on the benefits and barriers of ER. The analysis could help to widen our understanding of the influential factors by understanding how the change in perceptions of different groups on benefits and barriers affect their decisions to undertake ER.

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The important benefits and barriers to renovation are ranked in the first column of Table 2 based on the mean value of responses from the survey. Table 2 also presents the perceptions on the benefits and barriers of ER for the motivated and unmotivated groups. The benefits and barriers that were perceived significantly different (p<0.05) by motivated and unmotivated groups are highlighted in the table, for the specific factors. In general, some of the benefits and barriers are perceived equally important by both motivated and unmotivated groups (Table 2). Hence, those benefits/barriers cannot explain the difference in homeowners’ intention to undertake ER. For example, the mean value of importance for energy cost reduction was 4 (in a Likert scale of 1 to 5) for the motivated age group while the mean value for that benefit for the unmotivated age group was similar at 3.9. At the same time, the motivated and unmotivated age groups may perceive the importance of a few other benefits/barriers significantly different from each other. Accordingly, those benefits/barriers might be considered as determinative for the homeowners in those groups to implement ER.

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Table 2. Comparison of perceptions of motivated and unmotivated homeowners on the benefits and barriers associated with ER Compared groups a

Age

Education N M

N

M

95

4

44

14 3

3. 9 3. 9 3. 8

14 9

Occupation N M

Annual household income b* c* N M N M

Children in household

13 2

11 9 28 6 11 8 28 5 11 8 27 8 11 8 28 1 11 8 27 8 11 9 28 0 11 3 25 4 11 9 27 8

N

Benefits/ M

Motivated Unmotivate d

Minimizing maintenance/ 3.6

Motivated Unmotivate d

Preserving environment/ 3.3

Motivated Unmotivate d

Aesthetics improvement/ 3.2

Motivated Unmotivate d

Adopting modern systems/ 2.3

Motivated Unmotivate d

Barriers/ M

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Complication of process/ 3.3

Motivated Unmotivate d

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High investment cost/ 3.9

Time consumption/ 3.3

94

4

42

13 5

14 8

13 6

3. 4 3. 7 3. 5 3. 3 3. 4 3. 5 2. 8 2. 4 2. 2 2. 5 1. 4

93

4

37

13 1

3. 9 3. 5 3. 3 3. 3

14 7

95 13 9 95 13 6 95 13 5 90 12 3 95

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Extending living space/ 1.8

Motivated Unmotivate d Motivated

14 8

44 14 6 43 14 4 41 14 8

92 13 0 92

38 13 6 43 14 6

3. 9 3. 9 3. 5 3. 5 3. 3

22 3 14 3 22 2 13 9 21 7

37 14 5 35

4. 1 3. 9 3. 9 3. 8 3. 9 3. 4 3. 8 3. 4 3. 3 3. 4 3. 5 2. 8 2. 4 2. 2 2. 1 1. 5

55 13 4

4. 1 3. 8 4

13 2 61 13 4

4. 1 3. 8 4

Past experience N M

4.0

36

3.9

113

4.1

12 6

3.9

4.0

41

4

313

3.9

30

4

59

4

3.9

36

4.1

114

4

12 7

4

362

3.8

3.8

43

3.7

310

3.8

30

3.9

59

4

3.7

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Motivated Unmotivate d

IE improvement/ 3.7

14 3

45

22 6 15 5 22 4 15 5 22 5 14 9 22 5 15 0 22 4 14 7 22 4 14 7 21 2 13 4 22 6 14 7

M

Motivated Unmotivate d

Increase in property value/ 3.8

94

3. 9 4. 2 3. 7 3. 8 3. 7 3. 5 3. 7 3. 4 3. 5 3. 6 3. 2 3. 1 2. 3 2. 3 2. 2 1. 5

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Motivated Unmotivate d

Energy cost reduction/ 4.0

M

Tenure period N M

4 3. 8 3. 5 3. 2 3. 3

55 13 1 55 13 0 55 12 8 55 13 2 54 12 1 50 12 8 55 13 0 53 12 7 54 12 5

3. 7 3. 7 3. 6 3. 6 3. 7 3. 4 3. 3 3. 4 3. 3 2. 4 2. 5 1. 9 2. 2 4 3. 9 3. 4 3. 4 3. 3

12 1

3. 6 3. 7 3. 5 3. 6 3. 5 3. 4 3. 4 3. 4 2. 8 2. 4

51

2

12 8

1. 9 1. 5

59 13 1 56 13 0 58 12 8 58 13 2 55

57 13 0

4

52

4

12 7

3. 4 3. 3 3. 3

50 12 5

11 5 27 3 11 4 27 1 11 3

Age of house N M

Intention to sell the house N M 364

3.9

4.0

36

3.8

110

4

12 5

357

3.7

3.6

39

3.5

307

3.6

27

3.7

58

3.7

3.8

35

3.6

112

3.6

12 4

3.9

360

3.6

3.6

41

3.7

308

3.6

30

3.7

56

3.6

3.3

357

3.3

3.2

36

3.2

111

3.3

12 5

3.4

39

3.5

303

3.3

30

3.2

56

3.2

3.5

36

3.6

110

3.4

12 2

3.6

360

3.2

3.1

38

2.8

306

3.1

30

3.2

55

3.4

2.9

2.4

32

2.2

104

2.4

11 2

328

2.3

2.3

33

2.4

279

2.3

27

2.4

55

2.3

2.4

36

2.4

111

1.9

12 4

2.1

358

1.8

1.6

39

1.5

305

1.8

30

1.8

56

2

4.0

35

4.1

110

4.1

12 3

3.8

349

4

3.9

33

3.8

296

3.9

29

3.8

57

3.9

3.5

35

3.5

110

3.4

12 1

3.1

348

3.4

3.4

34

3.6

295

3.4

29

3.4

57

3.2

3.4

11 6

3

339

3.3

3.3

34

3

105

Uncertainties on cost savings/ 3.1

Inconveniences to routine life/ 2.9

Difficulty of getting low interest loan/ 2.9

Difficulty in finding reliable information sources/ 2.8

Motivated Unmotivate d Motivated Unmotivate d Motivated Unmotivate d Motivated Unmotivate d Motivated Unmotivate d

Low cost-effectiveness/ 2.8

12 4

14 3

13 1

3. 4 3. 1 3. 2

93

3

37

13 0

2. 9 2. 8 3. 2 2. 7

14 5

93

90 12 8 91 12 8 91 13 4

3 2. 8 2. 9

38 14 6

37 14 5 36 14 3 38 14 3

3. 6 3. 1 3. 3 3. 2 3. 1 2. 9 3. 5 2. 8 3. 3 2. 9 3. 1

13 8 22 3 14 0 22 3 14 0 22 0 14 0 22 1 13 8 21 9 14 3

3. 3 3. 1 3. 2 3. 1 2. 8 2. 9 3. 1 2. 8

53 13 0 54 12 8 54 12 8

3. 2 3. 2 3. 3 2. 9 3. 1 3

51 13 0 51 12 8 50 12 8

2. 5

51

3

12 7

3. 5 3. 2 3. 2 2. 9 2. 9 3 3. 6

26 4 11 5 27 2 11 5 27 1 11 3 27 0 11 2 26 9 11 3 27 3

3.3 3.1

32 35

54 12 7

3

54

2. 8 2. 8

12 9

2. 7 2. 9

53

3

51 12 9 53

3

2. 9 2. 9 2. 6

3.7 3.1

290 111

3.3

29

3.4

55

3.1

3.1

12 3

2.9

347

3.2

3.1

57

3

348

3

3.2

35

3.6

296

3.2

29

3.1

35

2.8

110

2.7

12 1

3

2.9

33

3.1

295

3

29

2.9

57

2.7

2.9

34

2.9

110

3

11 9

2.5

345

3

3.3

292

3

29

2.8

57

2.9

AN US

Unmotivate d

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ACCEPTED MANUSCRIPT

3.0

32

2.7

35

2.8

110

2.9

11 8

2.7

341

2.9

3.0

31

3

289

2.9

29

2.8

58

3

2.7

12 3

2.6

347

2.8

2.8

29

2.8

57

2.8

2.9 2.8

35 36

2.7 2.9

107 297

AC

CE

PT

ED

M

Significant results of Mann-Whitney U tests are highlighted. N refers to the number of responses in a group and M refers to the mean value of responses for the respective group. a The motivated and unmotivated groups related to ER for each influential factor are chosen from Table 1. b* The column refers to the analysis to compare income groups “500750 k SEK” and “>900 k SEK”. c* The column refers to the analysis to compare income groups “500-750 k SEK” and “<350 k SEK”

ACCEPTED MANUSCRIPT 5.2.1 Determinative benefits and barriers that drive decisions to implement ER for motivated and unmotivated “demographic groups” Homeowners’ age

AN US

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The analysis in this section showed that there were significant differences in the perceptions of motivated age group (18-45 yr) and unmotivated age group (>65 yr) on several benefits and barriers related to renovation. The motivated age group perceived IE improvement, aesthetics improvement, adopting modern systems and extending living space in their houses significantly more important as compared to unmotivated groups. The mean values of 7 out of 8 investigated benefits were higher for the motivated age group as compared to the unmotivated group. This shows that the homeowners who were 18-45 years old perceive more benefits in renovation, therefore, have more reasons and motives to implement it. Additional analysis (not shown in the table) of the benefits for other age groups suggested that the importance of IE improvement, aesthetic improvement, and extending living space decreases with increase in age. The analysis on barriers showed that the mean values for 5 out of 8 investigated barriers were higher for the unmotivated group as compared to the motivated group. The age groups who were more motivated to implement ER (18-45 yr) were significantly less likely to perceive finding reliable information a barrier to implement renovation compared to unmotivated group (>65 yr). Additional analysis for other age groups showed that finding reliable information becomes more difficult with the increase in age. Education

PT

Occupation

ED

M

The motivated group related to education were those who have higher education (studied equal or more than 3 years in university) and the unmotivated group were those with low education (up to secondary school). The mean value of 6 out of 8 benefits were higher for the motivated group compared to the unmotivated group and the difference for “extending the living space” were significant. Analysis of barriers showed that in 7 out of the 8 barriers, the mean value for the unmotivated group is similar or higher than that of the motivated group while two of them were significant. The group with higher education perceived getting a low-interest bank loan and finding reliable information significantly less difficult compared to the low educated group. This suggests that higher education is likely to affect the homeowners to envision some of the barriers of renovation (access to funding and reliable information) as less severe, therefore being more driven to implement ER.

AC

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The significant groups related to occupation were those who had full-time employment (motivated group) and those unmotivated were pensioners. The mean values of 7 out of 8 benefits were higher for the motivated group as compared to the unmotivated group while the differences in 5 of them were significant which may be considered determinative for ER decision. They included IE improvement, minimizing maintenance, aesthetics improvement, adopting modern systems and extending living space. Majority of the pensioners were in the high age category and their perceptions of benefits were mostly identical to the homeowners above 65 years old. Only two of the barriers were perceived less severe by the motivated group while the difficulty of getting a low-interest loan was the one, which was significant. In contrast, time consumption and inconvenience to routine life were considered significantly less important barriers for pensioners. The results can be explained by considering the income level of different occupation groups. It may be relatively easier for those who have a full-time job to raise the financial resources for ER while the pensioners have more time and more flexible lifestyle to implement ER. Although the perceptions of the motivated group show that they face more barriers as compared to the unmotivated group, it seems the several benefits that they perceive for ER could outplay the barriers and lead them towards ER implementation.

ACCEPTED MANUSCRIPT Household annual income

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For the annual household income, there were two unmotivated groups (low-income group earning less than 350,000 SEK and high-income group more than 900,000 SEK per year) and one motivated group (middle income of 500,000-750,000 SEK per year). Accordingly, the analyses for household annual income were performed separately to compare the motivated group with the two unmotivated groups. Comparison of perceptions between average income group and high-income group showed that the average income group perceived energy cost reduction significantly more important than the high-income group. The high-income group perceived availing low-interest bank loan and reliable information sources less important barrier than the middle-income group. The reason might be the higher income group with their better financial position could better negotiate with the banks to get lower interest rate and may be more willing to access relatively expensive sources of information (for example, from consultants). The low-income group (unmotivated), as compared to the middle-income group (motivated), perceived the benefits of ER to be less important while they considered barriers to be relatively more severe to implement renovation. The mean values for all the benefits were higher for the motivated group as compared to the unmotivated group. The difference in the mean values of two of the benefits, aesthetics improvement and extending living space, were significant. A similar analysis of barriers showed that the average income group as compared to the low-income group perceived availing low-interest bank loan to be significantly less difficult. Comparison of these two groups showed that the middle-income group perceives more benefits and fewer barriers for renovation compared to the low-income group, therefore being significantly more motivated to implement ER. Children in the household

AC

CE

PT

ED

M

The homeowners who had a child or several children (below 18 years old) living with them were found to be more likely to implement ER (motivated group) than those who did not have any children in their household (unmotivated group). Five of the benefits had higher mean values for the motivated group compared to the unmotivated group. The difference for three of these benefits, IE improvement, aesthetics improvement and extending living space, were found to be significant. Analysis of barriers showed that the motivated group perceived finding reliable information sources to be significantly less difficult compared to the unmotivated group. The results of the analysis resembled, largely, the analysis on the age of homeowners. Further investigation showed approximately 70% of homeowners who had children living in their houses were in the age group of 18-45 years old. About 50% of the homeowners who did not have children in their household belonged to the age group above 65 years old. Children in the household change the construct of household, creates new needs and limitations and generates a condition that affects the perceptions of homeowners on benefits and barriers of renovation. For example, parents may consider improvement in the ventilation of the house to be more important due to concerns about their children’s health.

5.2.2 Determinative benefits and barriers that drive the decisions for motivated and unmotivated ‘house-related’ groups Tenure period The homeowner’s duration of living in their houses was found to influence their decision on whether to implement ER or not. Those who had moved to their houses recently (less than 3 years ago) were more likely to implement ER and those who were living in their house for a longer period (> 40 years) were less likely to implement ER. The statistical analysis to compare their perceptions towards benefits and barriers revealed that the motivated group (those who

ACCEPTED MANUSCRIPT moved in less than 3 years ago) were significantly more likely to perceive aesthetics improvement and extending living space to be important. A similar analysis of the barriers showed that the motivated group were less likely to perceive the renovation process to be complicated. The homeowners who bought the house recently are easy to identify, as their contact details could be easily available, via registration centres (such as Inskrivningsmyndiget in Sweden). It may be useful to pro-actively provide the information on ER to this group through existing policy instruments (for example, energy advisers). The study suggests that the majority who recently moved to a single-family house belong to the younger age group (18-45 years). The information for this group need to be communicated considering the information sources they often rely upon or perceive important.

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Previous experience in the adoption of EEMs

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The homeowners’ previous experience in the last 3 years to adopt one or more EEMs was found to influence their decision to implement ER. The investigations on their perceptions of benefits and barriers showed homeowners with such experience were significantly more likely to perceive IE improvement important when they implement renovation. This group were also significantly less likely to perceive inconvenience to routine life a severe problem as compared to the group with no experience. Considering most of the EEMs directly improve the IE, this perception of the homeowners may be attributed to their experience with the EEM(s) that have created an interest to improve the IE further. Moreover, the results suggest that it may be easier for homeowners with previous experience to cope with the complications in decision-making and implementation of ER compared to those without experience. These findings may be in line with the foot-in-the-door strategy wherein the compliance would be higher for a large project (ER) if the homeowners have previously implemented a smaller project (EEM) [41].

M

Age of the house

CE

PT

ED

As presented in Table 1, the homeowners whose houses were built 41 to 55 years ago were more likely to implement ER and those who lived in “newer” houses built in last 25 years were less likely to do so. Comparing the perceptions of these two groups on the benefits and barriers of ER, it can infer there is a significant difference in how they perceive the importance of adopting modern systems in their houses. It was more important for homeowners living in older houses to modernize their houses. Moreover, those living in newer houses perceived the process of renovation significantly more complicated as compared to those who live in houses built 41 to 55 years ago. Intention to sell the house

AC

The homeowners who intended to sell their houses in next 3 years (unmotivated group) were significantly less likely to implement ER as compared to those who did not have such intention (motivated group). However, no significant difference was found between these two group’s perceived benefits and barriers on ER. One explanation could be the homeowners who intend to sell their houses consider that they will not avail the benefits for a long time as they would move out soon after they implement ER. The benefits such as improvement in IE and reduction in energy cost become irrelevant for this group despite they perceive such benefits to be important motivators for implementation of ER.

5.3 General remarks The homeowners are more likely to implement ER for reasons other than economic benefits of ER such as energy use reduction and increase in property value. Improving the indoor environment that promotes health and comfort is found to be a significant driver for the

ACCEPTED MANUSCRIPT homeowners in several motivated groups. This result is verified in a previous study by GramHanssen [42] that states the homeowners often implement ER to improve their lifestyle. Preserving the environment was also found to be similarly perceived among motivated and unmotivated groups suggesting not be a determinative barrier for implementation of ER. Financial objectives and climate protection are found not to be effective motivators for ER although these are often the focus of ER policies [43]. Among different investigated barriers, the difficulty of finding a low-interest loan and reliable information sources are found to widely impede the intention to implement ER among different groups.

6

Policy implications

M

AN US

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The homeowners are not a homogenous group and they do not benefit equally from implementing ER. Some of the benefits and barriers might be widely considered important among the homeowners but are not determinative criteria for the homeowners to implement renovation. For example, the majority of homeowners consider energy cost reduction as an important benefit, however, this benefit is mostly equally important for both motivated and unmotivated groups. In other words, it is less likely that homeowners base their decision to implement ER solely on reducing energy cost but possibly consider it as an extraneous (or secondary) benefit that they can achieve by the renovation. On the other hand, aesthetics improvement and extending living space were found to be determinative drivers for several motivated groups of homeowners to undertake ER. This result was similar to that reported in [44] where the authors mention that improving the appearance could be a strong driver for renovation. However, aesthetics improvement and extending the living space may not lead to energy efficiency if they are considered the sole motivations for renovation. These two, in combination with other motivating benefits, can facilitate to initiate an ER. This is supported by previous research as the adoption of EEMs are more likely in the neighbourhoods that undergo larger remodelling projects [44]. Moreover, the product and service providers should pay more attention to aesthetical aspects of the EEMs to make them appealing to motivate the homeowners towards their adoption.

PT

ED

Improvement in IE is another determinative benefit and the results show statistically significant relations for several groups of homeowners suggesting the role IE can play to motivate the homeowners to implement ER. A study in Denmark suggests that the policy initiatives aiming to improve energy efficiency in buildings do not actively promote benefits such as comfort and health [43]. It may be advantageous to highlight the IE benefits when communicating the benefits of ER. For example, the informative policy instruments such as local energy advising in Sweden can raise awareness and promote such benefits related to ER.

AC

CE

EPC is a policy instrument that promotes ER as an investment by enabling the comparison of buildings and influencing their market value based on their energy performance. It is shown in previous studies that the market value of houses are affected by EPC [45,46]. Nevertheless, the results presented in Table 2 shows that the examined motivated groups of homeowners did not consider the increase in property value as a determinative benefit for their decision to implement ER. Even the homeowners who intend to sell their houses did not perceive an increase in property value by renovation to be more important as compared to those who do not have such intention. The results suggest that EPC as a policy instrument might have a minor effect to drive homeowners’ decision to implement ER despite its seemingly effect on the increase in market value suggested by [45,46]. This is verified in another study that states homeowners rarely try to improve the results of EPC after receiving it [47]. Moreover, the focus on economic aspects of renovation and viewing ER as an investment might have the risk of hindering ER since the homeowners might compare it with more profitable investments. EPC can be supplemented by providing information on IE qualities of a house and recommendations to improve such aspects. This can also engage the homeowners with EPC to consider its recommended list of measures and change the view of EPC as a bureaucratic procedure [47].EPC is required when homeowners intend to sell their houses while this group are still unmotivated to implement ER to increase the

ACCEPTED MANUSCRIPT market value of their house. Instead, EPC can be leveraged by the buyers who newly move into their house by transforming into a long-term road map for ER that takes into account the homeowners’ needs and interests.

CR IP T

The homeowners who intend to sell their houses, due to regulatory requirements, are more likely to have EPC for their house. However, this group is found to be relatively unmotivated to implement ER and their perception of the importance of the increase in market value by renovation is quite similar to the rest of the homeowners. Motivating this group remains a challenge, as none of the benefits investigated in this study are motivating enough for them to implement ER. Regulatory policies that require efficiency improvement for houses below a certain efficiency level before being sold may be one strategy. However, the target for such a policy should not be too high otherwise might hinder small renovations [48]. As Weiss et al. [49] suggested, the necessity to increase the regulations in this area comes with the challenges to set the right energy level for ER and to avoid the creation of social imbalance.

ED

M

AN US

Similar to the benefits, some barriers are widely considered important among the majority of the homeowners while there were no significant differences found on the perceptions of motivated and unmotivated groups about them. This suggests that these barriers were not determinative to the decision-making for the motivated groups as compared to unmotivated groups despite the overall difficulties they cause for the implementation of ER. Such barriers include high investment cost, uncertainties on cost saving and low cost-effectiveness of ER. On the other hand, difficulties associated with getting a low-interest loan and finding reliable information were perceived significantly different among the motivated and unmotivated groups of homeowners. Accordingly, these barriers could influence the decisions of homeowners to implement ER. Policy interventions such as providing credible targeted information that is easily accessible may facilitate homeowners’ decision on energy renovation. Local energy advising in Sweden is found to have limited effect on homeowners to implement ER [50]. One explanation could be that the energy advising is standardized without considering the differences between the house and its inhabitants. As it was shown by the analysis, different groups of homeowners can have significantly different perceptions of the benefits and barriers of ER. The information interventions should be designed to reach the homeowners with tailormade information and strategies to be successful to motivate diversified households with different characteristics.

AC

CE

PT

The results show that younger homeowners, below 45 years old are more likely to implement ER. With the high rate of internet use among this target group, the policy measures should be directed to make use of the internet in order to facilitate access to information. The study findings show complication of renovation process is a determinative barrier for some groups of homeowners. Developing credible online tools for renovation based on the one-stop-shop concept can make access to information easy and address the perceived complexity of the renovation process. The online tools can support homeowners’ decision-making by providing information related to every step of renovation and connect the homeowners to the verified building professionals. Such tools can be merged with other policy instruments such as local energy advising in Sweden to also provide face-to-face local support to improve their effectiveness. The difficulty of getting a low-interest bank loan was found to be a determinative barrier for groups such as those with low household income. This suggests that financial constraints remain a major barrier for different groups of homeowners to implement ER. Policy intervention for financial support in the form of subsidies and loans with affordable repayment terms may facilitate ER among these households. Furthermore, information that promotes ER may also consider highlighting the existing financial supports.

ACCEPTED MANUSCRIPT 7

Conclusions

CR IP T

This study contextualizes the implementation of ER into a concept from a social marketing campaign to investigate how homeowners’ intention to undertake ER can be inspired by their perceptions on benefits and barriers. The analysis links the influential factors on ER (age, tenure period, etc.) to the expected consequences that are benefits and barriers of ER. The demographic and ‘house-related’ factors are used to distinguish different groups of homeowners. These groups are differently driven to undertake ER as their perceptions on the benefits and barriers differ from each other. Implementation of ER can be motivated or impeded by combination of benefits and barriers. Some of the benefits that homeowners are interested may not directly be energy-related although can eventually lead to energy savings in a renovation. The homeowners might be widely interested in some benefits such as reducing energy cost or increasing property-value; nevertheless, these benefits may be considered extraneous and not determinative drivers for the homeowners to base their decisions. The policy instruments might be inadequate to motivate the homeowners unless they take into account the specific needs and interests of homeowners.

M

AN US

The analysis is based on the self-reported intention to undertake the renovation. A future study can cross-verify the findings by focusing on the homeowners who have actually undertaken ER to find out which combinations of demographic and ‘house-related’ factors have a higher probability to lead to ER implementation. Some specific benefits and barriers perceived by a few niche groups, such as those who intend to sell their houses, are driven by specific needs are not investigated in this study. A study on the general population may not be able to reveal the specific motivation and barriers of those groups. Accordingly, a future qualitative study may be required to focus on such groups to further investigate their perspectives. The study findings verify the hypothesis that different groups of homeowners can have significantly different perceptions of the benefits and barriers of ER. The policy schemes should be designed to be consistent with the interests and needs of specific groups of homeowners they aim to deal with, as one size often does not fit all.

Acknowledgement

ED

This study has been carried out as part of the project supported by Botnia-Atlantic programme titled “Renovation Centre”. The programme is funded by the European Regional Development Fund.

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