Fourth Learning Event, 10th of November 2022. Summary of presentations

Learning event on how to promote deep renovation in multi-apartment and public buildings - Possibilities for a standardized approach to energy efficiency financing

The EU Renovation Wave strategy and the revision of the Energy Performance of Buildings Directive

Ms Serena Pontoglio, European Commission, DG Energy

Key messages and learning

Ms Serena Pontoglio started her update describing the EU building stock. The overall situation is that from 24 billion m2 floor area, around 28 % non-residential and 75 % has poor energy performance. Unfortunately, only 11 % of existing buildings undergo some level of renovation each year and this number is very low in order to meet energy efficiency goals in the future. 85 % of existing EU dwellings were built before 2000, of which more than 85 % will still be in place in 2050. Since the building sector is one of the largest energy consumers in Europe, responsible for more than one third of the EU’s energy-related emissions it is important to maximize the renovation to see the effect. 

Regarding the European Green Deal there is an increased climate ambition with buildings and their renovation. The main key focuses are: 

  • Big energy consumers -40% of energy consumed
  • Very slow rate of renovation, exposing citizens and businesses to spikes in energy prices and to volatility
  • At the same time, many citizens struggle to keep their homes warm
  • Building renovation creates jobs, reduces green-house gas emission and improves quality of lives
  • Need to step up/double the rate energy renovations, to increase investments and make available dedicated financial instruments at large scale

In this regard, most relevant buildings-related documents are REPowerEU Communication, EU Save Energy Communication, Amendments to Renewable Energy, Energy Performance of Buildings and Energy Efficiency Directives and Regulation establishing the Recovery and Resilience Facility / Proposal for a Regulation on REPowerEU chapters in recovery and resilience plans / Guidance on recovery and resilience plans in the context of REPowerEU.

EPBD legislative proposal has following focus areas:

  • Renovation, that includes national Building Renovation Plans, minimum Energy Performance Standards, Energy Performance Certificates and renovation passports for individual buildings
  • Modernization and system integration with the emphasis on infrastructure for sustainable mobility, EPC digitalization and databases availability and smart readiness indicator
  • Decarbonization with zero-emission buildings approach as new standard for new buildings and 2050 vision for building stock, consideration of whole life cycle carbon, phasing out of incentives for fossil fuels and new legal basis for national bans
  • Financing of public and private projects with technical assistance, deep renovation standard, priority to vulnerable households and people affected by energy poverty

National building renovation plans main objectives are replacing and strengthening long-term renovation strategies, Comprehensive planning and implementation tool for building renovation. That includes overview of national building sector, as well as roadmap with nationally established targets for 2030, 2040, 2050. Another important aspect is review of implemented and planned policies and measures, investment needs, financing sources and measures and administrative resources. It is intended that plans are to be submitted every five years; first draft by 30 June 2024, then aligned with NECP cycle with later assessment and country-specific recommendations provided by the Commission.

Minimum energy performance standards requires minimum energy performance standards for example public and other non-residential buildings: at least EPC class F by 2027 & EPC class E by 2030 and residential buildings and at least EPC class F by 2030 & EPC class E by 2033. It is after each member states to set up timelines for further improvement of their building stock in their building renovation plans and supporting framework with a focus on financing and monitoring of social impact.

Additional notes
Finance for energy efficiency as seen from EU-funding landscape perspective 

  • Direct investments: Recovery and Resilience Facility (EEF), Cohesion Policy Funds (ERDF/CF), Just Transition Fund (JTF), ETS Revenues, Modernization Fund.
  • Leverage private capitals, project development assistance and advisory: InvestEU, ELENA Facility, Technical Support Instrument (TSI).
  • Market uptake, policy enhancement activities, technological development, research and innovation: Horizon Europe, Built4People Partnership, LIFE Clean Energy Transition, Innovation Fund.

Latvia

Examples and good practice at national level

Ms Karina Truhanova, Ministry of Economy of Latvia

Key messages and learning

Ms Truhanova presented the ministry’s position on decisiomaking process. The decision
making is the most important process before even renovation in multiapartment buildings. Mains aspects will be regarding the topic of the decision making, optimization and the concept of minority protection vote.

Renovation in Latvia cannot be carried out without the proper decision making from the apartment owners. During last 2 years there were important amendments made in regulations to make decision making process convenient and faster. In Latvia it is necessary to gather certain votes in favor in order to proceed with the process. In our case it is 50+1 vote needed. Moreover, it is common sometimes physically divided but legally combined buildings can make separate decisions. In addition, house owners can make a decision by the electronic tool – BIS (building information system).

The concept of minority protection vote prescribes that requirement regarding energy efficiency of buildings must reach at certain point the exact class, for example “B” and in that case there are more possibilities by law to proceed with the building renovation even if the majority if apartment owners are against it. In case there was not a needed majority of participants in the apartment owner’s meeting in this case by law it is allowed to call another meeting in a month. In that case the decision is made by the majority of those representatives who attended this meeting. The same applies for the surveys among apartment owners. This concept also exists in other countries, for example in Austria and Estonia and main idea to protect the minority rights for better living conditions against majority inaction.

Poland

Thermo-modernization Fund and other support instruments for building renovation in Poland

Mr Andrzej Rajkiewicz, National Energy Conservation Agency of Poland

Key messages and learning

Mr Rajkiewicz started with the overall description of the financial scheme and the main outcomes. That includes the perspective of reduction of heating cost covered by households by 30%-40%, improvement of technical standard of 50 000-100 000 buildings, reduction of energy intensity of budgetary sector (schools, hospital offices), increase of Energy security through saving of 7-14 million Mg of coal, reduction of green-house gases emission and other negative environmental impact creation of several dozen of thousands of work places and facilitation social acceptance for marketization of energy prices. Thermal refurbishment Fund that was presented for the period of 1988-2008 provided a 25% subsidy to the loan extended for owners of buildings (condominiums, co-operatives, private ones, public – municipally owned, special social purposes with not limited ownership) and for owners of local district heating systems up to 11,6 MW – for up to 80% of total cost of thermal refurbishment measures (now the bonus is 16% of total cost, by >50% financing by loan). The precondition is still to achieve at least 25% energy savings through measures to be financed, confirmed by the energy audit. Later with some adjustments the program had a special attention to old buildings owned mostly by condominiums, which are in bad technical condition, facilitation of financing through elimination of own equity requirement, thermal refurbishment will be implemented in 6 million m2 of residential multifamily buildings, renovation of buildings will be implemented during 2008-2012 respective of 150, 300, 900, 1400 and 1900 buildings, filling in the renovation gap estimated to 42 billion PLZ (approx. 10 billion €) and thermal refurbishment gap estimated to approx. 43 billion PLZ (approx. 10,2 billion €). The subsidy will be neutral for the budget in short term perspective, because of tax recovery. The next step of the program provided 16% subsidy+5% p.p. for PV, to the total cost of thermal refurbishment financed by >50% loan for owners of buildings (condominiums, co-operatives, private ones, public – municipally owned, special social purposes with not limited ownership). The precondition is to achieve energy savings through measures to be financed, at least 25% confirmed by the energy audit and in the case of renovation of multifamily buildings constructed before 1961 the subsidy accounts to 15% of total renovation cost, by minimum of 10% of energy savings, confirmed by renovation audit. The main outcome of the program and the lesson learned is that the total number of applications for the thermal modernization bonus (PT) and for the renovation bonus (PT) (red line) has shown a downward trend since 2014. It is conditioned by the gradual depletion of the market potential in large towns, the implementation of thermal modernization and renovation in a less comprehensive manner without using the Fund's resources by at least half of the building owners, as observed by BPIE. Also, it was because of the appearance from 2018 of competing financial products based on bank loans with reduced interest rates thanks to EU grants used in 6 out of 16 Polish regions. There is small (maximum 3%) percentage of applications for bonuses rejected in the course of their verification (black line), which means a good understanding of the Fund's operation by applicants and high quality of energy audits. Since 2007, the number of accepted applications for a thermo-modernization bonus has been convergent with the number of bonuses granted (green lines), which means that the process of thermo- modernization of the building is closed during the calendar year, starting from the decision by the owner of the building to the completion of works. More detailed information can be found here: https://www.bpie.eu/publication/financing-building-energy-performance- improvement-in-poland-status-report/ .

As for the current development 2022 for multifamily and social buildings there is an increase of the thermomodernisation bonus to 26% TIC, special incentive for achieving the nZEB standard – 10% TIC, increase of renovation bonus to 25% TIC, separate grant for PV installation – 50% TIC and special grant for municipally owned social houses – up to 90% TIC. In general, there is a minimum 30% savings required. Thermomodernisation Fund served 2000 buildings, the EU funds used in form of grants for governmental public buildings within OP I&E, municipal public buildings within 16 ROPs and support of ESCO model (starting 2022). Additional there is EAA/Norway grants for municipal buildings. The cost of thermomodernisation for multifamily building is 250€/sqm and for public building about 500€/sqm. At the moment there are 12 banks operating with Thermomodernisation Fund. Long SPBT which is more than 20years is not attractive for ESCOs, that means the new scheme should reduce SPBT to 10 years, what makes it interesting for banks keen to finance ESCOs. Combination of loans with EU ELENA is very successful – 4 banks are doing this and other FI are looking for this opportunity. In addition, One-stop-shops for building of projects in municipalities in development.

Denmark

State of Green White Paper on Energy Renovation in Buildings

Ms Gry Klitmose Holm, State of Green

Key messages and learning

Ms Gry Klitmose Holm started by introducing the key aspects of renovation which included the concept and understand of the Danish governance system for green buildings, the necessety to explore world class energy efficiency solutions for buildings. Additional there is a dive into the holistic approach to energy renovation as well as inspiration by perspectives on smart energy systems, data usage, public-private partnerships, financing and much more.

The DGNB is a systematised approach to sustainability that consists of several steps:

  • Planning, DGNB pre-sertificate for new constructions
  • Construction, DGNB certificate for new constructions
  • Operation, DGNB certificate for buildings in use
  • Inventory/conversion/renovation, DGNB certificate for existing buildings and for renovated buildings
  • Operation, DGNB certificate for buildings in use (recertification)
  • End of life, DGNB certificate for dismantling

The main focus is on the supply and demand side of energy renovations that encourages local investments in energy efficient projects. The impact of holistic energy renovation of office buildings is that the approx. 80 mil. people working in offices in Europe can benefit from healthier and better work environment and resulted in 12% increase in employee productivity. In general, it results in Euro 500 bil. gross value added across the EU.

Clarification, guidance, and recommendations from financial sector

Ms Ilze Kukute, Finance Latvia association

Key messages and learning

Ms Ilze Kukute pointed out to the main aspects of the renovation wave:

  • Energy performance as the priority in renovation of buildings
  • Financing – integrated support starting from the renovation idea
  • Energy performance certificate – mandatory
  • Standardized certificate in the machine reading format, digitally available, information system integrated within EU
  • Mandatory minimum energy performance standards, energy renovation passports, digital tool to link the passports with building digital registers
  • European new BAUHAUS – building ecosystem, sustainability of buildings (design, environment, human, materials, renewable energy resources etc.) Skills on sustainable building – how we will get such skills?
  • 160 000 new jobs – possible to create
  • Coupe with energy poverty – support to socially vulnerable

In a climate-neutral Europe, buildings will be more healthy and foster well-being, be part of the energy system infrastructure with high energy efficiency indicators. Also, buildings will be more circular in relation to their material as well as fossil fuels free that means that there are resilient to climate risks.

The average renovation process takes 3-4 years which is considered to be a long period to achieve effective results. The main aspects that have the biggest impact on the process is knowledge of the process itself – responsibility, initiative and capacity. Decision making process requires apartment owner meetings, dialogue with the bank and payment discipline for utilities services. Another issue is the documentation, including technical documentation, building company procurement, signing of agreements and project management. The last step is the financing Idea of renovation of the project, that include application for loan, decision of the bank and grant/loan issuance. The most important issues to be addressed in this process applies to information as it should be focused on minimization of energy consumption, ability to pay – payment discipline and building sector capacity/quality on how to get most simple and effective way of renovation with project management capacity and quality.

To sum up the topic there are few basic instructions to follow regarding long term building renovation strategy, that is to focus to reach measurable targets, using digital tools, public access of data – energy performance certificates, energy passports; National support scheme – to be worked out earlier then 2029, potential of tax system as motivation to be discussed (real estate tax, personal income tax,…), Integrated support, flexibility of instruments Capacity building for apartment owners. Apartment owners should focus on energy passports, energy performance, how to minimize the consumption, integrated support from state, municipalities. Renovation process should be supported by simple schemes, mobilized support from housing maintenance companies on procurement, agreement signing, building process supervision, project management. New Bauhaus principles foresees information, dialogue on how Bauhaus principles can be applied in building renovation, prefabricate materials, sustainable building.

Discussion and conclusion

Final part of the learning event was dedicated to discussions, summing-up the results and pointing out next steps.

To finalize the discussion and to sum up the learning event there are some main points to be emphasized:

  • Energy cost will be rising so the is a need to invest in energy efficient projects
  • Since the construction prices rise as well it is important not to be lagging behind in decision making scalability of project solution to make it more affective
  • 3% of apartment buildings in Riga have been renovated, so there is huge potential for investment in this segment
  • The importance of One-stop-shop is becoming more important that provide wide variety of service, starting with advice and consultation and the ability to receive step by step explanation and providing solutions to different kind of problems
  • The biggest challenge is to achieve the mass scale of successfully implemented projects that resulted in better environment for building owners
  • The digitalization of certificates system and actual implementation of EPC system can also be a good stimulus in favor of more profound investment in energy efficiency projects especially in multiapartment buildings. Otherwise the value of these real estates will decrease.
Nødvendige

Necessary
Required cookies help make the website usable by enabling basic functions, e.g., Slide functions, and ensure full access to all pages of our site. The website does not function optimally without these cookies. We have considered these as paid and are therefore stored without prior consent.

Expires
1 year
Name
wordpress_[hash]
Data processor
System
Purpose
On login, WordPress uses the wordpress_[hash] cookie to store your authentication details.
Expires
1 year
Name
wordpress_logged_in_[hash]
Data processor
System
Purpose
After login, WordPress sets the wordpress_logged_in_[hash] cookie, which indicates when you’re logged in, and who you are, for most interface use.
Expires
1 year
Name
wp-settings-{time}-[UID]
Data processor
System
Purpose
This is used to customize your view of admin interface, and possibly also the main site interface.
Expires
1 year
Name
comment_author_{HASH}
Data processor
System
Purpose
When visitors comment on your blog, they too get cookies stored on their computer.
Expires
1 year
Name
comment_author_email_{HASH}
Data processor
System
Purpose
When visitors comment on your blog, they too get cookies stored on their computer.
Expires
1 year
Name
comment_author_url_{HASH}
Data processor
System
Purpose
When visitors comment on your blog, they too get cookies stored on their computer.
Expires
1 year
Name
cookie_settings
Data processor
System
Purpose
Used to set your cookie settings
Sporingcookies
Statistical cookies help the website owner understand how users interact with the website by collecting and reporting information.
Expires
2 Years
Name
_ga
Data processor
Google
Purpose
Google