Show me the money – how to finance the energy renovation of our buildings

Day THREE Focuses on Finance

Energy renovation of buildings in Europe must be done. The directives and plans clearly state how many buildings we must restore, in what way and how much. But who will pay for it? At the Financing energy renovation panel discussion, it was stated that around 1.5 trillion euros need to be invested by 2030. To boost energy renovation, indeed, a concerted effort is needed, with private financing supporting public funding.

The panel discussion was attended by Marta Babicz, Director of External Funds Department, National Fund for Environmental Protection and Water Management, POLAND, Irena Kriż-Selendic, Director for Energy Efficiency in the Buildings Sector, Ministry of Physical Planning, Construction and State Assets, CROATIA, Krisztian Meszaros, Senior Vice President Region CEE, VELUX, Tomas Rosak, CEO for Eastern Europe, Saint-Gobain, Anthony Doherty, Head of Corporate Affairs, Kingspan and Adrien Bullier, Senior Project Advisor for Energy Efficiency Finance, CINEA. The discussion was introduced by Marko Zlonoga, Head of Buildings Department, REGEA, CROATIA, and moderated by Andelka Toto-Ormuz, HUPFAS.

– Public money can cover a maximum of 20 percent of energy renovation. The remaining 80 percent must come from the private sector, whether it is property owners or private companies – said Adrien Bullier. He clearly emphasized that for every euro invested, at least five euros must come from the private sector.

We must be very careful. Investing in energy renovation and decarbonization is not like investing in the stock market. Renovating buildings is much more than that. The prices of works and the return on investment—yes, they are important but not essential. The EPBD wants to push out the worst buildings and renovate them in terms of energy. Investing in energy renovation is not the same as investing in the stock market, but in people, said Bullier.

The participants of the panel discussion are optimistic about the continuation of energy renovation, achieving the decarbonization goals, but it is clear to everyone that the deadlines are short and the challenges are great.

– If we want to be successful, it is crucial to have a long-term plan so that everyone in this chain knows what is being done and what will be done. Public money makes up 20 percent of the total money for renovation, the rest comes from the private sector, from the owners. I believe that one of the good models is tax relief – said Krisztian Meszaros.

In Poland and Croatia, they have developed numerous models of energy renovation, especially in terms of financing sources. So, in Poland they started using the tools of the Modernisation Fund, and in Croatia they are using several EU funds to combine earthquake-resistant renovation, energy renovation and green technologies.

– In the last long-term strategies, we estimated that we need nine billion euros, the total value of renovation was estimated at 32 billion euros by 2030. That was before the price increase. We don’t have enough builders. We must calculate those numbers again – said Irena Kriż-Selendic. She warned that it is necessary, in addition to energy renovation, to also do structural renovation of the building because the lessons learned in Croatia after the earthquake are clear: buildings need to be comprehensively renovated to be safe for living.

– This is harmful for the construction sector and energy renovation. The big problem is the dependence on public funding.

Financing programs? In the last few years, there have been many programs to attract private money and loans with EU money. We have the possibility to launch guarantee schemes because banks do not have collateral when lending energy renovation. Loans and guarantees are key instruments. Credit lines are created – explained Bullier.

– We have buildings, houses and public buildings. Private houses – poorer and richer. The richer ones will do the renovation. The poor will never rebuild the building by themselves. State financing is crucial for them. Buildings are a different story. Some countries have renovated most of the buildings, improved the quality of life. In some it is not like that. Why – how was ownership made? If the building is not constructed as a community, there is no money and no credit. Buildings are subject to local laws and regulations. Banks are eager to invest in such projects, there is no risk, there is a great financing potential. Public buildings – this is a third of all buildings in Eastern Europe. A strong focus must be on speeding up the reconstruction of public buildings – said Rosak.

Overall, energy renovation of buildings will bring both opportunities and challenges for all EU member states, especially those in the CEE region. However, the participants of the C4E Forum conference will, with optimism, knowledge and experience, explore and advance the drive for energy renovation of the building sector.