Five lessons from France on how to cost-effectively finance and consistently deliver home renovations

There are three different challenges to mass-market home renovations that must be solved: the first, and easiest challenge, is the technology. Heat pumps and insulation are known, mass-market, implementable technologies that have this covered if installed correctly (despite some worrying trends).

Second, the human challenge. Renovation is a disruptive process in a person’s life filled with salespeople, conflicted messaging and poor user experience. One-stop shops with objective trustworthy advice are crucial to addressing this.

Third, is the finance. Home renovation brings massive benefits, to health, energy bills, comfort, asset value, climate resilience and more – but often is too large an investment for any single household to carry. This is where Third Party Financing companies shine.

The role of Third-Party Financing companies

Third-Party Financing (TPF) companies, established by cities, offer customised technical and financial support services to individuals and condominiums with an energy-efficient home renovation project (i.e. delivering energy savings of at least 40%). One of their unique features is the provision of direct or indirect financing with multiple benefits: no upfront investment, pre-financing of public subsidies, and an interest-free loan of up to €50,000 repayable after work completion and integrating expected energy savings. TPF companies focus on all three challenges to ensure a successful renovation project.

Key lessons for expanding home renovations in the EU

There are currently five third-party finance companies operating in France and they have put together five lessons as part of the ORFEE project to allow their successful model to be exported throughout the EU.

• Ensure the coherence and long-term stability of public home energy renovation policies 

A big NO should be given to the ‘Stop and go’ approach to policy implementation. The market needs a clear horizon to grow and successful one-stop shop economic models require stable regulatory and financial frameworks. 

• Make the provision of advice and support to households on home energy renovation a public service 

This will ensure that first-level advice is accessible to everyone everywhere through a national public service network. In addition to first-level advice, public support should also include tailor-made support (audit, project definition, work completion and monitoring) as a public service, thus bringing visibility and confidence to homeowners. 

• Support local and regional authorities with setting up local one-stop shops. One-stop shops (co-) created by local and regional authorities have the trust of homeowners and ensure that the general interest is considered. 

By organising physical meetings with homeowners, they give a more human face to the whole process. Because of their local profile and knowledge of the local area, OSS know best what people need. They can also create local partnerships and ensure that local schemes and policies are implemented (training, jobs, urban planning, etc.) 

• Make stable, clear and simple public funding schemes for deep renovation and the creation and operation of local one-stop shops accessible to all 

Advising and supporting homeowners are costly activities. Given their importance in the renovation journey, advice and support to homeowners should be subsidised through a stable long-term scheme accessible to all stakeholders. Public subsidies should be directed towards deep renovation. The instability of funding schemes makes it difficult for both OSS and homeowners to understand them. 

• Make sure every citizen has access to long-term financing 

Encourage banks and financing institutions into offering tailor-made, long-term (zero) low-interest rate loans accessible to all. Support financial instruments facilitating loan management and alleviating financial risks. Establish a guarantee fund for low-income households covering assets and associated risks.

Buildings are the single largest energy consuming sector in Europe. We simply will not achieve our objectives without broad, well-funded, long-term plans to reduce those emissions.

Learn more about the lessons from the ORFEE project here!