Retrofits vs. New Builds: How Subsidies Are Shaping Central & Eastern Europe’s Insulation Demand
Updated: 3 hours ago
Summary:
CEE building renovation is driving insulation demand as governments address ageing buildings, high energy costs and EU energy-efficiency targets.
Government subsidies and EU funding support energy-efficient retrofits across Czechia, Poland, Slovakia and Romania.
EPS, XPS, mineral wool and PU/PIR insulation benefit from renovation of walls, roofs and floors.
Renovation-led insulation demand is expected to strengthen beyond 2030, while new construction remains uneven across Central and Eastern Europe (CEE).
Across Central and Eastern Europe (CEE), energy efficiency is becoming an increasingly important priority. High energy costs, ageing building stock and stricter EU energy performance requirements are encouraging governments and property owners to invest in renovation. While new construction will continue to support insulation demand, renovation is emerging as a more resilient driver, backed by subsidies and EU funding.
The Role of Subsidies
According to the European Commission, 85% of EU buildings were built before 2000, while 75% have poor energy performance. With the annual renovation rate around 1%, a substantial proportion of the existing stock presents an opportunity for energy‑efficiency upgrades.
Governments across the region are supporting renovation through grants and subsidised financing. Czechia’s New Green Savings programme supported around 500,000 beneficiaries and paid out CZK 117 billion between 2009 and 2024. Poland’s Clean Air Programme recorded more than 1.1 million applications by September 2026, while Slovakia’s Obnov dom had supported almost 14,000 homes with €210 million by mid‑2025. Meanwhile, Romania has allocated €2.9 billion under its Recovery and Resilience Plan for energy‑efficiency renovation and seismic consolidation.
These programmes help reduce upfront costs and encourage improvements to building envelopes, including walls, roofs and floors, alongside windows and heating systems. This supports demand for expanded polystyrene (EPS), mineral wool, extruded polystyrene (XPS) and polyurethane/polyisocyanurate (PU/PIR) insulation, depending on the application.
New Construction
New construction continues to generate insulation demand, although high construction and financing costs have affected activity in several CEE markets. In Czechia, 35,819 dwellings were started in 2025, down 2.2% year on year. Poland recorded 208,800 completed dwellings, up 4.3%; however, permits and registered construction projects declined by 8.8%, while housing starts fell by 9.2%, indicating a weaker pipeline for future construction.
Slovakia recorded around 14,300 completed dwellings in 2025, down 19% year on year, while construction starts totalled approximately 15,100. Romania completed 59,062 dwellings, a decline of 3.1%. Hungary also saw completions fall by 9.3% to 12,062 dwellings, although construction permits increased by around 37% to 28,081, pointing to potential recovery if these projects proceed.
Elsewhere, Croatia recorded 18,338 completed dwellings, compared with 16,654 in 2024, while Slovenia completed 5,087, down 2%. Slovenia’s building permits nevertheless increased by 2%.
These differences highlight the uneven outlook for new-build insulation demand across CEE. While completions reflect current construction activity, permits and housing starts provide an indication of future demand. The revised EU Energy Performance of Buildings Directive will also support the transition towards zero-emission buildings, with requirements applying to all new buildings from 2030, subject to the directive’s provisions. However, the impact on insulation demand will depend on construction volumes and the insulation requirements of individual projects.
Renovation Leading Insulation Demand
The growing importance of renovation in the Eastern European countries does not mean that new construction is becoming less relevant. Rather, it reflects the age of the existing building stock, stricter energy-efficiency requirements and government efforts to reduce the cost of renovation.
The revised EU Energy Performance of Buildings Directive reinforces this trend by requiring national building renovation plans.
Depending on the building and the measures implemented, deep retrofits can reduce household energy consumption by 40–50%, making them particularly valuable amid high energy prices and ongoing conflicts in Ukraine and the Middle East, which further strengthen the case for energy-efficiency improvements. Across CEE, renovation is therefore likely to remain an important and potentially more resilient driver of insulation demand over the forecast period. New construction will continue to contribute, particularly as energy performance standards become more demanding, but its contribution will vary with housing completions, investment conditions and the pipeline of new projects.
With renovation rates still below 1% annually, the scale of subsidy support suggests retrofits will dominate insulation demand beyond 2030. The market opportunity is shifting from construction volume towards building efficiency, with renovation set to account for an increasing share of insulation consumption.
Author: Sonal Rawat
Source: IAL Consultants
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