Bordeaux Metropole has taken a holistic approach to renovation. Awareness raising, technical support and financial incentives targeting homeowners are all provided via a Local Energy Renovation Platform. The Platform provides technical and financial support to homeowners and stimulates the market by connecting banks and contractors with homeowners.
The objective of the Bordeaux Metropole Climate Plan is to renovate 2,000 private and 1,000 social housing units per year. The Metropole encourages the completion of extensive energy renovation work in order to meet low energy building standards (maximum consumption of primary energy is set at 50 kWh/m² per year).
Lack of attractive financing for homeowners with low to medium incomes
In France, homeowners who wish to renovate their homes have access to the following financial sources:
– A consumer loan usually has a maturity of 7 – 10 years and
relatively high interest rates (compared to a mortgage). Average consumer loan interest rate was 3.83% in September 2016.
– A mortgage can include energy renovation costs when purchasing the property. The interest rate is lower and maturity longer which is more attractive for homeowners. The average mortgage interest rate was 1.68% in September 2016.
Fuel poverty and lack of upfront financing for very low income households
Out of the 154,000 targeted housing units, approximately 1,000 are very low income households who could in fact finance extensive energy renovation work through the subsidies for which they are eligible (there is a wide range of subsidies in France for low and very low income households which are not cited here). In spite of this significant financial support, they cannot have the work done because they are unable to pay the contractors in advance. Indeed, subsidies are only reimbursed once the work is finalised and approved.
Upfront financing is the main problem for this target group.
In order to create a critical mass of renovation projects that can be showcased as good practice, Bordeaux Metropole decided to focus first on the owner-occupied residential buildings. It was assumed that this target group would be easier to convince about the benefits of carrying out energy-efficiency renovation work. One of the key decisions was also to take a holistic approach to renovation work and provide financial and technical support to homeowners while involving and coordinating all key stakeholders. Finally, Bordeaux Metropole realised that one product will not fit all households which led to the development of tailor-made products for low to medium income households and for very low income households. Bordeaux Metropole:– Has built partnerships with commercial banks in order to stimulate the uptake of the national 0% Eco-loan and to develop and promote low interest ‘energy renovation loans’:Bordeaux Metropole has taken a holistic approach to renovation. Awareness raising, technical support and financial incentives targeting homeowners are all provided via a Local Energy Renovation Platform.
The Platform provides technical and financial support to homeowners and stimulates the market by connecting banks and contractors with homeowners. The Platform stimulates the uptake of the 0% Eco-loan: independent energy advisors help homeowners develop technically feasible projects eligible for the Eco-loan that do not need to be checked by the banks. The Platform also provides a list of craftsmen certified within the framework of a national quality certification scheme ‘RGE’ or a quality charter developed by the Metropole.
Finally, Bordeaux Metropole has established partnerships with a limited number of banks who have become official partners of the Platform. They agree to provide specific ‘energy renovation loans’ with lower interest rates to homeowners. All partner banks promote their products on the Platform which boosts competition.
– Has set up a ‘Subsidy advance payment fund’ which will advance money to contractors who carry out energy retrofit work in order to help out low and very low income households.
Low interest energy renovation loans:Bordeaux Metropole does not subsidise low interest loans offered by local banks and does not pay any administration fees for their management. These are managed in full by the partner banks which determine homeowners’ eligibility criteria based on their creditworthiness. The Metropole has not set up any guarantee fund to cover any non-payments by homeowners. The entire risk is born by the partner banks.
Subsidy Advance Payment Fund
Bordeaux Metropole signed an agreement with two partners – Crédit Municipal (local public bank) and InCité (local public-private company) to jointly set up a ‘Subsidy advance payment fund’. The agreement states that:
– Crédit Municipal pays in advance for renovation work directly to craftsmen/companies.– Homeowners authorise InCité to collect subsidies on their behalf (no grants are channelled through the owners) which are then paid to Crédit Municipal.
– Bordeaux Metropole pays a fixed management fee of 3% for advanced payments paid by Crédit Municipal.