Modelling household barriers to retrofits and solar energy - Quantifying the hidden cost in the Norwegian energy transition

Long-term energy system models are widely used to support decision-making for policymakers and industry stakeholders. However, these models often assume households behave as techno-economic rational agents, which can lead to misleading insights for guiding the energy transition. This paper proposes a methodology on how household investment behaviour can be more accurately integrated into long-term energy system models, as well as analysing the value of overcoming barriers that prevents households from energy investments. The approach is demonstrated using a Norwegian energy system optimization model combined with data from a comprehensive survey of 2997 households. The analysis focuses on the adoption of retrofits and building-applied solar power towards 2050. The survey reveals that 85 % of the respondents face one or more barriers to implementing retrofits or PV. Results show that removing these barriers has significant monetary value for both the energy system and households, particularly in the case of retrofits. It is estimated that a socio-economic budget of up to 26 billion EURO could be allocated to overcome these barriers. Importantly, more than half of this budget would need to address non-financial barriers, highlighting the importance of broader policy measures beyond financial incentives. • Survey data informs household behaviour in energy system model. • Retrofits in households significantly benefit the low-carbon transition. • Both financial and non-financial barriers limit a cost-efficient transition. • Up to 85 % of the respondents have one or more barriers for implementation. • A socio-economic budget for retrofits and PV implementation is assessed.