Economic Evaluation of Building Insulation Strategies Using Net Present Value and Sensitivity Analysis
Abstract
This study investigates the cost-effectiveness of building insulation strategies using the Net Present Value (NPV) method with Sensitivity Analysis (SA). A residential building model was created in DesignBuilder to simulate annual energy demand for different insulation materials, including Rock Wool, EPS, XPS, Glass Wool, Aerated Concrete, and Polyurethane Foam, each tested at multiple thicknesses. The alternatives were evaluated according to TS 825 requirements for Türkiye's climatic zones. Economic performance was assessed over building lifespans of 10 to 30 years using constant nominal discount rates of 4%, 8%, 12%, and 15%. To reflect economic uncertainty, a dynamic discounting scenario was also applied, where rates increased annually from 4% to 22% over 5 and 10 year periods. Sensitivity analyses with ±20% variations in initial investment costs and discount rates were performed to test the robustness of NPV results. The findings show that insulation type, thickness, and evaluation period strongly affect cost performance. Earlier studies mainly used fixed discount rates, but this study also tested changing rates to reflect real economic conditions. This makes the results more realistic and useful for selecting insulation strategies that are both cost-effective and regulation compliant.
Keywords
Cost-effectiveness, energy efficiency, net present value, sensitivity analysis, building insulation material
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