Optimized step-by-step modernization of residential heating systems: a multi-period investment strategy for energy efficiency and cost reduction

Abstract

The modernization of residential heating systems is a critical step towards achieving energy efficiency, sustainability, and economic feasibility in the built environment. This study presents an optimized approach for selecting and implementing renovation actions in building heating systems in a step-by-step sequence, considering economic, environmental, and energy performance indicators. The proposed method enables efficient allocation of investment funds over time, ensuring maximum financial and energy savings while minimizing upfront costs. The methodology was applied to a case study of five buildings in Ukraine, where different renovation scenarios were analysed. The results demonstrate that scenario S3, which involves optimized multi-period investment planning, is more financially efficient than both lump-sum investment (scenario S1) and a non-optimized step-by-step approach (scenario S2). For individual buildings, S3 reduces investment costs by 186,000 EUR while extending the payback period by 0.2years, leading to an overall efficiency gain of 148,000 EUR. When applied to a group of buildings, S3 achieves higher cost savings of 330,000 EUR (20%) with a payback extension of 0.4years, yielding an efficiency gain of 234,000 EUR (14%) compared to S1. These findings underscore the advantages of coordinated group modernization over individual building renovations, emphasizing the importance of structured, staged investment strategies in optimizing resource allocation and maximizing economic returns in residential heating system upgrades.