Exploring transaction costs in passive house-oriented retrofitting

In order to tap the energy saving and climate mitigation potential of buildings, transaction costs of implementing energy efficient technologies need to be better understood and ultimately reduced. The objective of this paper is to identify and analyze the nature and scale of transaction costs resulting from the application of the passive house concept in energy efficient renovations. Related conceptual choices are also discussed. This study explores learning strategies as a potential to reduce transaction costs. It focuses on transaction costs borne by building owners and building developers in the planning and implementation phases of a passive house-oriented renovation in Sweden. Results reveal three main sources of transaction costs: due diligence, negotiations and monitoring. The analysis shows that transaction costs are non-negligible and for individual cost sources the scale can be three times higher than for conventional renovations. To reduce transaction costs, various learning strategies such as study visits, demonstration projects, new forms of meetings and new channels of (written) information were found. These strategies have the potential to half transaction costs of future renovation projects.