1 INTRODUCTION Buildings are responsible for 40% of total energy consumption and 36% of CO 2 emissions in Europe (BPIE, 2011). In order to try to stop the increase of carbon emissions in the building sector, the EU Direc- tive EPBD (European Parliament, 2010) introduced the nearly Zero Energy Buildings concept (nZEB) and established its mandatory implementation for new buildings after the end of 2020. These buildings present very high energy performances with very low energy needs that are to be satisfied with renewable energy sources harvested on-site (BPIE, 2011). Besides the nZEB target, EPBD also requires that buildings are cost-effective during their life cycle and established a methodology for the cost-optimal calculations. The outcome of cost- optimal level shall include macroeconomic and financial calculations. The macroeconomic cal- culations take into account the carbon emissions costs, while the financial calculations only con- sider the investors costs (Diacon & Moring, 2013). Within this study, only the financial pers- pective is shown. Apart from the type of energy source, the achievement of the nZEB target in buildings usual- ly involves high levels of insulation, very efficient windows, good levels of air tightness and controlled ventilation (BPIE, 2011). There are some renewable energy sources that can be used in buildings such as photovoltaic, solar thermal, wind, hydroelectricity and biofuels (Pless & Torcellini, 2010). However, some of these solutions cannot be applied to every building. Existing buildings face several barriers when it comes to refurbishment and even more when the target is nZEB. This gets even more difficult when the building is part of social housing. In Europe, social and public housing pro- Cost optimality and nZEB target in the renovation of Portuguese building stock. Rainha Dona Leonor neighborhood case study Manuela Almeida University of Minho, Department of Civil Engineering, Guimarães, Portugal malmeida@civil.uminho.pt Ana Rodrigues University of Minho, Department of Civil Engineering, Guimarães, Portugal anarocha32846@yahoo.co.uk Marco Ferreira University of Minho, Department of Civil Engineering, Guimarães, Portugal marcoferreira@civil.uminho.pt ABSTRACT: Improving energy efficiency in existing buildings is a great challenge. These buildings have their own limitations related with their design, location and function. To study the possibilities of cost-effectively improve the thermal performance of these buildings and in- crease the chances of reaching the nearly zero energy (nZEB) target, one building of Rainha Dona Leonor neighborhood has been analyzed. The purpose of the study was to find the most cost-effective renovation solution for this case study and assess in what way this solution con- tributes to reaching the nZEB target. With this work it was possible to understand that the ener- gy performance of this kind of buildings can be firstly improved through renovation measures applied to the envelope but, above a certain level, changing the existing equipment and the energy source become more cost-effective. Chapter 1 - Nearly Zero Energy Buildings 35