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CECODHAS conference on Dec 9^th, 2008 – our final presentation of results ”Energy efficiency in housing: EU tools to unlock the potential”

Please find relevant information from single countries under the specific country space.

Famous Jeremy Rifkin, president of the US based foundation on economic trends, was the key note speaker at the CECHODAS conference. He set the scene that is now much more dramatic than we expected months ago. Actual results show climate change to be accelerating and our ecosystems less resilient than expected some time ago.

It seems clear that the planet will survive, as it survived 5 earlier extinctions of species. But the question is not answered whether mankind will. This way he reminded us of the challenges we are facing and the role innovative enterprises and stakeholders can play.
There are three crises that we have to face at the same time:

• Financial crises
• Energy availability and
• Climate change

The world needs to develop new principles of governance to find a new equilibrium between private endeavour and social security, it needs to reduce carbon consump-tion considerably and it has to improve the efficiency while using available energy sources.

But there is also hope as the crisis offers a chance to develop new technologies. Historical developments reveal an interesting relation between developments in energy technology and communication patterns. The 1^st industrial revolution based on the spreading of the coal based steam engine in the 19^th century was accompanied by the availability of cheap production of printing. It is interesting to see that the 2^nd industrial revolution based on the evolving oil production in the beginning of the 20^th century that brought up the car industry was in line with centralized wire based communication possibilities via telegraphs. The 3^rd revolution in communication certainly is based on computers and the internet offering tremendous possibilities to bring information to every home and any remote places. While the other industrial revolutions saw centralized energy supply patterns the actual revolution will see an ongoing decentralization of energy production. Sun, wind, garbage, agriculture or heat from the ground offer a kind of democratic access to energy resources for everyone instead of big, insecure centralized power plants.

The use of renewable energies therefore forms the first pillar for that 3^rd industrial revolution. The second one is formed by buildings that will need not only much less energy due to improved control systems but that will even produce energy by the use of solar radiation or wind power. CECODHAS representing 12% of the European building stock with its members could become a forerunner in this process when reduction in energy consumption would become a priority in refurbishment processes and be followed by own power production. While the first industrial revolution saw the development of big cities and the 2^nd industrial Revolution was accompanied by the development of suburbs the 3^rd industrial revolution will be concentrated on the role of single buildings.

The third pillar of that revolution will be another energy carrier in the form of hydrogen and the fourth pillar will be distributed electricity production and management. Within the next 25 years a trillion € will be spent to develop this infrastructure to make electricity available to everyone that has been produced in single buildings. Advanced metering systems need to be established in every building to allow measurement of incoming and outgoing electricity and to show possible improvements in energy efficiency.

In a 2^nd key note Jørgen Henningsen from the European policy centre made clear that EU policies are by far not being ambitious. He motivated us that the EU should and could go for 30% reduction target, but focus is on 20% only, which is really modest, if one adds up the reductions already achieved, the massive use of CDM, the renewables objective and the energy efficiency potential. His summary was that we now focus on real reductions of 0.5% a year, while 3-4% is necessary.

He called for seeing CO₂ as a pollutant, finally, so that it also becomes more natural to try to reduce emissions by law. He raised what is probably one of the main stumbling blocks for massive improvements of energy efficiency of houses: the extreme short payback periods that companies and consumers require: three years or less. That even governments think this way like Denmark which underlay 5 years.

Martin Elsberger of the Commission confirmed this bottleneck of the pay-back period. The recast Directive has a definition of “cost-optimal level” linked to life-cycle of a building. This is what it should be of course. But he was concerned this will be attacked and that the Commission has to compromise. Also important was his message that it does not make sense to invest in renewable energy on houses if they are not made energy efficient first.

InoFin could present its final findings during the afternoon session (form right to left) based on presentations by Georg Wagener-Lohse from Brandenburg, Prof. Dagnija Blumberga from Technical University Riga and Andrzeij Rajkiewicz form the Polish National Energy Conservation Agency NAPE. InoFin was able to compare financing tools from the different East European countries and based on experiences from its Danish, Dutch and German partners initiate new ideas for financing refurbishment. State owned banks play an important role offering loans with low interest rates while securing high performance refurbishment through auditing like in Poland and Germany. But heat supply companies could become sources for low investment means as well if they replace heat supply by capital supply making use of their existing contractual structures with the clients. Speakers made clear that high energy process are the best basis for fast pay back instead of subsidized energy prices that still exist in some countries. European financing schemes like Jessica must become adapted if they shall get broader influence. At the moment only few Polish regions have started negotiations with EIB. A final political advice from the project was formulated:

• Both sides have to intervene
  public-private partnership offers the best combination of the criteria and offers sustainable impact.
• Multiple policies are more effective than single measures
  No single policy instrument can fully resolve the problem
• A market for energy efficiency is needed
  weak demand requires few providers
• Strong political will is required
  Only private actors offer sufficient creativity and resources, they need political stimulation

In his concluding remarks John Hontelez from the European Environmental Bureau highlighted how CECODHAS members could unlock the potential of housing institu-tions to combat climate change:
Climate Change obliges us to see the housing sector as an action area of common interest, beyond the interest of the individual.

The energy saving potential is enormous. The 25% efficiency increase target of the old and new Directive together can be seen as just the start. Grenelle sets target of 38% for existing buildings! And we need longer term targets, example: in 30 years from now a zero-fossil fuels target for the housing stock as a whole. This also means that on the longer run we need to oblige renovation for all houses that are not energy efficient yet.

Financing is essential: the commercial pay-back period of 3 years or less cannot be accepted: we may need to OBLIGE owners to invest on a longer time scale, and help where this is appropriate. I understand we should not only focus on one-off investment costs, but also maintenance. Social Housing seems to be the right answer in these times, used as you are to think in terms of “forestry” rather than “agriculture” as Hans Fürst of Nassauische Heimstätte said.
Need to tackle fuel poverty! Means that public funding needs to make investing in energy efficiency more affordable for houses where low income groups live, and EU Structural Funds should be massively mobilized for that. Also, idea of varying rent to tell the “ecological truth”, lowering rent for badly isolated houses is a good one.

But also the energy price should reflect the ecologic truth; we need stable, high energy prices which gave a stable incentive for investing in energy efficiency. Several speakers said so. For lower incomes the revenues need to be used to increase their purchasing power.

Like WWF: Directive should be adopted without weakening, including on the definition of “cost-optimal level”. For new buildings we need to ask for zero-energy housing as soon as possible, we think by 2015 this should be possible. And definition of “major renovation” should be adapted to widen the scope.
Information to the public and training of entrepreneurs and workers is essential. These are national tasks, but EU encouragement is needed. And the EU initiative should not be undermined by too much demand for subsidiarity. We are convinced that not only Hungary is waiting for a “kiss” from Brussels.

We are pleased with the interest of CECODHAS to work with us. We do believe that working together we can combine the fight against climate change with socially sus-tainable development. We can become more effective because the social housing sector is a vanguard which experiences and develops the practical solutions and learns the practical problems. As EEB we want to move beyond the social housing sector and move into the other sectors, commercial buildings, commercial stock owners, private individual house owners.

We will discuss with our members how we can build upon the current concerns about climate change, the changing attitude of governments towards public investments and the growing and growing evidence of effective and affordable refurbishment actions. We will discuss how the environmental movement can give a major boost to energy efficiency policies in the building sector, cooperating, also on the national and local levels, with house owners, tenants, architects, public authorities.

With regards to the role of the EU, we would like to integrate this issue in the work we will start next month, with a wide range of EU civil society organization on an EU sustainability Agenda for the next decade. EEB will start this together with the ETUC and the Social Platform, with CECODHAS as one of the key members. We intend to work amongst NGOs till June and discuss the results then with the Council, via the Swedish Presidency, members of the new EP and the members of the new Commission. We will campaign for our points to be integrated in the political agenda for the next decade, in particular for the next commission.

Rest me to thank the European Commission, the Economic and Social Committee, Eurima and Husbanken for their support to this meeting, the speakers, and you all for your participation.

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In Bratislava partners met on Nov 20^th 2008 to discuss necessary political implications to unchain refurbishment possibilities by innovative financing schemes

Several participants represented stakeholders from partner countries like Ministry of Industry and Trade of Czech Republic, Ministry of Environment, Latvia; State Fund of Housing Development, Slovakia (_tátny fond rozvoja b_vania), Association of Flat Owners Associations, Slovakia (Zdru_enie SVB – spolo_enstiev vlastníkov bytov), Slovak Institute of Housing (In_titút b_vania) and the Slovak Association of Housing Cooperatives (SZBD – Slovensk_ zväz bytov_ch dru_stiev).

At the beginning Georg Wagener-Lohse stressed the importance of new models of thinking in planning the housing refurbishment. Actually housing refurbishment is viewed from the angle of investment and the capital costs. Energy costs however play an important role in the monthly expenditures of the tenants and must be taken into account as well. Know-how on energy efficient refurbishment often is neglected because it seems too expensive. Innovative financing schemes therefore aim at a shift from energy costs to capital costs not neglecting some spending on know-how.

Capital could be gained from other owners, form banks, from public funds, form th e tenants or from the landlord himself. This is influenced by monthly income of tenants, avoided costs, public guarantee, strengthened political importance, longer term contracts or the wanted rate of return.

Only the ratio between capital costs (€ per m²) and the avoided energy costs govern the economic viability of a refurbishment project. Lower added value tax on insulation material for example could reduce the investment costs but most of all high energy prices would improve the ratio.

Lowering capital costs could be achieved by competition among banks, reduced risk through secured savings, mortgage or other guarantee, maturity of the state financial system, competition on the refurbishment market, reduced added value tax for building material, reduced company tax on refurbishment projects, rather pay for investments than for energy cost support, get the tenant on board through changes in the rent law.

On the energy side following means could be applied: Choose the right standards, no money without audit, don’t neglect the carbon tax option, strengthen the emission certificate market, open housing market for emission trade, municipal standards for energy efficient facades, windows or roofs.

Other representatives gave short overviews of policy and market conditions for fi-nancing refurbishment of social housing in Slovakia, Poland, Bulgaria, Czech Repub-lic, Latvia and the Netherlands. Capital could be gained from other owners, form banks, from public funds, form th e tenants or from the landlord himself. This is influenced by monthly income of tenants, avoided costs, public guarantee, strengthened political importance, longer term contracts or the wanted rate of return.

Only the ratio between capital costs (€ per m²) and the avoided energy costs govern the economic viability of a refurbishment project. Lower added value tax on insulation material for example could reduce the investment costs but most of all high energy prices would improve the ratio.

Lowering capital costs could be achieved by competition among banks, reduced risk through secured savings, mortgage or other guarantee, maturity of the state financial system, competition on the refurbishment market, reduced added value tax for building material, reduced company tax on refurbishment projects, rather pay for investments than for energy cost support, get the tenant on board through changes in the rent law.

On the energy side following means could be applied: Choose the right standards, no money without audit, don’t neglect the carbon tax option, strengthen the emission certificate market, open housing market for emission trade, municipal standards for energy efficient facades, windows or roofs.

Other representatives gave short overviews of policy and market conditions for fi-nancing refurbishment of social housing in Slovakia, Poland, Bulgaria, Czech Repub-lic, Latvia and the Netherlands.

The most important particularities in each country were highlighted:

• Most part of housing fund is privately owned in Bulgaria, Slovakia, Czech Republic, Latvia and Poland.
• In most of the countries mainly public buildings, not block of flats are eligible for EU funds support.
• In Poland also private buildings are eligible for state budget support;
• In Bulgaria there is only one housing association, in the rest of countries (obligatory) forming of housing associations or hiring housing management company indicated success in effective management and refurbishment of social housing.

Following recommendations were derived for a change in policy:

• In Slovakia the amount of rent for the tenants in rental block of flats is being regulated by the state, what represents the biggest barrier for investment to energy efficiency and refurbishment. Restriction of state regulation in this sector would lead towards more effective refurbishment.
• In Poland although the state thermofund exists and supports the refurbishment, the allocation of funds is insufficient for such number of dwellings to be refurbished. Therefor the fund should start to provide recoverable support (long-term loans) without own sources providing;
• In Bulgaria the change of national policy towards enabling of forming of housing associations and cooperatives is absolutely necessary to run efficient process of social housing refurbishment;
• In Germany an adaptation of the rental law would help to invest higher amounts in refurbishment projects if the rent could be increased to a greater extent;
• An effective tool for complex urban areas renovation could be found in Jessica Fund, where EU financial sources from ERDF fund flows to local urban development funds. Instead of individual publicly supported investments on some coherent urban areas using Jessica fund would lead toward more effective and coordinated approach. On the other hand, crumbled ownership and interest of local stakeholders will represent the biggest obstacle to this process.

D16c-ECB-Bratislava.pdf

D16c-ECN-Bratislava.pdf

D16c-ENVIROS-Bratislava.pdf

D16c-MATRA-Bratislava.pdf

D16c-NAPE-Bratislava.pdf

D16c-NAPE-Jessica-Bratislava.pdf

D16c-SEC-Bratislava.pdf

D16c-Veenendal-Bratislava.pdf



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Conference Lübbenau/Brandenburg

On Sep 17^th and 18^th 2007 a conference in Lübbenau/Brandenburg presented the findings so far and the approaches in the different countries to find demonstration projects for most suitable financing schemes:

Lübbenau is situated half way between Berlin and Cottbus, the centre of southern Brandenburg counties. It may be reached via regional trains from Berlin Main station and via motorway A13 from the southern Berlin ring towards Cottbus and Dresden. Lübbenau is one of the centres of the nature and recreation resort ‘Spreewald forest’ with 100s of beautiful canals.

The first conference day will show good examples form Germany and will be started by Brandenburg’s minister for infrastructure Reinhold Dellmann. In the afternoon an extensive discussion between partners from the InoFin team and the audience will take place.
On the 2^nd day “WIS Wohnungsgesellschaft im Spreewald” offered an insight into their refurbishment practices.

Jürgen Schweinberger announced the finalization of the Brandenburg energy strategy 2020 that will set the scene for further political decisions in energy effi-ciency improvement and financing and the development of renewable energies for the coming years.

His ministry will support integrated concepts of cities which have been announced regional cores of growth to combine economic development, demonstration projects and energy refurbishment of buildings and district heat upgrading. Also Lübbenau will receive support under this scheme. Still a big challenge is the amount of empty flats, 165,000 at the moment in the whole of Brandenburg. 55,000 have to be deleted to keep up a running market for housing companies. Forming own property, supporting refurbishment, integrating supply structures are the main targets of their policy. 38 Mio. € will be paid for this task partly financed be Brandenburg, the German state and the municipalities.

Axel Vieweger, head of the East Europe working group of CECODHAS and presi-dent of the Saxonian housing association introduced the work of the Eurpean Liason office for housing. 20 Mio. flats are owned by the member companies and associations all over Europe. Most important is a legal framework that makes investment into housing attractive. Unfortunately the financing of the Polish Thermorenovation fund has become a topic of political debate during the actual election campaign. These kind of processes however need continuity. In Bulgaria a necessary legal process has been started to define common ownership.

It was a rather important achievement of CECODHAS to attract the structural funds policy for social housing refurbishment in the period from 2007 to 2013 in Eastern Europe. He pointed out as well that integrated approaches are necessary which com-bine economic development, competitiveness and attractive housing conditions. Structural funds may be used for developing research and development and training either.

Looking from an East German perspective sustainable growth may also represented through necessary shrinking. It must be kept in mind that the aim of sustainable urban development has only been defined through the New German Länder to fulfil the Lisbon targets.

He mentioned Jessica as well to highlight the possibility of building up funds for a time when European money isn’t available anymore for certain tasks. It is an important improvement that European money may be combined with private or other public resources. Jessica might help to offer low interest loans that help to make capital costs in refurbishment cheaper.

Comparing the situation in most of the East European countries with East Germany it is now clear the privatization policies were rather a means to get rid of the responsibility to refurbish existing buildings of poor quality. East German municipal owned housing companies could organize refurbishment much better than single owners in East European multi-family houses. It should be supported that cooperatives have to be formed in order to enable refurbishment projects.

Further contributions were made by Dr. Hans-Jürgen Gaudig, managing director of Berlin based BBP Bauconsult, member of the steering committee Brandenburg and an experienced expert in refurbishment of large housing estates in East and West Germany. He highlighted the role of sorrow and integrated planning processes as costs in the planning phase are much more effective than in the maintenance phase. He called on engineering companies to offer full services that include financing options as well as energetic concepts. Quality assurance often is neglected and may cause higher energy costs during the whole life time afterwards. Biogas as a new resource for CHP plants in housing estates is a new option that attracts housing companies more and more. Sufficient reduction in energy consumption today needs the installation of heat recovery systems. The German system of reduced interest rates through the state owned KfW bank on the basis of high energy conservation rates is an important support for sustainable developments.

Michael Jakobs, managing director of WIS, described his strategies to deal with shrinking population. 2,000 flats must be taken away from the market in Lübbenau till 2015 as population decreases. It is rather important to offer different types of buildings for different types of tenants to keep most of them. Older people must be taken into account as well as singles and young families with different available income and demands. One building could be refurbished to become a low energy building. The additional financing amount for introducing heat recovery however has not paid for the tenants with higher reduction in heating costs.

Since some years the institute for housing in Eastern Europe IWO works to transfer German know-how to East European countries. Its managing director Knut Höller described main experiences of this work. Unfortunately there are not so many examples of successful refurbishment projects with high quality and high reductions in energy consumption. In Riga a project could be supported by the Berlin Senate and Berlin housing companies to reduce energy consumption from 150 to 80 kWh per m² annually. Investments of 4,000 € per flat were needed which could be financed by 23 € per month. It is highly welcome that EU has offered 150 Mio. € till 2013 through its structural funds. However compared to the enormous sum of buildings this amount is nothing but a rather tiny start. Only 0.4% refurbishment rate is reached through these measures. A 30% CO₂ reduction till 2020 may not be reached under these constraints. Missing mortgage schemes, low know-how in the management, low duration of loans make them expensive, low prices for district heat are an obstacle for pay back time – these are only a few obstacles that have been identified. InoFin could play an important role describing innovative financing mechanisms.

Roland Leuck of LuWoGe, Ludwigshafen, referred to experiences with different re-furbishment schemes. Often existing building may be called energetic ruins which consume up to 220 kWh per m² annually and cost tenants up to 1,800 € heating costs per year. When tenants get the chance to move to better buildings it will become difficult to sell buildings under bad conditions. LuWoGe could compare different extents of refurbishment investing 350 € to gain 70 kWh/m_, 500 € to get to 50 kWh, 700 € to achieve 30 kWh and 1,000 € per m² to get to a passive-house standard. To gain high standards heat recovery is inevitable. With high standards new models for rents are achievable when additional costs (including heating) are kept constant. Demanding 1,5 €/m_ monthly credits can be paid back and 8% return is yielded. Dynamic amortisation calculations are necessary to get to economic viable results.
For the InoFin team Nils Daugaard from Energy Consulting Network summed up the actual status of the findings. Main elements to overcome the barriers for innovative financing are:

1. Raising the awareness towards implementation of energy saving measures,
2. Supporting qualification of loan applications,
3. Providing additional financing resources and
4. Improve accessibility of funds.
   

So it is not only important to provide financial means for refurbishment but also inte-gral support for consulting. No financial support without qualified audits. Mixing different sources of finance like structural funds, international financial support, commercial loans or revolving funds should become normal. Green investment schemes should be developed. In any case the softening of loans seems the better approach than the payment of grants. Lower interest rates, extended grace periods, longer amortisation time, interest subsidies or risk premiums are only a few means to achieve that. Among the partners several interesting approaches could be identified like use of structural funds in the Czech Republic, softening of loans in the Slovak Republic, set up of Jessica in Poland, ESCO schemes with municipal support in Latvia and new national grant schemes in Bulgaria.


Single partners (from right to left) underlined these findings in more detail during the panel discussion in the afternoon. Juraj Nagy, representing Energy Centre Bratislava, referred to the high number of dwellings in private onership. So no experience could be gained with housing associations. Would it be fair to invest structural funds money to private property? The private sector consumes 25% of the national energy balance so refurbishment becomes a topic of public interest to reduce this amount. Subsidies have been offered by the ministry of construction. The tools that were use had been rather effective. 12 bio € would be needed for all refurbishment. It would take time till 20143 based on the actual refurbishment rate – far to slow to change emissions. The example of the city of Martin forms a good basis for further development of schemes. Dutch DIGH bank supported the process of the municipal MATRA company with reduced interest rates. Experts assure performance of the results.

Andrzjey Raikjewicz of NAPE underlined the achievements that have been made in Poland through the thermorenovation fund but the amount of refurbishment is far too low to reach any substantial contributions to change CO₂ emissions. Jessica would need some adaptation to get higher response from more regions in Poland.

Prof. Dagnija Blumberga of Ekodoma decribed schemes from Latvia which did not work on the basis of subsidies. In Valmira loans without interest were offered for small scale investments. Ekodoma developed a scheme together with the district heating company in Daugavpils to make investments in improved heating technology available. The municipality paved the way with paying the necessary audit. The customer will pay less for heat, that has been avoided, and pay more for the service that has been offerend by the supply company.

Peter Busch from the Brandenburg Ministry of infrastructure and member of the Brandenburg steering committee highlighted the achievements in East Germany in comparison to Eastern Europe. Without economic viability refurbishment projects can not be managed by the housing companies. What Jessica does not achieve are individual guarantees for the bank. In Eastern Europe energy prices do not reveal the economic truth while in East Germany energy prices seem to be too high. Constraints in Germany help to follow an integrated approach that does not only concentrate on the building. Structural funds are important to support the integrative approach but for Eastern Europe they are not able to solve the full problem of refurbishment.

Evelina Stoykova from Sofia Energy Centre emphasized that 97% of the building stock in Bulgaria is private. A revolving fud for energy efficiency has been installed recently but only 4 projects have been started in 2006 based on a 5 year pay-back period. In many home in Bulgaria people can not afford heating all rooms. Missing legal basis for the formation of cooperative is one of the highest barriers. The recently launched EBRD credit line for residential buildings should become valuable for people with lower income but they cannot afford.

In 95% of all cases insulation based on Polystyrene and new plastic windows is the matter of choice in Czech refurbishment mentioned Tomas Vanicky of Enviros, Prague. The existing PANEL programme is not able to supply anough money for plenty of the needed refurbishment. With 300 mio. Czech crowns from the structural funds program only 40 buildings might be refurbished. So projects are mainly directed to underprivileged people. So many more efforts are necessary.

Georg Wagener-Lohse summed up the discussion stating that the future activities should concentrate on the aspects of ownership and refurbishment costs. Costs for refurbishment must be compared among the different partner countries and analysed with regard to their technical basis. Although missing funds are the basis for low budget refurbishments buildings may face damage and consecutive (expensive) following refurbishment if no proper concepts are realized. Aspects of information and motivation must be followed either as more demand is needed from the owners side.

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A kind of breakthrough offered the basis for the systematic design approach in Sofia

Sofia meeting on June 20^th 2007 showed a considerable progress in definition of financing schemes in relation to different saving measures.
Partners found a systematic approach to distinguish between the different financing schemes that are in place in the different countries. In the Czech Republic only soft loan systems have been asked for in the stakeholder workshop. In the Slovak Republic the offer of DIGH from the Netherlands to the project in Martin failed as it did not offer any advantages in comparison to the existing commercial loans. Nevertheless DIGH will exercise three different model projects with 3 different ownerships. Managers to follow the execution of the projects will be installed. Juraj Nagy gave some detailed information on Matra Company that was installed by the city of Martin. They offer 700 flats for rent for socially deprived people (social housing in the narrow sense).

From experience with the stakeholders following rules may be derived:

• Grants are appreciated but not realistic,
• soft loans could be gained sooner thus saving earlier,
• only limited financial resources are available in private budgets,
• pensioners, well earning couples and socially deprived people (sdp) have completely different background for financing refurbishment,
• structural funds offer money for very limited projects only,
• municipal funds are necessary for sdp,
• commercial funds to finance projects with pay-back-time below 5 years
  (mature economies like Cz, Sk, Lv offer interest rates around 6-7%, Bg due to higher risks behind: 12%),
• soft loans or green investment schemes would be suited to finance level B projects
• grant money is necessary to make level C refurbishments possible.

Comparison between the different countries shows that a development in interest rates may be seen: This development starts with high interest rates due to high insecurity in future developments and it goes to internationally usual average rates that differ only slightly. Only Bulgaria still is in a situation of high rates thus showing the highest difficulties to get refurbishment projects with higher pay back times financed. In the other East European economies interest rates may be handled but the rate of energy conservation with level A measures is too low to have a real impact on climate change and lowering the dependence on rising energy prices.

Partners summed up the experiences with lowering interest rates:

• Guarantee by mortgage, state or int. financing institutions
• Cashflow becomes guarantee
• Common (forced) ownership
• Full cost tariffs in energy supply
• Energy audits guarantee savings
• Paid energy audits if measures are realized
• Soft loan systems
• Longer pay-back periods
  

Looking for the practical cases in the 2^nd half of the project partners discuss opportunities in Slovakia, Prague, Poland and Bulgaria. As the situation is very difficult in Bulgaria one might distinguish between a project that might work and real clients that would take their money to pay a complete refurbishment of their building.

Partners summed up actual experiences:

• Different environment in the respective regions causes different solutions
• A solution for the ownership problem is necessary
• A constant lack of awareness works against strong developments
• Existing schemes are not able to solve the problem although tey are well designed
• Increasing investment costs shift the economy from more favourable to more difficult conditions
• Financing of level A projects is not any problem any longer in the mature economies
• Waiting for cheaper money hinders decisions
• A manager is needed to take a decision
• Preparation of projects must be supported to speed up the developments
• Changes in the tax system could help faster than grant schemes

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Cottbus was valuable for better understanding of next steps

The Brandenburg University of Technology in Cottbus/Brandenburg, home of CEBra-Centre for Energy Technology Brandenburg was the venue of the meeting on April 12^th 2007.

Under the leadership of workpackage 3 leader Energy Consulting Network from Denmark partners has to discuss the next steps in the design of tailored financing schemes. The InoFin project now had to face severe changes in political backgrounds till the beginning as the new Polish government is changing the rules of the Thermorenovation fund and Green investment schemes seem no longer to have the high priority in Latvia that was expected in November 2006.

The general conclusion drawn is following:

• accessibility if financing schemes has to be approved, also by softening loan conditions
• lack of awareness has to be improved, Dissemination from best practise from real cases
• quality of loan applications must be improved
• Additional financing resources must be found. Mixed funds, revolving funds and green investment schemes have to be checked

There is a considerable need for specific approaches in the respective countries and partners must agree upon best way forward in each country. The aim is to try to agree on main efforts/ common approaches. It would be useful to have a ranking on economic efficiency of the schemes that have been analysed so far. A next step of the work could be to check the replicability of country specific schemes in other countries. The effect of the limited structural funds could be enlarged by supporting soft loan schemes as the one from Germany’s KfW. Within structural funds rules obligations could be made on refurbishment of whole areas.

Due to the discussion it became obvious again that a common understanding of necessary refurbishment and a structure of different measures must be prepared. It was argued that only class” A” measures (pay-back below 5 years) would not be counted as a complete building renovation that would expand the life time for future need of the owners. In Poland 4,000 € per dwelling are needed for this kind of full renovation and a 45% reduction of energy consumption needs 60% of this investment. In Bulgaria the problem still exists that 100% of the owners have to accept the renovation before a project may be started. Partners agree that full refurbishment should be the basis for common efforts of InoFin. In the Czech Republic the search for a guarantee fund will be the key priority.


Finally partners agreed that four schemes will be the basis for further discussions:

• KfW from Germany as a soft loan scheme,
• Thermorenovation from Poland as a capital grant,
• investment by service provider in Latvia for low level financing and
• a revolving fund based on Czech ideas.

Partners will characterize typical projects by the EXCEL table from the LOCOSOC project and ABC measures will be defined according to pay back times of 5, 10 and 20 years reaching roughly 30, 45 and XX% reduction in energy consumption.

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National meetings became the basis to be better linked with stakeholders

The 3^rd half year was important with regard to stakeholder meetings that were orga-nized to discuss initial findings with innovative financing schemes in Riga, Warsaw, Prague and Sofia.

On March 29^th Prof. Dagnija Blumberga from Technical university of Riga presented Latvian financing schemes and some examples of building financing in the office of Ekodoma, Latvian partner of InoFin. She also put emphasis on the role of European financing in Latvian financing schemes.

During the presentation six different financing schemes were presented:

• Commercial loans;
• Municipal support with non-interest loan;
• TPF – municipality (house management or heat supply company) as ESCO;
• Extension of building;
• EU structural funds;
• Green Investment Schemes;

More detailed a TPF scheme where the municipality (house management or heat supply company) acts as ESCO was analyzed.

The scheme has specific characteristics like:

• Energy audit should be done before;
• Budget for municipalities is limited;
• Loan is paid back with money with is saved due to energy consumption re-duction.

Financial analysis with help of this scheme (municipality as ESCO) was performed for two existing buildings were energy audits are done.
In a second scheme which was presented Municipal support was given with noninterest loan. The City council of Valmiera has provided non-interest loans for dwelling buildings to improve energy efficiency. Until now more than 50 buildings have used more than 230,000 LVL to improve energy efficiency by heat insulation of roofs, change of windows and doors, installation of heat substation etc.. Until now municipality has not faced any problems with repayment of loan. But there is limited amount of money which is offered and the pay back period is short (3 – 4 years). A possibility to extend buildings also was presented as possibility to raise energy efficiency in buildings. At last EU structural funds was analyzed.

The main results of the discussion are summarised below:

• EU Structural fund grants are adjustable for very limited numbers of projects only;
• A very well established commercial loan system exists with attractive conditions but not many apartment owners take loans due to social barriers. The major disadvantage is the requirement that more than 75% of apartment owners have to agree to take loan. It is a very complicated issue that is deeply rooted in social and cultural barriers.
• As most promising scheme form stakeholder’s point of view tehj scheme has been identified where the municipality (house management or heat supply com-pany) acts as ESCO. This scheme could be combined with the commercial loan system. In this case interest rate could be much lower than in existing commercial loan systems. This scheme has very high potential to be combined with other schemes. It’s not really clear who will be responsible if predicted energy savings are not reached and in the end the repayment of loan could not be realized. It should however be elaborated in the future.
• The participants were very satisfied with the organized discussion table and discussions continued far longer than it was planned;
• Representatives of municipalities and property owner cooperatives shared their concerns, ideas, and experience on building renovations. Some of them were potentially interested to use the TPF scheme.

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Tessaloniki showed the first public presentation of results at CECODHAS

Tessaloniki was chosen as the third meeting place as it was chosen as venue for the annual conference of CECODHAS the European Lieson office for social housing on Nov 6^th and 7^th 2006.

This time Miroslav Maly from the Czech partner ENVIROS explained the importance of guarantee in the Czech Republic. Financing of refurbishment of panel blocks is difficult as they have no financial value and banks therefore are missing guarantees for their involvement. Old cooperatives work quite well because of good attitude towards property. Financing refurbishment seems most difficult if the ownership is mixed – partly privatized partly under ownership of the municipality. All together 1.5 bn € were spent annually in the Czech Republic on refurbishment. There is no lack of money in the market as the banks have plenty of it. Pay back possibilities and guarantee in financing projects are key issues. May be we could work more successfully with those banks that are in close contacts with municipalities. Difficulties in realization of refurbishment projects are also due to the change in consciousness after socialist times. The value of property must become more important and the understanding for long time financing projects must grow. Some construction companies have started to understand that a full service offer including financing is the basis for a successful refurbishment project. There is also a lack of understanding that buildings are more than concrete envelopes for living spaces. Buildings work according to certain technical rules that are the background for energy consumption. Within refurbishment they must be obeyed. Condominiums are an important basis for possible refurbishment projects as they are able to collect money for standard refurbishment and bigger investments. They are marked by an elected president and an accountant, which are paid for their services.

Andrezej Raikjewicz, Vice president of the Polish partner NAPE, presented Polish experiences. In projects supported by the Thermorenovation fund the average pay-back time is 9 years. In Poland a strong interest exists to combine the Fund with means from structural funds. After a slow start of the programme meanwhile 26 Mio. € are allocated annually and in 2006 the money was already spent in May for 1,700 bonuses. For 2007 altogether 2,500 applications have been submitted and 64 Mio. € have been planned in the state budget. 81% of these means are spent on apartment blocks and 50% of these are run by housing associations. Additional funds exist for new buildings for vulnerable people. Five Polish banks have specialized themselves for financing social housing buildings. Meanwhile also a union of cooperatives is existing and a federation of managers working for their members. NAPE will collect opinions from different stakeholders regarding the further development of the Thermorenovation fund. It was most important that the banking sector in Poland could learn that cooperatives of apartment owners are reliable customers for loans. Today they feel that these customers are most reliable. It is important for the success of the refurbishment in Poland that majority rules the decisions for the reconstruction and not the opinion of single owners. By the measures that are guaranteed by an energy audit (central heating reconstruction, walls, roof, stair cases) monthly heating costs of 75 Ct/m_ may be reduced by 40%. Owners have to contribute 20% of the refurbishment costs before the project starts and 80% is financed by a normal credit, from which 25% is contributed through the Thermorenovation fund. The renovation of windows usually is taken as a private measure of the apartment owner. Recommendations for the next steps are prepared, i.e. lower interest rates than 4.3% by combination with structural funds means that should be invested for areas to be revitalized under re-gional operational programs. Power supply refurbishment will be supported by means from the cohesion fund.

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Prague proved that 2^nd step privatization was the best choice

Following meeting took place in Prague on June 22^nd and 23^rd 2006 and was dedicated to exchange on experiences documented under Workpackage 2 “The need for intervention - Situation in Financing Social Housing refurbishment”.

Michael ten Donkelaar from the Dutch experienced partner ECN gave an intro-duction to the Dutch social housing situation. According to definition social housing in the Netherlands means belonging to cooperatives (organized under AEDES). From 6.8 Mio dwellings 2.4 belong to the social housing sector (roughly 50:50 single family houses and apartments). There is a slightly higher annual energy consumption (62 kWh/m_ instead of 50) due to lower quality in material. The standard for energy consumption has been reduced after 1995 from 100 to 50 kWh/m_. The Dutch average is at 82 kWh/m_ (including domestic hot water) which are supplied mainly by natural gas (99.5%) and mostly by central heating (86%), 4% are supplied by district heat, 10% use single heaters. Rules exist to reduce the max. allowed rise in rents. A rent bonus act exists. Tenants organize themselves in tenant commissions. A Dutch guarantee fund for social housing and a Dutch municipality bank help in financing. Insulation grants had been introduced after 1978 but were stopped due to budgetary reasons recently.

First findings from an analysis of barriers were shown in the following graph:





Nils Daugaard, partner from the Energy consulting network, introduced the Danish situation that shows decreasing consumption standards since 1945. 161 kWh/m_ have been typical before the war. After 1991 just 64 kWh/m_ became standard. In Denmark 80% of multi family houses are supplied by district heat, which is based in 90% in CHP generation where 30% use municipal waste and biomass. 7.5% of the average spending goes to energy (4.4% for heating). In 2002 tenants had to pay 150 € per month for electricity and heat. The “Act on the Rent of Social Dwellings”, “Law on energy savings in buildings” and the “Energy Labelling and Energy Certificate” are national regulations under the Ministry of Social Affairs. At present, there exist 700 social housing associations with approx. 8,000 departments. There are three forms: social housing for families, for elderly and for social youth residents. There is a high degree of local democracy; meaning that technical changes and purchase of equipment is to be approved after a collective process in which tenants/local social housing departments express their interest and make their influence. Social housing is financed in a differentiated mix of tenants, state and municipality. By political agreement 2005, a National Building Fund has been established to support construction of new social housing as well as refurbishment with the primary aim of avoiding ghetto development. Today this fund is the key source for construction works. There are very few examples of ESCO arrangements or similar concepts in general. Decision-making in favour of energy retrofitting can be troublesome, especially in case of large projects. The Na-tional Building Fund is not yet dedicated to energy retrofitting.

Georg Wagener-Lohse from CEBra GmbH, Cottbus/Brandenburg, explained the differences between East and West Germany that still exist. In general the average size of flats is lower in the East (77m_) than in the West (99 m_). In East Germany the dominant heat source has been brown coal supplied via district heating systems while DH in West Germany has only been introduced occasionally. After the reunification plenty of refurbishments have brought natural gas as a new heat source to social housing estates. Germany has different zones for climate and uses different standard constraints for the calculation of heating loads. A certain dependence of the average heating consumption can be found in the size of the building. Following acts and ordinances regulate the social housing sector for all German Länder (D) and for the State of Brandenburg: the Second Housing Law, the Fair Housing Act (D), the Rent Regulation Law (D), the Second Billing Regulation (D), the new housing rent regulation (D), the housing benefits act and ordinance (D), the Housing Support Provision, which acts as an administrative regulation (Bbg). After the reunification the municipal housing stock moved to municipal companies and cooperatives and private estate owners. In the state of Brandenburg most companies are organized under BBU the Berlin/Brandenburg association of housing enterprises. A second association of independent estate owners exists. BBU is part of the German roof association GdW, which is part of CECODHAS. BBU organizes its work by working groups, a.o. one on technical matters (collecting energy performance figures and running costs for a data base).

This time partners were introduced to a sophisticated housing refurbishment in Prague. Basic principal of the financing was the extension of the building in the vicinity of the centre of Prague by a 6^th floor that could be sold to market prices. The owner (Prague district No 3) was able to use the benefit from selling to finance the refurbishment of the rest of the building including the reduction in energy consumption. Only by close collaboration of all parties and by the political will not to sell every public good at once the solution could be realized.

The InoFin team could meet the mayor of Prague 3, being responsible for the welfare of 75.000 inhabitants who took the initiative for this unusual privatization scheme. She referred to the situation after the political changes when public owned buildings were transferred to the municipalities apart form those which were owned by private people before (restitution). Municipalities then had to face a big gap between costs and income that led many to sell the buildings to the tenants. In Prague 3 however due to the liberal policy another option became possible. It was their conviction that private owners would care better once it was their property but only if it was in a good state. In case of panel built blocks this principal is not so easy as the buildings usually are in a bad condition due to bad building quality.

In the district were three areas that had been built between 1960 and 1975. The city would have had the option to sell the buildings at once but the idea came up that restored buildings might gain a better price and that public organisation of tendering, organizing and selling could result in lower costs and complete refurbishment. The city was able to use its own budget to prefinance the activities (72 Mio CZK – 2.5 Mio €). The 23 new dwellings that were established on top of the refurbished old ones received 450 offers. The design of the interior was left mainly to the future owners as it was noticed that buyers had their own ideas for their future dwellings. Surprisingly the biggest flat was sold most easily. After selling the new flats the renovated flats were offered to their tenants taking their financial situation into account as well. 2/3 of the market price (22,000-23,000 CZK/m_- 700-800€/m_) were a first estimate. A certain social pressure was used during the selling process as 5% price reductions were given in case that all owners in one building would decide to buy. The process has been quite successful but in the beginning in 1994 it was extremely difficult to convince people that it would be the right way.

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Having a first meeting in Cottbus, Feb 15/16^th 2006

It is one thing to write a proposal and to convince the European commission and it’s another thing to get a group of people feel enthusiastic about a common project.

Project meetings therefore play an important role to get to know each other, to find a common language for communication, to manage the activities of the project and to exchange experiences when visiting sites of practical interest.

InoFin’s Kick-Off meeting took place at the Brandenburg University of Technology in Cottbus, where CEBra has its offices.

It was important to decide on a proper definition of social housing and partners de-cided to take one from ERDF funding definitions:

“Concerns the provision of good quality accommodation for lower income groups including recently privatized housing stock as well as accommodation for vulnerable social groups.” Draft ordinance regional development ERDF (21.12.2005)

Partners exchanged information on existing financing schemes. In Poland a large EBRD project is running to support the refurbishment of public buildings. In the Czech Republic a subsidy programme is working to support refurbishment of heating systems and buildings. An energy audit is the prerequisite for applying to the programme. Slovakia still has regulated prices in energy. Therefore the possible cost savings resulting from conservation measures are not as high as they would be on the real market. There is a tax redemption for the first 5 years for energy companies. A revolving fund from the United Nations Development Programme is existing. In Poland there are strong fiscal rules for the implementation of Third Party Financing schemes but a new law on public private partnerships will be introduced soon. NAPE could contribute one example from Warsaw.

Following survey on existing financing schemes in their respective regions was put up by the partners:

* based on existing laws for subvention
** based on temporarily existing grant schemes in public budgets


The Brandenburg partner “Wohnungsgesellschaft im Spreewald” was visited in Lübbenau. WIS has put some effort in showing good examples for low energy standard refurbishment. They own 5,000 flats. There is a strong threat on the hous-ing market as Lübbenau has lost 9,000 inhabitants from former 23,500 due to economic development (shut down power plant). 500 flats have been pulled down under the German city redevelopment scheme and 3,900 flats have been refur-bished. The total investment for these activities was 52 Mio. € and was taken from the state investment bank of Brandenburg, from the National state owned credit bank KfW, from private banks and from own resources. Average total refurbishments costs were in the range of 770 €/m_. The special low energy building (picture) contains 48 flats and a total space of 2,500 m_. By investments of 1.9 Mio. € annual energy consumption could be reduced from 180 kWh/m_ to 60 instead of 90 that would have been necessary according to the energy conservation law. A blower door test was used to prove the building performance after reconstruction.

Partners were also introduced to modern district heating refurbishment in Cottbus being designed and managed by a daughter company of the Cottbus housing cooperative named GEMAG. For the reduction of energy costs for the tenants the introduction of latest measurement devices and the continuous measurement of heat flow and load are essential. A microprocessor based unit enables the reduction of necessary load requirements to a minimum and thus saves money in a dual tariff on consumption and load. Without this type of equipment a negotiation with the district heating company of Cottbus would not have been possible.

Partners discussed mutual stakeholders that should become members in the regional steering committee and produced the following list:

• Representative of a bank (local, nat.)
• Representative of housing ass.
• Representative of Ministry
• Representative of the city
• Representative of Chamber (commerce, craftsmen)
• Representative of Policy

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Where everything started

Working together in networks certainly helps to form partnerships for developing common proposals. The European OPET network is one origin of this partnership between Energy Consulting Network of Denmark and CEBra – Centre for Energy technology Brandenburg. The other is the LOCOSOC project where partners from Czech Republik, Slovakia, Bulgaria and Latvia already worked together. LOCOSOC was a starting point to analyse the possibilities of energy efficient refurbishment for the social housing sector in Eastern Europe. Partners noticed that plenty of technical concepts exist for the refurbishment but financing would be the crucial barrier.

Finding innovative financing schemes therefore became the basic idea of the InoFin project that was developed in late summer 2005 and submitted under the IEE 2005 call. As there was a positive evaluation negotiations could start in November 2005 and the final contract was closed at the end of the year.

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