Investment Decisions under the revised Energy Performance of Buildings Directive

Abstract

The revised Energy Performance of Buildings Directive (EPBD) strengthens the regulatory
framework for improving the energy performance of the existing building stock in the European
Union. In Sweden, the implementation of the directive is particularly relevant for residential buildings
with low energy performance, especially buildings in energy classes F and G. This thesis examines
how the revised EPBD influences investment decisions among Swedish real estate companies when
renovating low-performing residential buildings. It also analyses which energy efficiency measures
appear most relevant in a Swedish context and whether there are identifiable thresholds where further
measures are perceived as less cost-effective.

The study applies a qualitative research design based on document and policy analysis combined with
semi-structured interviews. The document analysis examines the regulatory framework,
implementation mechanisms and policy context of the revised EPBD, while the interview study
captures strategic perspectives from Swedish real estate companies and actors involved in national
implementation. The analysis is supported by theoretical perspectives on the energy-efficiency gap,
principal-agent problems, investment under regulatory uncertainty and institutional pressures.

The findings show that the revised EPBD increases the strategic importance of low-performing
residential buildings but does not fundamentally replace existing investment logics. Real estate
companies continue to evaluate energy efficiency measures through established financial criteria,
including return requirements, payback periods, financing conditions and coordination with planned
maintenance. Regulatory uncertainty also affects investment timing, encouraging caution, staged
planning and delayed commitments before larger irreversible measures are undertaken. Measures
perceived as most relevant include operational optimisation, ventilation improvements, heat recovery
systems and, where technically and economically justified, roof and facade measures. However, their
relevance depends strongly on building-specific conditions, renovation cycles and practical feasibility.

The study concludes that the EPBD may strengthen the role of energy performance in portfolio-
level planning and increase attention to buildings in energy classes F and G. However, its practical
impact is constrained by economic, technical and strategic thresholds. The directive therefore acts
primarily as a reinforcing regulatory pressure rather than as a complete transformation of investment
decision-making in the Swedish residential real estate sector.

Popular Abstract

New EU energy requirements put pressure on the renovation of Sweden’s least energy-efficient homes

Sweden’s least energy-efficient homes are in focus as the EU tightens its energy requirements. The study shows that pressure on real estate companies is increasing, but that profitability and regulatory
uncertainty still shapes their strategies.

The new, revised EU energy directive, the Energy Performance of Buildings Directive (EPBD), places a greater focus on Sweden’s least energy-efficient homes. The study shows that the directive makes these properties more important in real estate companies’long-term planning, but that it does not automatically lead to more or larger renovations. In practice, decisions are still shaped by costs, financing, the condition of the building and uncertainty about how the rules will be applied in Sweden.

This matters because buildings use a large amount of energy. Reducing energy use requires improvements not only in new buildings, but also in the existing housing stock. For this reason, the EU’s new requirements pay particular attention to the homes with the weakest energy performance.
These buildings may play an important role in determining how quickly energy use in the residential sector can be reduced.

The thesis examines how Swedish real estate companies are affected by the revised EPBD when planning investments in energy efficiency improvements. The focus is on less energy-efficient properties. But it also analyses which measures real estate companies consider most relevant and where they perceive the limit to be when additional energy efficiency measures become too difficult or too costly to implement.
The results show that real estate companies mainly prioritise measures that can have an effect without requiring major interventions. This may involve improving the control and operation of existing systems, upgrading ventilation, or recovering heat that would otherwise be lost. Larger measures, such as improvements to roofs and facades, may also become important. However, these are mainly carried out when the building's condition warrants a larger renovation and when the work can be coordinated with already planned maintenance. An important observation is that the homes most clearly targeted
by the new energy requirements are often also the most difficult to improve in a reasonable way. They may have the greatest need for action, while also being technically complicated or economically difficult to renovate. This creates a clear tension between political goals and the practical reality facing real estate companies. The rules point in a clear direction, but each investment must still work in real buildings, with limited budgets and uncertain future requirements.

The study shows that energy requirements have the greatest impact when they can be linked to real estate companies’ long-term renovation planning, financing and practical conditions. The results may therefore be useful both for real estate companies planning their housing portfolios and for decision-makers designing regulations, support schemes and policy instruments. The thesis is based on an analysis of policy and regulatory documents, as well as interviews with Swedish real estate actors and representatives from public authorities.

• author: Åkesson, Fredrik and Arvidsson Bergving, Oscar
• supervisor: Joakim Haraldsson
• organization: Environmental and Energy Systems Studies
• alternative title: Investeringsbeslut under det reviderade direktivet om byggnaders energiprestanda
• course: FMIM01 20261
• year: 2026
• type: H3 - Professional qualifications (4 Years - )
• subject: Technology and Engineering
• keywords: Energy Performance of Buildings Directive, EPBD, energy efficiency, residential buildings, Swedish real estate companies, investment decisions, regulatory uncertainty, renovation strategy, Boverket.
• report number: LUTFD2/TFEM—26/5248--SE + 71
• ISSN: 1102-3651
• language: English
• id: 9230909
• date added to LUP: 2026-06-04 07:50:55
• date last changed: 2026-06-04 07:50:55