Uncovering the price effect of energy performance certificate ratings when controlling for residential quality. (September 2022)

• Record Type: Journal Article
• Authors: Marmolejo-Duarte, Carlos; Chen, Ai
• Is Part Of: Renewable & sustainable energy reviews. Volume 166(2022)
• Publication Date: 2022-09
• Subjects: Energy performance certificates -- Hedonic prices -- Energy efficiency -- Residential buildings -- Barcelona; EPC energy performance certificates -- EU European Union -- CO2 carbon dioxide -- EPBD Energy Performance of Buildings Directive -- HPM hedonic price models -- COVID Coronavirus disease -- RD royal decree -- US United States -- PC principal component -- QQ qualitative quality -- KMO Kaiser-Meyer-Olkin -- St dev. standard deviation -- ANOVA analysis of variance -- CBD central business district -- SLM spatial lagged model -- SEM spatial error model -- LM Lagrange multiplier -- NBE-CT Norma Básica de la Edificación-Condiciones Térmicas (construction code) -- nZEB nearly zero energy building -- CAPEX capital expenditure; Renewable energy sources -- Periodicals; Power resources -- Periodicals; Énergies renouvelables -- Périodiques; Ressources énergétiques -- Périodiques; 333.794
• DOI: 10.1016/j.rser.2022.112662
• Languages: English
• ISSNs: 1364-0321

Abstract

Abstract: In the last decade, market-mediated financial incentives for energy-efficient construction drawn from information policy, including energy performance certificates (EPC), have been intensively researched. While hedonic-based research seems to confirm a positive correlation between residential prices and EPC ratings, opinion-based studies have found that these ratings have a negligible effect on price formation. This paper explores whether insufficient control of non-energy-related architectural attributes in hedonic specifications is responsible for such a divergence. To achieve this, a case-by-case quality assessment is performed for a sample of listed apartments in Barcelona. Then, architectural assessment is introduced as a control in the context of hedonic analysis. The results suggest that EPC ratings show a positive correlation with prices (1.8% price increase for each EPC increment) only when location, general architectural attributes, and basic quality attributes are controlled. Conversely, when architectural quality is thoroughly controlled, such a correlation disappears. However, EPC rating remains as a price driver (7.5% price increase for A/B/C ratings) for the upper tier of apartments in central and affluent zones. Such findings have relevant implications for developers and energy policy. Highlights: The concomitance of housing energy performance with its quality attributes is problematic. Strict control of housing quality attributes leads to a zero energy premium. Only upper-tier dwellings (A/B/C) in affluent districts receive a 7.5% energy premium.