Financing and incentivising energy renovation of condominiums

MEL is a frontrunner with a very good support system and collaboration with relevant local stakeholders in place. To implement the energy-efficient renovation of the majority of its 8,500 condominiums, the Metropole would need to achieve higher volumes and a faster pace of implementation. This would mean moving from the renovation of single buildings and pilot projects towards energy-efficient renovation of districts and types of buildings. The new approach should be part of a long-term, strategic approach with ambitious targets that demonstrates direction of travel. MEL could envisage to secure more funding to increase its own capacity i.e. bringing a dedicated financial expert into its housing department to steer through different financial options. These together can increase credibility and trust with financial institutions to tap into resources.

To meet the renovation challenge, a project pipeline with higher investment volumes should be developed. Project aggregation can help to achieve scale, i.e., filtering building characteristics, applying standard methodologies, developing guidelines, and renovating districts or groups of buildings of the same type. These larger scale initiatives are more attractive for investors, with a larger potential return on investment. Common, or joint, procurement efforts can also bring down costs for each building. A major hurdle in most regions remains the availability of skilled professionals – offer training of installers, construction companies, managers and auditors which could be addressed through specific training programmes.

Renovations can be pre-financed via multiple options including bank loans, which can be variable or long-term fixed loans of 20-25 years. Community funding can enable larger scale renovations, e.g. multiple buildings or full districts. Savings can also be collected via small payments from co-owners during the preparation phase and ELENA funding could be used for financing integrated home renovation services, and for providing technical assistance to citizens. Energy Performance Contracting (EPC) is well proven, with different business models such as Energy Service Agreements, Energy Guarantee Contracts, or Energy Savings Sharing.

Renovation is as much about people, as about buildings. Citizens need to be confident and comfortable in a process, which can disrupt their daily life. To facilitate this process, the participation of citizens should be encouraged and tailor-made information should be available i.e. through professional advisory services, acting as a one-stop-shop to guide through the entire process. Moreover, in addition to increasing the energy performance of renovated buildings, communications should also highlight health, security, comfort and quality of life improvements. Pilot projects and successful renovations should be used as showcases, and MEL should actively go to its communities to engage them with stalls and infodays.