Energy Poverty in Extreme Climates: Thermal Retrofitting as an Alternative to Gas Subsidies in Punta Arenas, Chile

In the extreme climate of Punta Arenas, in southern Chile, Energy Poverty (EP) has been historically addressed via a gas subsidy for heating and a discount considering the dwelling’s value, reducing the price paid by the homes by around 70% compared to the national average, albeit without intervention measures for the low thermal performance of the housing stock built before 2000. This study sought to evaluate the technical, economic, and fiscal feasibility of replacing consumption subsidies with thermal retrofitting. A representative standard dwelling (V4, 114 m2) was modeled using dynamic simulation in DesignBuilder/EnergyPlus and calibrated against monthly gas consumption (July 2024–June 2025) using normalized mean bias error (NMBE) and the coefficient of variation in the root-mean-square error (CV(RMSE)) according to ASHRAE Guideline 14. The baseline and retrofitted scenarios were compared and extrapolated to the pre-2000 stock of 38,605 homes at coverage levels of 0%, 20%, 50%, and 80%. In the standard dwelling, the annual consumption decreased from 5181.5 to 702.5 m3/year (49,224 to 6674 kWh/year), a decrease of 86.4%. On an overall scale, aggregate consumption fell from 1820 GWh/year (0%) to 1562, 1090, and 608 GWh/year at 20%, 50%, and 80% coverage, respectively. With an investment of US$25,289.00 and annual fiscal savings of US$6458.54, the net present value is US$49,470.36, and the benefit/cost ratio is 2.96 over 20 years (6% discount rate), indicating that investment in the housing stock’s performance consistently reduces vulnerability and fiscal pressure.