Getting a building to net zero energy sounds great on paper - but what does it really take? The answer isn’t simple. Costs can vary a lot depending on the building’s age, size, and the systems already in place. While the upfront investment can be significant, it’s just one part of the equation. Long-term energy savings, comfort, and lower emissions all play a role in making the case for a retrofit. The key is understanding where the money goes and what you get back.
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Retrofitting for Net Zero: Why it Matters
In construction, retrofitting refers to the process of integrating modern technologies and features into existing, often historical, buildings to improve energy efficiency, sustainability, and climate resilience. This can range from relatively minor interventions, such as replacing conventional lighting with light-emitting diodes (LEDs), to deep retrofits involving advanced heating systems and comprehensive envelope upgrades.
The urgency behind retrofitting is clear. Global energy demand continues to rise, driven by population growth and higher living standards, increasing reliance on fossil fuels. Since the built environment is among the most energy-intensive sectors worldwide, net-zero energy buildings represent a critical solution for reducing both emissions and energy consumption.
Net-zero energy buildings represent a sustainable solution by reducing emissions and energy use in built environment/one of the world’s most energy-intensive sectors. While decarbonizing existing buildings is vital for meeting 2030 and 2050 climate targets, realizing this goal is difficult since 40 % of the floor area in developed economies was built before 1980/prior to modern thermal regulations.1-3
Achieving net-zero emissions by 2050 requires almost 20 % (or more) of existing buildings to be retrofitted to zero-carbon-ready standards by 2030. Yet, current annual deep renovation rates remain low, with most being shallow renovations.
Awareness and policy action are growing in this direction. The European Union’s recast Energy Performance of Buildings Directive aims to boost renovation rates, promote renewable energy use, and set definitions for zero-emission buildings. Complementary initiatives, such as the Renovation Wave and the Fit for 55 Program, aim to double renovation rates by 2030, focusing on the least efficient buildings and reducing energy poverty through the adoption of decarbonized heating and cooling systems.1-3
Retrofitting Approaches
Effective retrofitting depends on integrating energy efficiency and renewable energy technologies in ways that are both technically sound and cost-effective - whether at the level of individual buildings, clusters, or entire districts.
Older buildings tend to consume significantly more energy than newer ones, largely due to outdated mechanical systems and inefficient building envelopes. Elements like walls, roofs, and windows typically have long lifespans but are rarely upgraded once installed. In many cases, improving these components can lead to substantial reductions in carbon emissions, particularly in regions with extreme climates.2
A typical retrofit begins with passive improvements to the building envelope, such as insulation, airtightness, and glazing, to bring heating and cooling demands in line with current energy codes. Once the envelope is performing efficiently, additional systems can be layered in, such as high-efficiency HVAC, domestic hot water systems, and other mechanical upgrades. Any remaining energy demand can then be addressed through renewable sources, such as solar PV or heat pumps.
Comprehensive building renovation cuts energy use and emissions and also improves indoor comfort, reduces moisture-related issues, and lowers operational energy costs for households and businesses.2
Cost-Benefit Analysis
While the technical path to net zero is fairly well understood, the financial side is often more complex. How do the costs stack up against the benefits, both for individual owners and for society as a whole? And under what conditions do retrofits actually make sense?
Recent case studies from different parts of the world offer some insight. They explore not only the financial viability of deep retrofits, but also the social, logistical, and technical factors that influence success - or stall it.
A paper published in Energy Policy conducted a social cost-benefit analysis of a green retrofit project on a Victorian tenement in Glasgow, Scotland. The United Kingdom (UK)’s net zero goals and Scotland’s largely existing housing stock have made retrofitting critical for older buildings to reduce the built environment emissions.
The project aimed to meet the EnerPHit standard developed by the PassivHaus Institute, emphasizing a “fabric first” approach with major improvements in insulation, airtightness, and energy efficiency. This deep retrofit combined multiple upgrades simultaneously to cut heating and cooling demand. An orthodox cost-benefit analysis following the UK Government Treasury's guidelines was used in the study. Researchers modeled the households’ behavioral response through the rebound effect and displayed how this influences their findings.4
The work demonstrated that retrofitting provided greater social value than demolition and new construction, although the optimal investment level was highly dependent on underlying assumptions and local context. It confirmed that green retrofitting of pre-1919 housing was achievable, with the cost-benefit analysis showing it could be more advantageous than rebuilding. Yet, applying the results to other settings proved difficult due to economic, social, and technical variations.
Economically, high per-unit costs hindered large-scale investment, particularly for social landlords who had to balance multiple policy goals with affordability. Mixed ownership in tenements further complicated incentives for private owners and landlords to participate in retrofits. The work highlighted the need for integrated financing models, better coordination between renewable and “fabric first” improvements, and impartial local advisory “one-stop shops.”
Logistically, issues like resident decanting and transaction costs must be managed effectively. Technically, the diversity and condition of tenements limited scalability, though larger multi-block projects appeared more efficient. Slightly lower retrofit standards than EnerPHit could have achieved substantial decarbonization benefits at reduced costs.4
In another paper published in the Proceedings of the International Conference on Innovative Technologies for Clean and Sustainable Development (ICITCSD – 2021), researchers presented a case study of an institutional building in Chandigarh, India, that has been retrofitted as a Net Zero Energy Building (NZEB). A cost-benefit analysis and payback period assessment were performed to assess whether the benefits of retrofitting outweighed the implementation costs.
Building energy demand before and after retrofitting was simulated using eQUEST and validated against actual energy bills. Researchers recommended a 250 kWp rooftop grid-interactive solar photovoltaic system to meet the building’s energy demand post-retrofit. Simulation results showed annual energy reductions of 28.82 MWh, 191.87 MWh, and 90.46 MWh from envelope improvements, electrical appliance upgrades, and HVAC retrofitting, respectively. An encouraging 53.6 % reduction in annual energy demand was projected by deploying various energy efficiency measures.5
These examples show that retrofitting can pay off - but context matters. Costs, ownership, and building type all shape what’s possible. There’s no universal model, but with the right approach, it can be both practical and worthwhile.
New Developments
One of the tougher parts of retrofitting for net zero is knowing which upgrades will actually make the biggest impact and which ones are worth the cost. That’s where new tools, especially data-driven ones, are starting to help.
A recent study in the JJournal of Physics: Conference Series used a machine learning approach to find the most effective retrofit strategies. The researchers applied an optimization algorithm (NSGA-III) to balance energy savings with occupant comfort, then ranked the best options using a decision-making method designed to pick the closest match to an “ideal” outcome.
The Order of Preference by Similarity to Ideal Solution ranking method was applied to select the best retrofit strategy. Researchers analyzed various passive measures like enhanced insulation, alongside renewable energy retrofits to meet energy demands. It also considered the impact of climate change by evaluating different future scenarios.
The results indicated that achieving NZEB under future climate conditions requires higher levels of insulation and a greater reliance on renewable energy compared to current conditions. Specifically, in the sustainable future scenario, envelope insulation and renewable measures must be increased by 35 % and 50 %, respectively, compared to the fossil fuel-dependent future scenario, highlighting the importance of adaptive planning in NZEB retrofits.1
Net Zero is Doable, But Not Simple
Retrofitting buildings for net zero can also deliver real value. But the process is rarely straightforward. Costs vary, local context matters, and the impacts of climate change are already reshaping what “good enough” looks like.
What works is a mix of smart envelope upgrades, efficient systems, and renewable energy, supported by long-term thinking and adaptable planning. When done well, retrofitting cuts emissions, lowers energy bills, and makes buildings more comfortable to live and work in.
The challenge now is scaling it. And that means better policy, better tools, and more flexible funding to help make deep retrofits not just viable, but routine.
Looking to Learn More?
Here are a few related topics that are worth a closer look:
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References and Further Reading
- Ibrahim, M., Harkouss, F., Biwole, P., Fardoun, F., & Oultboukhtine, S. (2024). Building retrofitting towards net zero energy under climate change. Journal of Physics: Conference Series, 2857, 1, 012026. DOI: 10.1088/1742-6596/2857/1/012026, https://iopscience.iop.org/article/10.1088/1742-6596/2857/1/012026/meta
- Renovation of near 20% of existing building stock to zero-carbon-ready by 2030 is ambitious but necessary [Online] Available at https://www.iea.org/reports/renovation-of-near-20-of-existing-building-stock-to-zero-carbon-ready-by-2030-is-ambitious-but-necessary (Accessed on 03 November 2025)
- A guide to retrofitting (and how it could help us reach net zero) [Online] Available at https://www.ube.ac.uk/whats-happening/articles/what-is-retrofitting/ (Accessed on 03 November 2025)
- Higney, A., Gibb, K. (2024). Net zero retrofit of older tenement housing – The contribution of cost benefit analysis to wider evaluation of a demonstration project. Energy Policy, 191, 114181. DOI: 10.1016/j.enpol.2024.114181, https://www.sciencedirect.com/science/article/pii/S0301421524002015
- Punia, A., Sharma, S. K., & Syal, P. (2022). Cost Benefit Analysis of Retrofitting for Existing Building as Net Zero Energy Building: A Case Study in Composite Climate Zone. Proceedings of International Conference on Innovative Technologies for Clean and Sustainable Development (ICITCSD–2021), 615-625. DOI: 10.1007/978-3-030-93936-6_50, https://link.springer.com/chapter/10.1007/978-3-030-93936-6_50
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