Rental and leasing contracts that include heating/cooling costs

Typically when a building is rented/ leased, heating and/ or cooling costs will be paid separately by the tenants. However, if such contracts were changed to include the heating or cooling costs there would be greater scope for the initial developer to recover any additional costs incurred during low energy construction or refurbishment by fixing the long term price for rent and utility bills. This is quite closely linked to contracts based on an 'energy guarantee' approach often implemented by ESCOs.

Example in Hannover

An example of a ‘rental model including heating' for a retrofitted building to passive house standard in Hannover is the project Edwin-Oppler-Weg 3. The refurbishment included redesigning the layout of the apartments, a new insulated facade, decentralised mechanical ventilation systems and heat pump heating systems in order to meet the standard. Tenants pay a fixed amount for the energy bills in addition to the normal apartment rent. This 'second rent' is higher than the actual cost of the heating energy but less than the energy bills would cost in a 'typical' dwelling; the increased rental income helps to compensate for the capital investment for the refurbishment (though this could apply equally well to new build). The concept ensures that the landlord/ investor benefits from ‘the sale of passive energy’ (i.e. Tenants effectively pay for energy they are not using). This helps to provide long term cost certainty for the financier. See article and case study.