Analysis and recommendation report - REC...

1

Financing Low carbon refurbishment Phase 1

Analysis and recommendation report

I. Summary of the assessments The analysis and recommendation report is relaying on information gathered from the good

practices examples identifying in the mapping exercise, the policy and financing support

schemes assessment, and the energy audits performed in the five target countries, Bulgaria,

Hungary, Poland, Romania and the Netherlands. The mapping of energy efficiency

refurbishment projects is providing information of the current refurbishment practices,

technologies used for the refurbishment, the policy and financing supporting schemes provide

the framework in which energy efficiency projects in the five target countries are

implemented. The energy audits demonstrate how a 60% CO2 emission reduction and energy

saving can be achieved through energy efficiency and renewable technologies for different

type of buildings in the targeted countries.

In addition to analyzing the actual assessment results publicly available research results on

energy efficiency in the building sector have been also studied.

Governmental subsidies, main legislations and the finance mechanisms are listed and

analysed based on various criteria such as start of the programme, overall targets, scale of the

financing and support available, intensity of subsidy, required own funding from end-users

(households), eligibility criteria, financial terms and conditions etc. The aim of this chapter is

to summarize key terms and conditions as well as results of the selected programmes in the

five countries.

1. Bulgaria

The following table summarizes the available policies and measures, governmental subsidies

and loan products to support energy efficiency and renewable energy projects in the housing

sector in Bulgaria.

Governmental subsidies

Name of the program Exception from property taxes

Program started 2005

Overall target of the program

Tax exception for buildings that are certified to be of

category B or A (for buildings built before 2005)

2

Energy saving target

Category B or A

Intensity of subsidy

100% exemption from property tax for 3 to 10 years

Own fund requirement from

owners

n.a.

Number of homes effected

n.a.

Name of the program

National Programme for Renovation of multi-family buildings 2006-2020

Program started

2006


The program intends to support the refurbishment of

almost 700.000 dwellings by the end of 2020, of which

around 364.000 are panel buildings, 153.000 fero-concrete

and 170.000 massive


n.a.


20%


owners

80%


n.a.

Name of the program National long term EE program 2005-2015



Support various energy efficiency measures in all sectors,

including buildings


40%


n.a.


owners

n.a.


n.a.

Name of the program EU Operational Programme

Program started

2007


Implement energy efficiency projects in the building

sector


n.a.

3


n.a.


owners

n.a.


600-1200 multi-apartment buildings

Name of the programme Subsidising energy efficiency audits of communally owned buildings. National energy assistance programme, improving energy

efficiency in the use of solid fuel by households

It is planed that after 2012 this programme will be

launched; the budget frame is expected to be 288 million

by 2020, with funds coming from the next OP and the

national allocations in relationship with the 2013-2020

OP.

The targets are the purchasing of EE solid-fuel boilers and

the upgrading of old boilers.

Program started

Will start in 2012


It is planed the support of energy audits of buildings that

have a communal ownership from 2012 with a budget

expected to be 27 million BGN. These funds are planned

to be gathered partially from restructuring existing support

mechanisms already mentioned.


n.a.


n.a.


owners

n.a.


n.a.

Name of the program Green Investment Scheme It is planed that if revenues are generated under the GIS

those will be invested in EE and RES in relationship with

the end users as well. The exact framework still needs to

be developed.

Program started

Has not started yet


It is planed that if revenues are generated under the GIS

those will be invested in EE and RES in relationship with

the end users as well.


n.a.


n.a.


owners

n.a.

4

Number of homes effected n.a.

Name of the Programme EU Emission Trading Scheme

Program started n.a.


It is planed that after 2013 Bulgaria could use revenues

generated from the EU ETS that still needs to be set up, to

finance EE and RES in relationship with the end users as

well.


n.a.


n.a.


owners

n.a.


n.a.

Name of the Programme Promoting the use of individual Renewable Energy System



It is planed that after 2011 a support mechanism will be

introduced to support the installation of electricity

producing technology from RES and of heating and

cooling from RES (examples: PVs on rooftops and heat

pumps, etc.)


n.a.


n.a.


owners

n.a.


n.a.

Name of the program Soft loans for reducing electricity consumption in the households It is planed that this programme should be launched in

2012. The needed budget is estimated to be 540 million

BGN by 2020. A 30% grant it is expected to be attached

to the loan.

The loan would be used to purchase EE heating/cooling

and lighting systems, and other EE domestic appliances.



n.a.


n.a.

5


n.a.


owners

n.a.


n.a.

Loan products

Name of the loan product Residential Energy Efficiency Credit Line (REECL) (EBRD)

Overall target

The scheme works by providing householders or

Associations of Home Owners with loans and incentive

grants through local participating banks

Eligibility criteria

Measures undertaken include: energy efficient windows,

wall insulations,

roof insulations, floor insulations,

efficient biomass stoves and boilers and systems, solar

water heaters and systems, efficient gas boilers and

systems, heat pump systems, roof-top building integrated,

gasification and central heating of family houses, balance

mechanical ventilation with heat recovery.

Interest rate

n.a.

Maximum loan term

n.a.

Size of the loan

20%, 30% or 35% of costs. 9.000 euro maximum

cap/dwelling

Name of the loan product

Kozloduy International Decomissioning Suport Fund with EBRD

History:

-was established at the EBRD in 2001 with the original

intent to help the Bulgarian Government to decommission

one of its unsafe nuclear power plant

-its second goal is to promote new end-consumer

efficiency measures in the residential sector

-grant provider

Relevant highlighted projects:

a. Rehabilitation of the district heating network in

Sofia:

-total budget of the project 114 million euro

-from this KIDSF has provided a 30 million grant for the

supply and replacement of network pipes and district

heating substations, with the prospect of additional

equipment as the project progresses

- the whole package of rehabilitation measures

incorporated in this District Heating Project has had an

important effect upon the efficiency of heating and hot

6

water supply in Sofia

- among the results achieved are, increased reliability of

heat services and cost savings for customers, reduction of

energy losses and a decrease in the adverse impact of

energy production on the environment

b. New electricity meters in private households:

-installing new electricity meters in the residential sector

to replace the outdated and less efficient ones

-3 million euro in grant

Name of the loan product Bulgarian Energy Efficiency Fund (BgEEF)

History:

- a legal entity, established in accord with Chapter 4,

Section I of the Energy Efficiency Act (EEA) from 2004.

- was set up by funds from the Global Environment

Facility through the World Bank group in the amount of

10 million USD with an addition from the Government of

Austria of 1.5 million euro and the Government of

Bulgaria of another 1.5 million euro

-since then several private Bulgarian companies have also

added to the fund. BEEF has the combined capacity of a

lending institution, a credit guarantee facility and a

consulting company.

-financed projects at the moment amount to 112. From

these 59 are given to municipalities, 9 to universities, 7 to

hospitals and 37 to corporate clients. Total project value is

BGN 48.9 million (24.45 million euro)

Features:

-it provides technical assistance to Bulgarian enterprises,

municipalities and private individuals in developing

energy efficiency investment projects and then assists

their financing, co-financing or plays the role of guarantor

in front of other financing institutions. BEEF has the

combined capacity of a lending institution, a credit

guarantee facility and a consulting company.

Residential Portfolio Guarantees:

-BgEEF works directly with households to develop the

technical aspects of the project; these projects usually

form a portfolio

-a project implementer is selected to carry out the

refurbishment

-the building in question or portfolio of buildings is then

financed by a commercial bank, with the finance being

transferred directly to the implementer

-BgEEF guarantees to the bank that it will cover the first

5% of defaults

-on a loan repayment period of 5 year the fund charges

7

guarantee fees (that are paid indirectly by the apartment

owner, through the bank, above the interest that one has to

pay after the loan) that varies between 0.5 - 2%

So far only two residential projects benefited from this

scheme mainly due to the aforementioned condominium

law.

2. Hungary

The following table summarizes the available policies and measures, governmental subsidies,

loan products to support energy efficiency and renewable energy projects in the housing

sector in Hungary.


Name of the program The “Panel Programme”

Program started 90s and it was further developed many times. The latest

programme was introduced under GIS in 2009.


Renovation of panel buildings. Only housing associations

or owner associations (majority privately owned) are

eligible


The rational behind the programme was that up to a 29%

reduction in CO2 emission and a parallel reduction of the

total energy consumption (26%) can be achieved by

employing EE technology at a negative cost per investment.

The reduction targeted and achieved varies greatly from

project to project from 10% to 60%


33-60%


owners

40-66%


25% of panel buildings received some level of

refurbishments

Name of the program

NEP Programme – national energy saving programme

Program started


Support individual private homes to implement energy

efficiency refurbishment


The EE and RES technologies supported were similar to the

ones employed within the “Panel Programme”


15-30%


owners

60-85%

8


2500 homes yearly

Name of the program

ÖKO Programme – upgrading the district heating system

Program started


This programme was related only to the improvement of

the heating system by adding controlling/monitoring panels

to the heating body, insulation of the pipes(specific)


n.a.


50% was awarded by the state and 25% by the local

authority (with the involvement of the district heating

companies),


owners

25% had to be covered by the owner


n.a.

Name of the program

GIS Climate Friendly Home Programme

-projects that apply “excellent building product” labeled

products are favored over others

The 2011 additions:

-the projects have to result in at least 3 category

improvement to its previous state and at least a B level

-for the buildings that are at a C level before the

refurbishment it is required that at least an A level must be

achieved post refurbishment

-25% of the energy consumed must come from renewable

sources Program started

2010


Targets non-panel houses (traditional brick build for

example). The programme is very similar in its frame as the

third type of “Panel Programme” was, financed from the

income generated by the Green Investment Scheme under

the Kyoto Protocol.


-At a 50% reduction in energy consumption 40% of the

investment need, but maximum 3 million HUF (11.000

euro)/dwelling.

-At a 60% reduction in energy consumption 50% of the

investment need, maximum 4 million HUF (14.500

euro)/dwelling.


-At a 35kwh/m2/year overall energetic consumption a

25.000 HUF/m2 is awarded with a maximum of 3 million

HUF(11.000 euro)/dwelling.

9

-At a 25kwh/m2/year overall energetic consumption a

40.000 HUF/m2 is awarded with a maximum of 5 million

HUF (18.000 euro)/dwelling.


owners

n.a.


n.a.

Name of the program

Electricity-Efficient Household Programme

Mitigation of household appliance demand (lighting,

household appliances, stand-by consumption) http://palyazatok.org/zold-beruhazasi-rendszer-

energiatakarekos-haztartasi-gepcsere-alprogram/

Program started

2008

The last year when subsidy finance was available for

appliances was in 2010, under the GIS umbrella.


The government hopes to enhance the spreading of efficient

lighting technology, through direct intervention and other

horizontal means with a budget expected to be 7.1 billion

HUF between 2008-2016.


The programme supported the exchange of

refrigerators/washing machines.


An upgrading to an (A) labelled appliance was supported

with 60.000 HUF and of an appliance labelled (A+) (A++)

with a maximum of 70.000 HUF.

The total amount dedicated in the tender till it’s ended was

1 billion HUF.


owners

n.a.

Number of homes effected n.a.

Name of the program

The light bulb upgrading sub programme under the GIS

started in 2009 with a budget of 230 million HUF and

ended in 2010 with a budget of 450 million HUF.

http://www.kvvm.gov.hu/index.php?pid=9&sid=9&tid=376

http://www.kvvm.hu/index.php?pid=9&sid=9&tid=418

Program started 2009-2010


The lighting bulb upgrading. The targeted groups were the

elderly and those with large families.


n.a.


The programme covered 100% of the expenses up to 10

million per tender. The leverage of the scheme was 0.


owners

0%

10


n.a.

Loan products

Name of the loan product Guaranteed loans supported by the International Finance Corporation

Programme started

1995

Overall target

Provide support for block of flats (home owners

associations and housing associations) to have access to

loans. Security provided by the guarantee fund reduces

security requirement from home owners.


Home owners associations and housing associations were

supported. There was one sub-programme supporting

individual home owners to install efficient gas boilers.

Interest rate

Market based

Maximum loan term

Maximum guarantee term: 7 years.

Size of the loan

Over 50,000 homes

3. Poland



sector in Poland.


Name of the program Thermo modernization fund

Program started 1999 (redesigned in 2003)


Covers thermo modernization of buildings. The most

common measures: thermal insulation of the building

envelope, walls and roof, window replacement and

heating system replacement or modernization.


Eligibility based on energy consumption reduction:

-in buildings where only the heating system is refurbished

by a minimum of 10%

-where the heating system is modern by a minimum of

15%

-in other buildings by a minimum of 25%


64% commercial loan that needs to be repaid in less than

10 years(interest rates 7-10%), and 16% grant that goes

directly to the bank

Own fund requirement from 20%

11

owners


Between 1999 and 2006 the average project numbers per

year was between 500 and 1.500, from then on till today

the average project number per year is around 3.000, in

total of about 20.000 projects after 11 years of operation

confirming the criticism of NGOs, performing half as it

was expected.

Name of the program

National Fund for Environmental Protection and Water Management

Program started

Started in2010. Due to negative reaction from the market

and stakeholders in 2011 the scheme is being currently

revised and improved based on feedbacks


Support of installing solar panels on buildings


n.a.


40% Average solar installation costs of submitted

applications amount to EUR 3.500.


owners

60%


Since its start in September 2010, subsidies have been

granted to 8,166 households and the Fund has already

spent 6.25 million euro of its 75 million budget

Loan products

Name of the loan product Attached to the Thermo modernization fund

Overall target

The National Economy Bank offers 60% loan to

households who wants to participate in the TMF program


Same as the TMF

Interest rate

7-10%

Maximum loan term

10 years

Size of the loan

n.a.

4. Romania



sector in Romania.


12

Name of the program National multi-annual programme for the thermal rehabilitation of the blocks of flats



The target buildings are blocks of flats built between

1950-1990, the number of which is over 1.2 millions of

flats the majority being buildings of around 5 stores high.


According to the National Energy Efficiency Plan the

estimated improvement to the buildings based on the

intensity of the thermal rehabilitation programme is

maximum 25% reduction in energy consumption.


80% provided by the state and local governments from

which 50% of the funding is provided by the ministry,

30% by the local authority.


owners

20%


Since the programme started 6 years ago the number of

apartments affected is around or less than 5 % (60,000

flats) of the targeted number.

Name of the program

Green house program

Program started

2010


The targeted buildings are privately owned houses.

Supported measures: replacing the traditional fossil fuel

based heating systems, solar thermal heat pumps and

biomass .


n.a.


50% (1400-1800 Euro per households)


owners

50%

By the end of the 2010, 102 million LEI was paid out to

the 17.000 applicants. Loan products

Name of the loan product Thermal rehabilitation loan for individuals(physical person) and Rehabilitation credit for apartment owners associations(legal person)

Overall target

Thermal rehabilitation of buildings and overall renovation


The eligibility for the loan for individuals:

-owners of the family houses who are natural persons

13

The eligibility for owners associations:

- the building in question must be built before the

year 2000

- the building must be of the map of highly risky

territories from a seismic point of view (graded

red)

- the general meeting of the owners must vote yes

on the loan application with a minimum of 90% of

the owners approving

- the owners association must not have a utility bill

delay greater than 2 months

Interest rate

7.39% Fully subsidized by the state

Maximum loan term

5 years

Size of the loan

90% of capital cost

Maximum 7400 Euro for a family house and 1850 Euro

per living room for block of flats

Other finance products

Subsidized housing saving account

Saving period 2-5 years

Interest earning 2-3%

State subsidy Maximum 250 euro per month

Overall target of the scheme Support the national multi-annual programme for the

thermal rehabilitation of block of flats and the green house

programme

Saving to loan value 27.855 – 60%

5. The Netherlands



sector in the Netherlands.


Name of the program The Green Funds Scheme

Program started In the 90s


Support market based projects that have a direct positive

impact on the environment under the sustainability

umbrella

The “green funds” are created at commercial banks

designated as “green intermediary”, a label only those

financiers can obtain who commit to allocate 70% of

14

assets to green projects(decision taken by the Ministry of

Finance)


n.a.


Offers 2% below market rate interest rate

2/3 of the capital cost must be covered by the loan


owners

1/3


Since its creation the size of the investments has reached

almost 7 billion euro, financing more than 5.000 projects,

which include investment in sustainable housing

Name of the program

Temporary subsidy scheme Buildings and CO2 reduction (2006)

Program started

2006

Glass insulation scheme: 2009-2010


Measures financed included: combined heat and power

installations, heat pump boilers, solar thermal panels,

glass insulation.


n.a.


15% maximum 1 million euro per project ( one project is

minimum 20 dwellings)


owners

85%


100 000 households have applied for gas insulation

between 2009-2010. The entire budget of 45 million EUR

has been allocated.

Name of the program

Voluntary agreements social housing corporations (1998-2005)

Program started

1998, second phase 2001-2005


Social housing corporations to improve their housing

stock. In 2001 the plan was to provide 30% of the housing

stock with an energy performance advice, also to include

solar energy systems in 50% of the newly build stock.


15% (not reached, only 5%)


n.a.


owners

n.a.


n.a.

Name of the program TELI – EE in low-income households

15

Program started

2002


Support households with very low income(less than 1.200

euro/month) to implement energy efficiency measures to

reduce fuel poverty


n.a.


n.a. maximum 250.000 euro per project


owners

n.a.


n.a.

Name of the program

More with Less

Program started

2008, updated in 2009


Work with social housing providers, utility companies and

the construction industry to achieve energy saving in

buildings.


Insulating 500.000 dwellings to at least level B or two

levels above its previous status in the EPC.


-Housing corporations receiving an 11% tax discount,

house owners receive 1% reduction on the loan interest

(from 10% to 9% ),

-energy analysis done on a home and advice was

subsidized to up to 200 euro/dwelling,

-the glazing of windows was subsidized with 20% of the

capital cost,

-tax benefits were offered on insulation measure(from

19% VAT to 6%)

-Installing solar PVs, heat pumps and other RES is

supported by a reduction on the loan interest by 2-3%


owners

80-100%


n.a.

Name of the Programme National Grant Scheme More with Less Program started

2010


Increase attractiveness of energy efficiency investment in

housing



Home owners who improve energy efficient measures and

move to more efficient energy label level receive 300-750

EUR grant.

16


owners

n.a.


7000 homes by the end of November 2010

Loan products

Name of the loan product Green mortgage

Overall target

Green investment


The dwelling has to meet the rules of sustainability either

as a new or refurbished one.

Interest rate

1% lower than market price (over 10 years)

Maximum loan term

n.a.

Size of the loan

Maxium 34.000 Euro

Name of the loan product Energy Savings Credit Guarantee / Green Projects Scheme

/

National Mortgage Guarantee

It offers tax rebate and mortgage guarantee

Overall target

Encourage investments in energy saving


In the Green Projects Scheme the government subsidizes

savings and green investments in a form of a tax rebate

which aims to encourage home owners to save and invest

into energy efficiency.

The guarantee scheme is offered to those who take

mortgage to improve the efficiency of their homes to

protect them against potential default on mortgage loans.

This guarantee was planned to run until 30 June 2011.

Interest rate

The saving scheme has been changed and the benefits

were reduced from 2.5% to 0% in 2014 both for savers

and investors. The capital returns tax exemption (benefit

1.2%) will continue in full.

The guarantee is available for mortgages up to 350.000

EUR. Energy-saving measures can be co-financed, and

investments in energy saving up to a maximum of 6.500

EUR.

Maximum loan term

n.a.

Size of the loan

n.a.

17

II. Comparison

1. Comparison of the implementation into national legislation of the main EU Directives to drive energy efficiency in the buildings

The research activities have been consisted from an extensive desk research activity for

indentifying main policies and regulations enforcing EU energy efficiency and RES

requirements for buildings, combined with a detailed research on existing and planned

financial supporting scheme enabling the enforcement of EU requirements.

The assessment of the policy framework was focusing on the Energy Performance of

Buildings Directive 2002/91/EC (EPBD) and its recast adopted in 2010 as the main EU

legislation which aims to improve the energy efficiency of the EU building stock through

concrete measures.

Besides the EPBD and EPBD recast there are several Directives which are not the main

legislative instruments to improve the energy efficiency of the European building stock, but

they have several provisions reflecting to buildings and through this contribute to the ultimate

goal of the EPBD+recast. These directives are the:

- Energy end use efficiency and Services Directive 2006/32/EC – called ESD;

- First and second National Energy Efficiency Action Plan – called NREEAP;

- Renewable Energy Directive 2009/28/EC – called RED;

- National Renewable Energy Action Plan – called NREAP;

- Cogeneration Directive 2004/8/EC – called CHP.

The national transposition of the above listed directives is in place, except in Poland, where

the full transposition of the ESD requires several secondary legislations to be approved and in

the case of RED the transposition is only under way and is expecting the new Renewable

Energy Sources Act to enter into force.

The implementation, enforcement of the relevant directives is very different from country to

country and also the success and effectiveness of the implementation. The reasons are

multiple starting from staff capacity, accuracy of the transpositions and secondary

legislations, effectiveness of national regulations to financing tools to support the

implementing measures, motivation and understanding of the problems etc. The national

reports which have to be developed according to the ESD and RED directives, identify the

main long term strategies, but also the gaps on which each country has to develop improve,

through developing more in details the legislative framework, altering their financial

supporting schemes to provide more support for energy efficiency and renewables

18

technologies and implementation of low carbon refurbishment projects in cooperation with

the banking sector.

The national responsible institutions for the implementations are usually identified, however

there is a need for close cooperation with several Ministries and Governmental Agencies due

to the centralized systems still existing in CEE countries (not necessarily the case in the

Netherlands). Departments restructuring, staff fluctuation and workload usually are hindering

smooth implementation too.

19

Country EPBD ESD NEEAP RED NREAP CHP

Bulgaria The implementation

of the Energy

Performance of

Buildings Directive

2002/91/EC falls

within the

responsibility of the

Ministry of Energy,

Economy and

Tourism, the

Ministry of Regional

Development and

Public Works and

the Energy

Efficiency Agency

(EEA). The EPBD

was transposed into

national legislation

through the Energy

Efficiency Act from

2004, which was

continuously

updated and

amended in 2009.

The current version

of the Act is fully in

line with the EPBD

requirements.

The

implementation

of the Energy end

use efficiency and

Services

Directive

2006/32/EC falls

within the

responsibility of

the Ministry of

Economy, Energy

and Tourism,

however the

monitoring and

control is

delegated to the

Energy Efficiency

Agency. The

directive is

transposed into

national

legislation by the

new Energy

Efficiency Act

amended in 2008.

In line with the

Art 14 of the ESD,

Bulgaria has

prepared and

submitted the 1st

and 2nd

NEEAP.

Has adopted a

national indicative

target of 9% for

the 2008-2016

period and an

intermediary

target of 3% for

2008-2010 period.

The 1st

NEEAP

was developed

only for 2008-

2010, while the

targets set in the

strategy cover the

2008-2016 period.

The indicative and

intermediary

targets set were

determined based

on the final inland

energy

consumption from

2001 until 2005.

The

implementation of

the Renewable

Energy Directive

2009/28/EC falls

within the

responsibility of

the Ministry of

Economy, Energy

and Tourism and

the State Energy

and Water

Regulatory

Commission. The

Renewable and

Alternative

Energy Sources

on Biofuels Act

and the Energy

Act was

transposing the

2001/77/EC

Directive on

electricity

produced from

RES and the

2003/30/EC

Directive on

promotion of

The NREAP is the

main instrument in

Bulgaria to assure

fulfillment of the

country’s RES

target. Mandatory

targets set for

2020 by the EC

are 16% share of

RES in the gross

final energy

consumption and

10% renewables in

the transport

sector.

The

implementation

of the

Cogeneration

Directive

2004/8/EC falls

within the

responsibility of

the Ministry of

the Economy,

Energy and

Tourism and it is

transposed into

national

legislation

through the

Energy Act

amended several

times. The new

Renewable

Energy Act also

covers the CHP

from the energy

consumption

side. The new

Act support will

be provided for

the RES based

heating and

20

biofuels or other

renewable fuels

for transport.

Following the

adoption of the

new RED in

2009, Bulgaria

has developed

and in 2011

adopted a so

called new

Renewable

Energy Act,

which transposes

the RED

2009/28/EC.

cooling

especially in the

new buildings,

however if

buildings cannot

implement

individual

renewable

systems can

choose from

other measures

like connection

to heat

distribution

networks or

combined heat

and power

facilities.

Hungary The implementation

of the Energy

Performance of

Buildings

Directive2002/91/EC

falls within the


Ministry of National

Development. The

Directive is

transposed into

national legislation

by the Gov. Decree

The

implementation

of the Energy end

use efficiency and

Services

Directive

2006/32/EC falls

within the

responsibility of

the Ministry if

National

Development.

The Directive is

In line with the

Art 14 of the ESD,

Hungary has

prepared and

submitted the 1st

and 2nd

NEEAP.

Has adopted a

national indicative

target of 9% for

the 2008-2016

period,

information

regarding the

The

implementation

(with respects to

buildings and

pricing) of the

Renewable

Energy Directive

2009/28/EC falls

within the

responsibility of

the Ministry of

National

Development,

According to the

RED, Hungary has

to achieve a

minimum 13%

legally binding

target for the share

of renewable

energy sources in

gross final energy

consumption by

2020 and 10%

renewables in the

transport sector,

The

implementation

of the

Cogeneration

Directive

2004/8/EC falls

mainly within

the responsibility

of the Ministry

of National

Development

and the

Hungarian

21

7/2006. (V.24.) on

energetic attributes

of buildings, Gov.

Decree 176/2008.

(VI. 30.) on energy

certification of

buildings and Gov.

Decree 264/2008.

(XI.6.) on energetic

inspection of boilers

and air-conditioning

systems.

transposed into

national

legislation by the

Energy Efficiency

Action Plan for

Hungary, by Gov.

Decree 176/2008.

(VI. 30.) on

energy

certification of

buildings, by the

Law XL./2008 on

gas supply, by the

Law

LXXXVI./2007

on electricity and

by Gov. Decree

237/2007. (X.

19.) on

implementing

certain provisions

of the electricity

Law

LXXXVI/2007.

intermediary

target is

contradictory in

the 1st NEEAP.

The 2nd

NEEAP

under the

Hungary’s

National Reform

Programme, plans

to achieving a

10% energy

savings by 2020

instead of the 9%

initially set in the

NEEAPs.

According to the

2nd

NEEAP, the

interim energy

savings achieved

is higher 12.25

PJ/year than the

planned one, 9.4

PJ/year for 2010.

together with the

Hungarian Energy

Office regarding

energy

authorisations.

Transposition is

assured through

amending certain

provisions of the

Law on electricity

LXXXVI. from

2007 through

Gov. Decree nr.

273/2007, Gov.

Decree nr.

389/2007 and

287/2008 on

RES-E price

regulations, Act

XL of 2008 on

natural gas supply

and Gov. Decree

nr.19/2009 on

natural gas usage,

Act CXVII of

2010 and Gov.

Decree nr.

138/2009 (IV.

30.) on use of

renewables for

transport etc.; the

NREAP sets the

however the

NREAP sets a

higher objective of

14.65%

renewables in

gross final energy

consumption to be

achieved by 2020.

The government

considers the new

target realistic, but

the need for

adapting the

existing policy and

supporting frame

is needed.

Measures planned

are directed

towards changing

the existing feed

in tariff system

(FiT), evaluating

the subsidy

schemes, aid

schemes,

developing new

ones, review of the

regulatory and

authorization

procedures, R&D,

capacity building

etc., all these to

Energy Office

and it is

transposed into

national

legislation

through the

Electricity Law

LXXXVI. from

2007, Gov.

Decree nr.

389/2007.

(XII.23.) on

certification of

the origin and

mandatory off-

take of the

electricity

produced from

renewables or

waste and

cogeneration and

the price,

Ministerial

Decree nr.

110/2007. (XII.

23.) on the

calculation

method for

determining the

amount of high

efficiency

cogeneration

22

strategy which the

country plans to

follow in utilizing

RES for different

sectors in order to

meet the 2020

targets and boost

the green

economy.

support the

increase of RES

investments and

RES utilization

also in the

building sector.

There seems to be

a delay in

implementing the

planned measures.

useful heat and

electricity and

Ministerial

Decree nr.

91/2007 (XI. 20.)

on the public

administration

service fee rates

payable to the

Hungarian

Energy Office

and on the rules

of payment of

administrative

service and

supervisory fees.

Poland The implementation

of the Energy

Performance of

Buildings Directive

2002/91/EC falls

within the


Ministry of

Transport,

Construction and

Maritime Economy.

The Directive is

transposed into

national law by

amending the

The

implementation

of the Energy end

use efficiency and

Services

Directive

2006/32/EC falls

within the

responsibility of

the Ministry of

Economy. For the

implementation

of the NEEAP

several ministries

and governmental

In line with the

Art 14 of the ESD,

Poland has

prepared and

submitted the 1st

and 2nd

NEEAP.

Has adopted a

national indicative

target of 9% for

the 2008-2016

period, and a

national indicative

intermediary

target of 2% by

2010. The

The

implementation

(with respects to

buildings and

pricing) of the

Renewable

Energy Directive

2009/28/EC falls

within the

responsibility of

the Ministry of

Economy, in

cooperation with

the Polish Energy

Regulatory Office

According to the

RED, Poland has

to achieve a

minimum 15%

legally binding


of renewable

energy sources in

gross final energy

consumption by

2020 and 10%

renewables in the

transport sector.

The Polish Energy

Policy until 2030

The

implementation

of the

Cogeneration

Directive

2004/8/EC falls

mainly within

the responsibility

of the Ministry

of Economy and

the Energy

Regulatory

Office and it is

transposed into

national

23

Construction Law in

2007, 2008 and 2009

through Ministerial

Ordinances on

secondary

legislations.

The implementation

of the Directive

started in late 2007

after amending the

Construction Law,

but due to the several

criticisms related to

the legal mistakes in

the transposition, in

the methodology

how to calculate the

energy performance

etc., several

amendments were

approved by the

Government.

institutions need

to cooperate. The

Directive is

transposed into

national

legislation by the

Energy Efficiency

Law, adopted in

2011, but there is

still a need for

several secondary

legislations to be

adopted in order

to fully transpose

the ESD.

indicative and

intermediary

targets set were

determined based

on the final inland

energy

consumption from

2001 until 2005.

According to the

new Energy

Efficiency Law,

the Ministry of

Economy should

recalculate the

national energy

saving targets

every three years,

assuring by this to

achieve at least

9% reduction of

the 2001-2005

final energy

consumption by

2016. The 2nd

NEEAP shows

already that the

intermediary

target of 2% set

for 2010 has been

exceeded, and the

in total a 5.9%

final energy

responsible for

the Renewable

Energy

Certificates. The

Directives

2001/77/EC and

2003/30/EC were

transposed into

national

legislation by

amending several

times the Energy

Act and

Environmental

Act. The full

transposition of

the Directive

2009/28/EC will

be done when the

new Renewable

Energy Sources

Act will enter into

force. The draft

RES Act was sent

for inter-

ministerial and

public

consultation on

23 December

2011. It should be

mentioned that

several provision

is the main

strategical

document which

describes the path

how to achieve the

2020 targets for

each type of

energy like

electricity, heat

and cooling and

renewable energy

in transport.

Measures existing

and planed are

focusing on

supporting the

electricity

production from

RES through

certificates of

origin,

introducing

support

mechanisms for

the uptake of heat

and cold

production from

RES, regulations

for wind farm and

biogas

powerplants

constructions,

legislation

through the

approved

amendments of

the Energy Act,

Environmental

Protection Act

and the

Compliance

Assessment

System Act. The

regulation

supporting the

high efficiency

cogenerations

came into force

in 2007.

24

saving was

achieved. The

highest saving is

originated from

the Polish housing

sector mostly due

to the Thermo-

modernization and

Repairs Fund.

of the RED are

already

transposed and

are already

implemented

through the

amended Energy

Act. The new

RES Law will

serve the

optimization of

the existing

supporting

mechanisms and

will focus on the

transposition of

those provisions

of the RED which

are not covered

by the existing

Act and will need

to enter into force

later on, like the

certification

scheme of the

RES installers

from 2013 and

RES obligations

for buildings as of

2014.

RES connection to

the grid, electricity

network upgrade,

exemption from

excise duty,

stimulating the

industry through

RES technology

support etc.

Romania The implementation

of the Energy

The

implementation

In line with the

Art 14 of the ESD,

The

implementation of

According to the

RED, Romania

The

implementation

25

Performance of

Buildings Directive

2002/91/EC falls

within the


Ministry of Regional

Development and

Tourism. The

Directive is

transposed into

national law the Law

372/2005 adopted in

January 2007 and

provides the full

transposition of the

EPBD, together with

several Ministerial

Ordinances on

secondary

legislations.

of the Energy end

use efficiency and

Services

Directive

2006/32/EC falls

within the

responsibility of

the Ministry of

Economy Trade

and Business

Affairs, in

cooperation with

the Ministry of

Interior, Ministry

of Regional

Development and

Housing and

Ministry of Public

Finance. The

Directive is

transposed into

national

legislation by the

Governmental

Ordinance no

22/2008

supervised by the

Romanian Energy

regulatory

Authority based

on Gov. decree no

1428/2009.

Romania has

prepared and

submitted the 1st

and 2nd

NEEAP.

Has adopted a

national indicative

target of 13.5%

for the 2008-2016

period, and an

intermediary

target of 4.5% for

2010. The 2nd

NEEAP shows

that Romania has

doubled the

intermediary

target set for 2010

and is in line to

reach the 2016

targets.

the Renewable

Energy Directive

2009/28/EC falls

within the

responsibility of

the Ministry of

Economy, Trade

and Business

Affairs in

cooperation with

the National

Energy

Regulatory

Authority.

Responsible

Ministries in

relation to RES in

buildings are the

Ministry of

Regional

Development,

Ministry of

Environment and

Forests, Ministry

of Agriculture

and Rural

Development.

The transposition

of the RED was

done by

amending the

Law no. 220/2008

has to achieve a

minimum 24%

legally binding


of renewable

energy sources in

gross final energy

consumption by

2020 and 10%

renewables in the

transport sector.

According to the

NREAP, wind,

hydro and biomass

for CHP will be

the main sources

to achieve the

RES target.

The current key

policy instrument

in the country is

the quota

obligation based

on the Green

Certificates.

of the

Cogeneration

Directive

2004/8/EC falls

mainly within

the responsibility

of the Ministry

of Economy

Trade and

Business Affairs

together with the

National Energy

Regulatory

Authority. The

CHP is

transposed into

national

legislation

through the Gov.

Decree

219/2007. The

decree regulated

the cogeneration

efficiency

criteria, the

guarantees of

origin, access to

network, support

scheme for CHP-

E based on the

useful heat

demand. The

26

on promoting

energy produced

from renewable

energy sources

and several

Governmental

Decrees (88/2011,

935/2011). The

Law no 139/2010

is amending and

supplementing the

Law no.

220/2008.

Law no. 13/

2007 sets down

market rules to

assure the

priority access of

electricity

produced from

cogeneration.

The Netherlands The implementation

of the Energy

Performance of

Buildings Directive

2002/91/EC falls

within the


Ministry of Interior

and Kingdom

relations, the Dutch

Energy Agency is

the executive body

for the

implementation

process. The

Directive is

transposed into

national law through

the Decree on energy

The

implementation

of the Energy end

use efficiency and

Services

Directive

2006/32/EC falls

within the

responsibility of

the Ministry of

Economic

Affairs,

agriculture and

Innovation. The

directive will be

fully transposed

by the Rules

regarding energy

efficiency Law.

In line with the

Art 14 of the ESD,

the Netherlands

has prepared and

submitted the 1st

and 2nd

NEEAP.

Has adopted a

national indicative

target of 9% for

the 2008-2016

period, and an

intermediary

target of 2% for

2010. In the 2nd

NEEAP there is

some re-

interpretation of

saving reported in

the 1st NEEAP.

The

implementation of

the Renewable

Energy Directive

2009/28/EC falls

within the

responsibility of

the Ministry of

Economic

Affairs,

Agriculture and

Innovation and

the Ministry of

Infrastructure and

the Environment.

The transposition

of the RED was

done through the

Environmental

According to the

RED, the

Netherlands has to

achieve a

minimum 14%

legally binding


of renewable

energy sources in

gross final energy

consumption by

2020 and 10%

renewables in the

transport sector.

The main

supporting

instrument for

RES energy

production is the

The

implementation

of the

Cogeneration

Directive

2004/8/EC falls

mainly within

the responsibility

of the Ministry

of Economic

Affairs. The

CHP is

transposed into

national

legislation,

however there

are criticism

related to the

support given

27

performance of

buildings called

BEG and through the

Regulation on

energy performance

of buildings called

REG. The inspection

of A/C is regulated

through different

law, but this will be

changed and it will

be regulated in the

Environmental Law.

Explanation is that

in the 2nd

NEEAP

all kind of savings

arising from

policy measures

and autonomously

can be included

under the total

savings. The

intermediary

targets have been

met and the 2nd

NEEAP states that

2016 target will

also be met.

Law Act from

2010 and the Act

on biofuels from

January 2011,

however there is a

need for

secondary

legislations to be

approved.

so called SDE+

feed in premium

scheme, planned

to enter into force

from mid 2011.

the scheme is

supporting the

short term

implementation of

renewable energy

projects. The size

of the premium

will be adjusted to

the technology

used and to the

wholesale price of

the electricity

produced.

and market

penetration. The

SDE+ is

expected to

provide help

regarding the

CHP uptake in

the Netherlands.

28

2. Comparison of the five energy audits

The table below summarizes and compares the energy audits made in the five target countries.

Information provided from this exercise is used in the further in the analysis section.

Bulgaria Hungary the Netherlands

Poland Romania

Type of House

Multifamily

residential

building. The

building has 4

floors with

basement and

attic. The

construction is

solid with

vertical load-

bearing walls of

brick masonry

(solid bricks)

and concrete

slabs. The

foundations are

from stone

mansory. The

building has two

sections each

with 8

apartments. The

roof is wooden

pitched “cold”

roof covered

with ceramic

tiles. Most of the

attics in the

building are not

used (in some

cases they are

used for

storage).

Three storey

family brick

house,

covered with

Thermopor

ceramic and

built between

1985 and

1995.

Two storey

brick semi

detached

family house.

Three storey

traditional

family brick

house with one

apartment and

3 occupants.

Multifamily

residential

building. The

block

comprises 39

appartments

with balconies

and common

areas (casa

scării,

basement,

lavatories and

drying rooms).

Energy Efficiency Target

After

implementation

of the proposed

energy

efficiency

Maximum

achievable is

81% savings.

38.6%

reduction in

consumption

77.4%

reduction in

heating

consumption.

From the

analysis of

values

indicated in

energy audit

29

measures the

energy

consumption

will be reduced

to 107.2

kWh/m2a, which

is 61%

reduction.

results that the

proposed

solutions /

package for

modernization

lead to energy

savings of 0.34

– 17.39%, the

total relative

savings being

31.95%

Proposed Technology

Walls insulation

- 100 mm EPS,

Roof insulation

– 110 mm XPS

and mineral

wool, Windows

replacement –

triple glazing,

PVC profile,

Floor insulation–

100 mm XPS,

Flow restrictors

for DHW,

Energy efficient

lighting,

Behavior change

and new

appliances

Energy

efficient

windows, roof

and wall

insulation,

upgrading

heating

system,

condensating

gas boiler or

heat pump or

pellet boiler,

solar panel for

hot water

production,

ventilation,

radiator

valves,

heating

control,

insulating

pipes of the

hot water

system and

install control

system on the

hot water

system. Eight

different

options are

offered in the

energy audit.

Exterior

wall, ground

floor and

roof

insulation,

high efficient

glazing, solar

collector for

hot water

production,

Change of

heating

system,

insulation of

slab over the

basement,

modernization

of DHW

system,

insulation of

roof,

modernization

of ventilation

system,

insulation of

external walls.

General

energetic

rehabilitation

of the

building’s

envelope by

thermal

insulation of

the facades and

rehabilitation

of the finishes;

The changing

of the carpentry

with PVC

frames and

thermo-

insulated

windows;

Terrace

thermo-

insulation;

thermo-

insulation of

the stairs/

garbage

disposal

entrance and

thermal

insulation of

the ceiling

above the un-

heated

basement;

The necessity

of total

rehabilitation

of the heating

and hot water

30

pipes

distribution

network etc. at

the

investigation

date of the

building, the

process of

rehabilitation

concerning the

basement

installations

was still

running, being

rehabilitated

approximately

80% of the

total

distribution

pipes for

heating and

domestic hot

water.

Financing Demand

77 005.67 EUR In option 5

with the

highest saving

potential of

81% the total

investment

cost is:

18.960.000

HUF

(Windows 3

million,

insulation

5.96 million,

heat pump

with solar hot

water system

5 million)

65.380 EUR

4.776 EUR. 77.168 PLN =

17.795 EUR

115.068 EUR

Gap in Financing

The upfront

capital cost is

significant. It is

over 77 thousand

EUR. The

simple payback

is just over 8

Simple

payback of

measures is

between 19

and 50 years.

It is very

challenging to

The simple

payback is 8

years. The

upfront

investment

cost is not

very high,

The upfront

cost is

significant.

The simple

payback is

23.6 years.

The owner

The total

upfront cost is

significant,

11.068 EUR.

The simple

payback in

unknown.

31

years. secure funding

for this long

period.

however, the

8 year

payback can

represent

barrier.

plans to

finance 80% of

the project

from loan.

However, it is

difficult to

secure funding

for over 20

years.

3. Comparison of finance mechanisms

The following table summarizes the financing mechanism in the target countries.The

assessment focuses on the following key characteristics of the programmes:

• Scale: Programmes with small scale are marked if they offer financing below EUR 1

million and if they are able to support small number of home retrofits (below 500).

Medium scale is up to EUR 5 million and 2500 homes. Anything above it falls into the

category of large. Scaling is important because we search for large scale financing

mechanisms which are able to successfully handle ten thousands of retrofit projects

and not only a few hundred or less.

• Type: The type of financial instrument, and the financial product are assessed.

Currently the most popular financial instruments are grants, interest rate subsidies,

loan guarantee subsidies, advisory support in the form of the energy audit and tax

relief. The conditions of these different types of supports are also assessed with the

aim of being able to tell what type of supports with what type of conditions lead likely

to a successful large scale finance programme.

• Measures: Measures and aimed carbon dioxide and/or energy saving reductions are

also covered. The aim is to look at which mechanisms are able to address the problem

of the “lock in” effect, with other words, which mechanisms are able to provide

financing for deep retrofit of homes, aiming to achieve 60 or higher % of savings in

carbon dioxide and energy consumption.

• Administration: Information on procedural practices are also collected, to look for

mechanisms which work with streamlined procedures of application, decision making

and administration of financing support. The aim is to assess streamlined procedures

which likely to be more preferable for applicants than procedures which make

decision on projects one by one.

• Implementation: The management and implementation structures of the programmes

and mechanisms are also examined. Two main different types of structures are

distinguished, the centralized and the decentralized management approaches. The aim

is to see which one is more supportive to make a finance programme more successful

and achieve larger scale of financing and larger number of retrofit projects.

32

• Gaps: The aim is to identify any gaps or areas for improvement looking at the original

aim of the programmes and in the case the original goals were not achieved we try to

identify the reasons and identify the gaps which have to be addressed in order to

improve efficiency of programmes.

33

The following table summarizes the findings:

Countries and names of programmes

Scale (small, medium, large)

Financial instrument and financial product (grant, subsidy, terms and conditions of the financial support)

Measures and savings are targeted

(EE measures and sectors)

Streamlined procedures (yes or no)

Implementation and management

(local, centralized, accessibility)

Gap

(between aim and what the programme achieved or capable to achieve and how far it is from supporting to avoid the ‘lock in’ effect)

Development Banks WB-IFC Bulgaria-

BgEEF

Large scale programme,

with approx. EUR 10

million. The programme

has a residential

component as well but it

is unknown how many

projects they supported.

Further research is

needed

Provides advisory

support, loans and

credit guarantees

and portfolio

guarantees for the

residential housing

sector.

Energy

efficiency and

renewable

energy measures

in general.

Sectors:

municipal,

private industrial

and residential

sectors

Information is

not available.

Further

research is

needed.

Locally managed Information is not

available. Further

research is needed

Hugnary-

HEECP


with approx. EUR 12


Provides advisory

support and credit as

well as portfolio

Energy

efficiency and

renewable

Yes, in the

second phase

of the

Locally managed

34

has a residential

component which

supported over 50.000

home refurbishments

guarantees energy measures

in general.

Residential

housing sector

(multi family

homes),

municipal and

industrial sectors

programme all

procedures

were

streamlined

Central

Eastern

Europe-CEEF


with approx. EUR 112.5


has a residential

component. Number of

supported homes is

unknown. More research

is needed.

Provides advisory

support and credit as

well as portfolio

guarantees

Energy

efficiency and

renewable

energy measures

in general.

Residential

housing sector

(multi family

homes),

municipal and

industrial sectors

Yes, all

procedures

were

streamlined

Locally managed

KfW Germany -

Communal

Credit

programme

Large scale programme.

The programme supports

residential home retrofit

and new build. In 2008

more than 500.000

homes were supported.

Provides advisory

support and loan

support (interest rate

subsidy)

Energy

efficiency and

renewable

energy measures

in general

Residential

housing sector

Yes Locally managed

and available

through local

commercial banks

EBRD Bulgaria

35

Residential

Energy

Efficiency

Credit Line


with approx. EUR 50


supports residential home

retrofit. More than

28.000 home

refurbishments were

supported

Grants and loans.

Grants are provided

in the percentage of

the loan.

Energy

efficiency and

renewable

energy measures

in general

Residential

housing sector

both for

individual home

owners and

block of flats

Information is

not available.

Further

research is

needed

Locally managed

and available

through local

commercial banks

Modest success

Hungary –

EBRD credit

line

Large scale, EUR 40

million was allocated for

2 commercial banks.

Indirect support for

residential buildings via

municipal projects.

Loan scheme and

from additional

funding from the

European

Commission

advisory support for

banks and

municipalities were

also provided

Energy

efficiency

measures

Municipal sector

(residential

sector only

indirectly

supported via

upgrading

district heating

networks)

Yes Locally managed

by commercial

banks

Governmental Programmes Romania Subsidised

housing saving

account

The scale of the loan

programme can be only

estimated, because it is

attached to the

governmental grant

programme under which

Loan scheme (100%

of the interest is

covered by the

government) The loan is attached

to two governmental

Energy

efficiency

measures for

individual home

owners and

multi family

Information is

not available

Information is not

available

Target is 1.2

million flat and

only 5% of the

target was

reached out.

Estimated that

36

EUR 35.3 million was

allocated yearly in 2010

and 2011 60.000 homes

were supported.

Approximately 25% of

the capital cost was loan,

therefore we assume that

the loan program had a

scale of EUR 25 million

programmes, the

Thermal

rehabilitation loan

for individuals and

the Rehabilitation

credit for apartment

owners associations

house owners 100 years would

be needed to

reach target.

Hungary Subsidised

housing saving

account

Unknown Grant scheme,

providing

percentage of

savings as grant for

home owners

Energy

efficiency

measures for

residential

building sector

Yes Locally managed

via building

societies

Interest rate

subsidy

The National

Development Bank

reported that the scale of

the program was EUR 40

million. (panel plus

programme). However,

the interest subsidy is

available for other types

of retrofit loans,

therefore the scale is

bigger than EUR 40, but

the exact number is

unknown

Loan scheme,

providing interest

subsidy

Energy

efficiency

measures for

residential

building (multi

family

apartment

buildings)

Yes Locally managed

via commercial

banks

Poland Thermo

modernization

Large scale, EUR 72

million yearly from the

Grant scheme, 25%

of the loan taken by

Energy

efficiency

No.

Complicated

Centralized,

managed by the

The aim was to

refurbish 2.4

37

fund

government. 20000

home refurbishment was

supported

home owners or

16% of the total

investment cost of

the refurbishment

measures for

residential

buildings

application

procedure

National Economy

Bank

million homes

within 10 years.

However, the

programme

funded only 500

to 1500 per year

The Netherlands The Green

Fund Scheme

Large scale, EUR 7

billion. Supported over

5.000 projects including

sustainable housing

Loan scheme.

Interest subsidy: 2%

off from the

commercial interest

rate

“Green” projects

(criteria is

unknown) in

organic

agriculture,

sustainable

greenhouses,

nature

conservation and

residential

buildings

Unknown Locally managed

via commercial

banks

TELI-EE in

low-income

households

Medium scale, EUR

5million was allocated

Grant in 80% and

loan in 20%. The

loan scheme is

subsidized but it is

unknown how

Energy

efficiency

measures in low

income

households

Green

mortgage

Unknown Loan scheme, 1%

interest subsidy

deducted from

commercial loan

rates

Sustainable

housing.

Definition is

unknown.

Available for

retrofit and new

built too.

Unknown Locally

implemented by

commercial banks

The UK The green deal EUR 250 million will be Grant, but after the Energy Unknown Implemented by The plan is to

38

allocated in the first year

to support early uptakes

EUR 250 million it

is expected that no

public money will

be required

efficiency

measures for

residential

housing

Green Deal

providers locally

support 150.000

home

refurbishment in

the first year of

operation in 2013

Eco-fit loan Small scale with EUR

360.000. 35 homes were

supported

Grant support to

provide advisory

support in the form

of a home energy

plan or audit and a

loan scheme to

provide £10.000

maximum per house

and zero interest

rate with EUR 40

payment obligation

per month

Energy

efficiency and

renewable

energy measures

for residential

home owners

No Locally managed

by the East

Hampshire District

Council Whitehill

and Bordon Eco

town team

The programme

met its goals

39

Scale

Most of the programmes are large scale programmes, exceeding the EUR 5 million budget in

total. The main question here is how much these programmes spend on each household to

facilitate the energy efficient refurbishment. Among the housing loan schemes the spending

per household varies between EUR 240 (HEECP, Hungary) and EUR 10.200 (Eco-fit loan,

The UK). The HEECP programme is a guarantee scheme and the Eco-fit loan is an interest

free loan scheme where 100% of the capital cost is provided as a repayable loan. Based on

these two examples, with EUR 1 million investment into the programme, HEECP could

support 4.166 home refurbishments in Hungary (0.10415% of existing housing stock in

Hungary) and Eco-fit could support 97.2 thousand homes (0.16% of UK housing stock) it

could be possible to support.

HEECP utilized EUR 12 million and supported over 50 thousand home refurbishments over

the years of programme operation and spent EUR 240 on each home. Proportionally with the

EUR 1 million into the programme it could be possible to support 4.166 home refurbishments.

There are approximately 4 million homes in Hungary, therefore the 4.166 homes represents

0.10415% of existing homes. The Eco-fit loan utilized EUR 360.000 and supported 35 homes,

spending EUR 10.200 on each homes. Proportionally, the EUR 1 million investments into the

programme could support 97 home refurbishments. There are approximately 60 million

homes in the UK, therefore the 97 homes represents 0.00016167% of the existing housing

stock in the UK.

Based on this example with one unit investment into a loan guarantee scheme it is possible to

support 43 times more homes than with one unit investment into an interest free loan scheme.

At this section the details of the schemes are not important rather the general impression

about the fact that loan guarantees are cheaper than interest free loans in general.

The second important beside the loans value is the uptake of the programmes. Data is not

always available, therefore the comparison of all programmes listed above cannot be done,

however, it can be highlighted that both HEECP and CEEF, as well as the Thermo

modernization fund in Poland reported slow start up and uptakes from end-users. The general

message is that when a programme announces a certain scale it might take more years to

reach that level of investment size than it was planned and expected by the investors. By the

time when the programme and the financial mechanism delivers results, investors might

decide to close the programme. For example in the case of HEECP it took 10 years to reach

the number of 50.000 home refurbishments. By the time when the programme demonstrated

that it is capable to deliver large scale residential housing retrofit, the investor decided to

close the programme in 2008. Continuing the programme and investing more into it could

have increased the number of home refurbishments exponentially in the following years.

Demand is another key issue. Is the market ready to soak up available funding? In some cases

it takes only month to fully utilize available funding and in some other cases it takes years for

the market to upscale.

Financial instrument and the financial product

40

Most of the progremmes offer grants and or loan interest subsidies. Often small scale grants

are offered to finance energy audit and larger scale of grants are offered to partially fund the

capital cost of the investment. Capital cost grants are offered as a percentage of the loan or as

a percentage of the capital cost of the project. In many cases the grant scheme is directly

attached to the loan scheme or to a governmental programme to facilitate quicker uptake from

end-users. Even if the subsidized schemes are not directly advertised as to be attached to

governmental grant schemes, they are often used mostly with the governmental funds, serving

as the required own funds from applicants for grant funding.

The level of grant can achieve the 80% intensity (TELI-EE programme in the Netherlands),

but usually they are in the range of 20-50% of the investment cost. In some advanced

programmes the level of grant is matched with the targeted energy savings. Those who save

more receive higher level of support. However, most of the programmes are lacking this

element. It could have been a good approach to aim for 60% emission reduction when the

funding intensity is high.

In case of interest subsidy programmes, the level of support varies. There are some

programmes where the level of support is 1% cut from the commercial interest rate (Green

mortgage, the Netherlands) and there are other programmes where the level of support is

much higher and can achieve the level of 6.75% cut (Interest rate subsidy programme,

Hungary) where the government provides 75% of the interest rate, which can mean 6.75%

with current market prices. In old member states such as the Netherlands (Green mortgage

scheme) and Germany (KfW scheme) 1-2% interest rate subsidy can mean a significant

support, because market based borrowing rates are obviously much lower than in new

member states such as in Hungary. Therefore, interest subsidy programmes are more

expensive in Central Eastern Europe than in Western Europe.

It might happen that preferential mortgage loans offering interest subsidies are successful in

Western Europe and they fail in Eastern Europe. The main reason is probably that providing

interest rate subsidy in Western Europe costs less because the base rate and interest margin is

lower than in Central Eastern European countries. Also, the disposable income of families are

different in Western and Eastern Europe. Average wages are lower in Eastern Europe than in

Western Europe, therefore the fuel bills and monthly loan payments for the same type of

investments means a greater burden on households even if the investment cost in Eastern

Europe is lower than in Western Europe.

Guarantee programmes support loans on a different way than interest subsidy programmes.

The interest subsidy is for reducing the monthly cost of loan repayments for the customers,

guarantee programmes are for reducing the collateral requirement from customers. Guarantee

schemes, such as the HEECP and CEEF are capable to reduce the collateral requirements

from borrowers to the minimum. HEECP for example replaces 100% of the required

collateral which means that borrowers do not have to offer any security such as mortgage or

cash security to be eligible for the loan.

Both interest subsidies and guarantees for household retrofit loans were able to generate large

interest, however, on longer term. It demonstrates that even if the finance conditions are very

41

favorable, often householders do not apply for the loans. Many programmes reported on slow

start up (HEECP, CEEF, Thermo modernization fund).

Guarantees and interest rate subsidies are very popular because they ease the access to loans

and also, they lower the payback time.

Measures and aimed carbon dioxide and/or energy saving reductions

In terms of measures most of the energy efficiency and renewable energy measures are

supported by the researched programmes. However, there is no programme which supports

only complex and deep retrofit projects. There are programmes which provide higher level of

support for higher energy efficiency savings (KfW programme) but most of the finance

schemes do not have any high level target. Many schemes are implemented via commercial

banks and energy saving is not the first priority for them. However, it should be, because the

more the borrower can save on energy cost, the more he becomes capable to pay back the

loan. It is possible that because the commercial banks are not motivated to support higher

level of energy savings, the governmental subsidy programmes which are linked to the banks

are potentially ‘bank washed’ and undermine the governmental targets of achieving the aimed

energy savings.

In the case studies there is limited information available on how much energy was saved

because many programmes do not require post-refurbishment monitoring. Grants are

available only for the energy audit which is about to show how much energy can be saved but

no grants are available usually for monitoring the actual energy cost savings. If it is not

obligatory, householders do not monitor energy savings because they are not willing to invest

into monitoring.

In the case it is not required or not funded, households do not make effort to do the energy

audit. They make decisions based on common knowledge or based on what the merchant

offers.

Most of the programmes are lacking having ambitious targets to avoid the lock in effect. The

most popular measures are insulation, boiler and heating upgrades and window exchanges.

Some programmes also support renewables, but most of the schemes are focusing on energy

efficiency measures only. Most of the programmes are aiming for the number of homes to be

retrofit at the first place, suggesting that most of the schemes are designed to reach as many

households are possible and they are not designed to save as many energy as possible.

Administration, Procedural practices

Procedural practices are important, because from the end-user point of view it is preferred if

the financing is easily accessible. Procedural practices can make a financing more or less

easily accessible depending on how the application is designed. Most of those programmes

which are implemented via commercial banks are using streamlined procedures. This means

that the end user has to apply for financing via the commercial bank and not from the fund

provider such as the government. This makes the financing more accessible, because the

banks usually have more offices, branches where the customers can apply and the

42

governments has only a few if any regional agencies to deal with applications. Also, banks are

profit oriented and they are interested in reducing administration costs of loans. Therefore,

banks are interested in simplifying application and decision making procedures.

Streamlining and simplification of application processes can have a direct impact on number

of applications. In the case of the HEECP programme for example all procedures were

streamlined in 2005 and if we look at the number of homes retrofitted prior and after 2005 we

can see a significant growth in number of applications and issued loans. Of course, there are

other factors which could have resulted in increased number of projects, but the finance

institution reported that they were able to handle more applications because of the streamlined

procedures.

Management and implementation structures

Governmental programmes without the involvement of commercial banks are likely to be

more centralized simply for the reason that they do not have the capacity to keep large

number of offices. Usually finance programmes are implemented via the national

development banks such as the interest rate subsidy programme in Hungary. Then the national

development bank tenders the programme and invites commercial banks to participate in

implementation.

It can be true for those programmes which are created by development banks. They usually

centralize their operations. They rather delegate responsibilities to local commercial banks

than to their own local office staff because they don’t have decision making bodies in country

offices. For example, when the HEECP was decentralized, meaning that decision makings

were delegated from the head quarters of IFC, the commercial banks were delegated to

implement the guarantee scheme and the local office staff of IFC remained responsible to

oversee and facilitate the work of the commercial bank. It can be a very efficient approach,

because it reduces cost. The commercial banks already have a full operation and decision

making system in place in the given country or in the branches. Therefore it is not feasible to

duplicate it via moving management responsibilities of large development banks into the

regions or countries. However, these development banks should consider delegating these

authorities to the commercial banks early to achieve maximum effect. In the case of HEECP

for example, it took more than 5 years to “fully trust” in banks.

Gaps or areas for improvement

It is very difficult to obtain information on original targets of programmes and how these

targets were achieved. When this information is available a huge gap can be seen in terms of

the 2050 target of reducing carbon dioxide emission by 80% will not be met with the support

of these finance programmes.

Most of the programmes are designed in a way that they are capable to achieve only

maximum 40% energy savings such as insulation and building envelop projects. But in reality

they might achieve even less. Most of the programmes are focusing on how many homes

43

received support rather than how much energy was saved. To achieve the 2050 targets of

reducing emissions by 80% with the support of these programmes would require significant

amount of support from governments or development banks, which might not available, and it

would take more than 50 years refurbish housing stock to high standard to avoid the lock in

effect.

III. Analysis of the findings Some of the aforementioned programmes (for example in Bulgaria) have been modestly to

moderately successful so far. Some reasons are obvious, such as the unsupportive legal

framework (for example in Bulgaria the outdated condominium law updated only recently)

others are more strongly related to less transparent political and market barriers. In Poland for

example, although the main programme available has had an impact on the energy efficiency

market, there are many elements of that programme that limits the impact compared to what it

could achieve. One of the most striking difference between the “thermo-modernisation fund”

scheme and other grant schemes present in the CEE region that it requires the owners (all

form) to have own funds of at least 20% of the investment need, and limits the loan to

maximum 80% of the investment, while providing attached to the loan a maximum of 16%

grant of the investment need. While in Romania we can see the exact opposite trend,

especially when it comes to the fact that the grant is not attached to the loan, but rather

independent. There are many implications when it comes to large scale programmes and

being either on the extreme side of the horse: a “loan-own funds scheme” (64% +20%,

required own funds, small grant of 16%) (Polish) or a “grant-loan scheme” (80% + 20%, no

need for own funds/savings) (Romanian). In the Netherlands for example there are some

disadvantages of the green fund scheme in relation with the building sector. The largest

proportion of projects focus on non-residential sector, such as organic agriculture, sustainable

greenhouses and nature conservation. The narrow market line is dictated by “be profitable but

not too profitable” dictum. Only physical persons can invest with a cap of 47.000 euro per

investor. In the case of housing project the same amount is the limit per house.

Neither legislation nor governmental programmes influence the market to achieve 60%

emission reduction and governmental programmes also not aim for high level of reductions.

In some cases governmental programmes providing up to 80% subsidies but they did not

promote high level (60%) emission reduction targets. Programmes implemented by

commercial banks also do not target high level of emission reductions. Current legislation and

most of the governmental programmes result in only 20-40% emission reduction. The key

issue with legislation is how governments implement them. Governments might be efficient

in adopting European legislation, but there are several issues related to secondary legislations,

and the efficiency of actual implementation. The directives together should aim for achieving

the expected results, but there are difficulties in synchronizing them. In some cases the

directives contradict. For example, in Hungary one directive supported the implementation of

biomass combined heat and power (CHP) technology, resulting in many inefficient projects,

44

because the market took the advantage of the directive and implemented biomass CHP

projects in areas where this technology was less efficient. This was the result of contradicting

directives. Legislation must be synchronized to be able to achieve maximum efficiency.

IV. Conclusion, Recommendation

The currently available legislation and governmental subsidies and finance mechanisms

motivate the market to achieve 20-40% emission reductions. This is much below the 2050

80% reduction target. In order to move into the direction of increasing saving targets and

achieve 60 to 80% emission reduction, legislation, governmental policies and finance

mechanisms need to be further improved.

At the legislation front the first priority is to harmonize the different directives at country

level to achieve high efficiency in implementation. The more accurate development of

secondary legislations, regulations are also needed and harmonization between different laws

at national level is also needed. Building capacity at national and local government level to be

able to efficiently implement and monitor programmes is important. Householders need

information and advice in order to be able to decide how to implement an energy efficiency

project. Without an energy audit and proper advice from an independent body, such as a local

government office, local energy agency it is very difficult for a household to decide which is

the most efficient investments. There are initiatives at EU and local government level to run

energy advisory offices or at least hire an energy expert who is available for the households,

but only in small scale. Usually local governments don’t have the human resource and

financial capacity to provide such a service for the public. As an effect, an average household

who has no access to independent advice, the family will make decision based on common

knowledge or based on an advice from a merchant who is usually interested to sell his or her

own product.

In order to achieve 60% emission reduction, it is very likely that renewable technologies will

have to be implemented. This further complicates the issue. New or unknown technologies

are usually avoided by households who are afraid or simply not informed about the

technology. The cost of a complex investment is also higher than the cost of a 20-40%

emission reduction project. For example, the technical planning for a whole house retrofit

might cost more than the technical planning for replacing the windows and insulate the house.

The institutional framework also needs to be improved. The programmes have to be available

widely. Central and local governmental offices could be organized on a way that the available

governmental programmes become easily available for households and that governmental

offices have the capacity for implementing the programmes and monitor the results. These

offices should also have the role of raise awareness and increase market demand, making sure

that the available programmes are fully and efficiently utilized.

45

Governmental subsidy programmes are usually large scale programmes, suggesting that there

is sufficient amount of subsidy available to support energy efficiency retrofit in the residential

sector. However, innovative finance mechanisms could be developed to leverage

governmental funding more efficiently with private funding. It is also important that financing

programmes should be accessible easily and application procedures should be simplified and

streamlined to motivate the private sector to invest into large scale retrofit projects. The end-

users can be motivated with energy audits. Energy audits are important to show the end-user

the opportunities for saving energy and energy cost. Many governmental programmes support

energy audits which is reasonable because private house owners do not invest in energy audits

by themselves and they don’t make reasonable decisions without an energy audit because they

rely on common knowledge.

Post refurbishment and monitoring is also problematic because private home owners do not

pay for monitoring. Therefore there is no available data on how much savings were achieved

in reality. Governmental policies could also support the monitoring activity which would help

governments to collect energy consumption date and deliver the required reporting.

Finance mechanisms could also be further developed. Complex energy refurbishments,

achieving 60% savings usually have long payback time. The commercial banking sector lends

for five to ten years which is not always sufficient to finance a 60% reduction which might

pays back only in 30 years. Innovative finance mechanisms could reduce payback time and

could reduce security requirements to help end-users to have access to financing more easily.

Interest rate subsidies and guarantees are the most popular mechanisms because with the

combination of the two the payback time could be reduced to the level where private sector

becomes interested in investing into 60% reduction projects and guarantees can reduce the

security requirement which helps those end-users with lack of financial capacity to provide

security for loans.

46

Bibliography

http://www.ideal-epbd.eu

http://www.epbd-ca.eu

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http://ec.europa.eu/energy/efficiency/buildings/buildings_en.htm

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http://www.ecn.nl/units/ps/themes/renewable-energy/projects/nreap/reports/

http://ec.europa.eu/energy/renewables/reports/2011_en.htm

http://www.energiatanusitvany.hu

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rendszer.html

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http://www.cogeneurope.eu

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World Bank, MIGA, IFC: Assessing the Impact of IFC’s China Utility Based Energy

Efficiency Finance – 2010

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EBRD, Sustainable Energy Initiative Phase I. Strategic Review - 2011

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