Financing the energy renovation of buildings: when budgets are low, creativity rises!


Publication date

September 20, 2017

While ensuring proper energy renovation of the EU’s building stock is crucial to achieve our energy transition, austerity and cuts in public budgets limit the action of local authorities. 
So a number of Energy Cities members have been testing 3 innovative financing schemes… and it works!

Soft loans – Residential sector (private residential buildings, social housing)

Home owners can borrow money to carry out energy-efficient renovation work in their homes for a lower interest rate than the standard market conditions.
There are three business model alternatives you can opt for depending on the money and staff available.
1- You don’t have money
2- You have some money
3- You have a significant budget

Click to enlarge

more information on ParmaBrussels and Riga

Third-party investment – Residential sector (private residential buildings, social housing)

A scheme in which the investment on the building is not carried out by the homeowner but by a third-party investor. Thus the homeowner does not take on a debt but pays a service fee to the investor.

Zoom on Stuttgart

Carbon footprint of the city’s housing stock: 33 %
Main challenge: Increasing the annual refurbishment rate – which was stagnating at 1% – to meet its ambitious goal: climate neutrality by 2050
Solution: Development of a “care-free renovation package”
Partnership with:
• A municipal ESCO which finances the works for condominiums of min. 20 housing units with energy supply contracting
• The Energy Advice Centre which provides homeowners with tailor-made support for energy-efficient retrofitting
• A general contractor in charge of coordinating the renovation works. For two types of retrofitting works: heating system and building envelope.
more information

Revolving fund and Internal Contracting – Public sector (public buildings, equipement and facilities)

The purpose of Internal Contracting is to enable the municipality to finance multiple investments aimed at energy savings without being bound to an external contractor. It is based on the following process: a “client” department within the local authority submits an energy-saving project. The project and its energy-saving potential are examined by the energy department. If the payback period proves acceptable and the project cost-effective, an agreement is signed between the two departments. The “client” department starts repaying the investment the following year. These repayments are then used to finance other projects.

Zoom on Agueda

Year of creation of the fund: 2016
Fund size (2016): 300,000 euros
Core team in charge: Municipal Division of Environment and Sustainable Development
Number of measures implemented: 2
more information

These activities were carried out as part of the EU-funded Infinite Solutions project that just came to an end. Bordeaux Métropole (France), Frederikshavn (Denmark), Delft (The Netherlands), Udine (Italy), Almada (Portugal) and Koprivnica (Croatia) also tested these innovative schemes!
Through two guidebooks the 11 Infinite Solutions partners are providing guidance to other local and regional governments and stakeholders for setting up financial schemes to save energy in buildings.