Energy Efficiency in the EU Residential Sector: Integrating Multiple Benefits into Socioeconomic and Investment Decisions

¹ Institute for Systems Engineering and Computers at Coimbra (INESC Coimbra), University of Coimbra, Electrical and Computer Engineering Department (DEEC), Rua Sílvio Lima, Polo II, 3030-290, Coimbra, Portugal
² University of Coimbra, DEEC, Polo II, Rua Sílvio Lima, 3030-290, Coimbra, Portugal
³ Polytechnic University of Coimbra, Rua da Misericórdia, Lagar dos Cortiços, S. Martinho do Bispo, 3045-093 Coimbra, Portugal
⁴ University of Coimbra, CeBER, Faculty of Economics FEUC, Av. Dias da Silva 165, 3004-512, Coimbra, Portugal

^* Corresponding author: This email address is being protected from spambots. You need JavaScript enabled to view it.

Abstract

This study assesses the role of energy efficiency (EE) within the residential sector of the European Union (EU), highlighting the necessity of incorporating multiple benefits (MB) into policy frameworks and investment strategies. EE initiatives have focused narrowly on energy consumption and immediate cost savings; however, a broader perspective reveals substantial economic, environmental, and social benefits. Despite significant political backing and financial investments, many EE programs in the EU have underachieved due to persistent financial, institutional, social, and technical barriers, including high initial costs, fragmented governance, low stakeholder participation, and the undervaluation of long-term benefits. To overcome these barriers, this paper proposes an integrated strategy: incorporating MBs into comprehensive multi-criteria evaluations and cost-benefit analyses with appropriate discount rates; adopting innovative financing approaches such as Pay-As-You-Save, Pay-for-Performance, and Energy Performance Contracts; and implementing targeted financial support for vulnerable households. Additionally, social acceptance is addressed through community-oriented advisory services, streamlined one-stop-shops, and participatory governance models that build local trust and ownership. Strengthening institutional coherence via improved cross-sector coordination and simplified regulatory processes, alongside technical capacity-building through workforce training and accessible information, are identified as critical steps.