Alternative Financing Schemes for energy efficiency in buildings

The deep renovation of existing buildings is essential to achieve the European Union's energy and climate objectives for 2020 and 2050. However, a key obstacle is the lack of financing schemes adapted to the existing building stock, whether public, commercial or residential.

We propose a critical inventory of traditional and alternative financing schemes. Case studies include schemes based on energy performance contracting, such as market facilitation in Berlin and EPC for deep renovation in Latvia and France. Pooling buildings or bundling different building owners is presented as a way to make projects more bankable.

We then analyse third party investment schemes which disconnect the burden of debt from the building owner and attach it to the building, such as PACE schemes (US) and the Green Deal (UK), used by the City of Newcastle to invest in projects carried out by a private delivery partner. We also present Energies POSIT'IF, the public ESCO recently created by the Ile-de-France region to invest in the deep renovation of the condominiums.

The provision of affordable and sufficient financing for ESCOs can be facilitated through soft loans, loan guarantees, or even portfolio guarantees as provided by BgEEF in Bulgaria. ESCOs can be refinanced through the assignment of their claim on future energy services to specialised vehicles, such as the EESF in Bulgaria, or through securitisation and the emission of bonds at a later stage. EU structural funding, expected to double, could be used to develop financing vehicles adapted to the needs of the different schemes, or to fund the development of a credible project pipeline.

It is possible to develop financing schemes adapted to the large-scale deep renovations of buildings. Their replication, adaptation and up-scaling will require public support in the coming years, in the form of improvements in the legal and policy framework, project development assistance, and capacity building along the whole value chain.

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Tags:
energy efficiency, ESCOs, financing retrofit, renovations, energy efficiency finance, Smart Investments

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