Extreme heat risk in retrofit cost–benefit analysis: probabilistic evaluation of overheating mitigation for mild climates

Despite the Netherlands’ mild climate, heatwaves are becoming more frequent, and the use of mechanical cooling is rising, exposing the limitations of retrofit strategies designed primarily to reduce heating demand. While cost–benefit analysis (CBA) typically supports energy-efficient retrofits, it often overlooks rising cooling loads and the role of passive cooling measures. Consequently, stakeholders lack a long-term perspective on the financial implications of indoor overheating and the effectiveness of mitigation strategies under climate variability. This study proposes a probabilistic framework that integrates heat resilience into CBA by coupling building energy simulations with Monte Carlo risk aggregation to account for climate variability and extreme heat recurrence. The framework is demonstrated for a mid-century residential unit in Rotterdam over a 30-year historical reference period (1995–2024) by evaluating the Net Present Value of passive strategies (shading, high-albedo paint and their combination) and deep retrofit. The case study reveals a performance domain disparity, where passive measures reduce overheating intensity (53–59%) but yield only marginal cooling energy savings (2–6%). The study suggests that conventional CBA relying solely on energy savings underestimate the broader value of overheating mitigation, highlighting the need to consider thermal resilience and climate uncertainty in retrofit investment decisions.