Agent-based modelling of building retrofit adoption in neighbourhoods

Abstract

Despite the significant energy-saving potential of building retrofits, adoption rates remain low, highlighting a gap in understanding homeowners' decision-making processes. This study addresses the research question: How do techno-economic and socio-psychological decision-making rationales impact energy-efficient retrofitting adoption? To answer this, we develop an agent-based model (ABM) to simulate retrofit decisions, contrasting two approaches: a techno-economic model, which focuses on financial returns, and a socio-psychological model, which considers social influences and personal attitudes. The techno-economic model evaluates factors like technology lifetime and profitability, while the socio-psychological model applies the theory of planned behaviour (TPB), incorporating attitudes, perceived control, and social norms. Applied to the Dutch housing market, our ABM simulates retrofit adoption over 20 years, considering various policy scenarios, including a heat pump subsidy, insulation subsidy, and a ban on gas boilers starting in 2026. The model explores whether homeowners opt for heat pumps or continue using gas systems under different policy frameworks in a generic neighbourhood context, where social interactions and peer influence shape decisions. Our results show that the techno-economic decision-making framework projects higher adoption of heat pumps due to favourable net present values (NPVs) and financial incentives, while the socio-psychological rationale shows a preference for gas boilers, with financial incentives having limited impact. These findings suggest that while financial incentives are effective in driving economically motivated decisions, they may be insufficient when social and psychological factors dominate. This highlights the importance of policies that combine both economic and behavioural considerations to increase retrofit adoption and achieve meaningful energy savings.