Financing EE in housing in Estonia
Mirja AdlerKredEx
29 November 2011
KredEx Foundation, financing Enterprises and Housing
• A self-sustaining and non-profit guarantee fund that offers:– Business loan
guarantees – Mezzanine financing– Long term funding for
commercial banks– Export guarantees – Housing financing and
loan guarantees
Solid foundation• Founded in 2001• Under the jurisdiction of the Ministry of
Economic Affairs and Communications• State guarantee limit for:
– SME guarantees EUR 96 million– Export guarantees EUR 64
million– Housing loan guarantees EUR 96 million
• Fully accredited for using ERDF and SF• Member of AECM, NEFI, IUHF, IFHP• Number of staff: 35
Housing stock • ~17 000 multi-apartment
buildings• ~95% housing stock is in
private ownership:– ~60% of the housing stock
has been built in 1960-1990– ~30% before 1960
• ~ 75% population living in multi-apartment buildings• Low quality and low energy efficiency
– Average energy consumption per year in buildings which have not been renovated 200-220 kWh/m2
• Energy used in buildings ~40%
Financial measures
• Grants– From state– From municipalities
• Low interest rate loan
• Beneficiary can combine the measures
Previous measure – grant scheme 2003-2007 state grants all over Estonia:
– For energy audits, building designs and technical expertise 50% of the costs (since 2003) – still continuing
• Supported 3 800 buildings• Totally 1,4 million €
– For renovation, 10% of the costs• Supported 3 200 buildings• 17 million m2, totally 11 million €
– Problems:• Insufficient funding• Singel works• Grant available after payments
From renovation grants to revolving fund – why?• Opportunity for re-usage of the funds
• Funds stay in state
• Support scheme (10% support) versus loan scheme (state support is even bigger)
• Loan is needed for reconstruction anyway
• Opportunity also to smaller buildings
• Easier to administer, lower administrative costs
• End-beneficiary is used to take loan
• Innovative scheme
Low interest rate loan - revolving fund scheme
Credit from Fund to the Bank• Credit to 2 banks• Maturity: 20 years• Annuity loan• Maximum limit of risk margin for Banks• Terms for credit to multi-apartment buildings• Fixed interest rate for end-beneficiaries• Bank is responsible for credit risk of multi-
apartment buildings
Credit to apartment buildings • Main purpose - energy efficiency measures:
– to save at least 20% of energy in buildings up to 2000 m²
– to save at least 30% of energy in buildings more than 2000 m²
• Self-financing 15% (now grant)• Energy audit is obligatory• Renovation according to energy audit (by
priorities)• Loan period: up to 20 years• Interest rate: up to 4,2% (first tranche) fixed 10
years
Selection of works• Thermal insulation:
– of the roof– of the walls/facade– of the cellar/roof ceiling
• New windows/outdoors• New heating system/renovation of the
heating system• Renovation of the ventilation system / new
ventilation system• Installation renewable energy devices
Obligations of banks• Monthly reporting about loans given
– Information about building– Description of investments– Number of dwellings concerned – Date of energy audit, savings – Total investment cost– Loan amount– Supplementary Bank loan– Loan maturity– Loan interest rate / margin
• KredEx can carry out audits in banks
• Loan is given in maximum 8 tranches, next tranche available after previous is used
SF loan vs usual loanSF loan
• Interest: – Fixed for 10 years– Between 4,3 – 4,8%– Interest on 64 000 € loan
4,5% 10 years 15 573 €
• Contract fee:– 0,5% - 0,75% from loan
amount
• Maturity:– Up to 20years
Usual loan
• Interest– Fixed for 5 years or floating– Interest ~ 7-10%– Interest 64 000 € loan 7%
10 years 25 137 €
• Contract fee :– Up to 1% from loan amount
• Maturity:– Average 2008: 11,8 years
Combination of national and municipal funding schemes• Credit guarantee from KredEx – if needed• State grant from KredEx for:
– energy audit – 50%, max 700 €– technical inspection – 50%, max 700 €– building design documents - 50%, max 4 000 €• Reconstruction grant from GIS up to 35%
• Tallinn city grant 10% for apartment buildings using renovation loan
Grant 15, 25 or 35% Do more – get more• 15%
• fulfill the terms for renovation loan,
• energy saving 20 or 30%, according to the size of the building
• Energy label E, energy consumption < 250 kWh/m²
• 25% • roof, facade, windows (U 1,1) heating system,
• energy saving at least 40%
• Energy label D, energy consumption < 200 kWh/m²
• 35% • roof, facade, windows (U 1,1) heating system, heat-recovery
ventilation system,
• energy saving at least 50%
• Energy label C, energy consumption < 150 kWh/m²
In all the cases it is obligatory to fulfill the criteria for indoor climate!
Burden of payments – building 2000 m², interest 3,8%, loan 20 years
Steps for end-beneficiary
Results so farLoan• Start 24.06.2009• By 20.11.2011:• 355 buildings• Apartments 11 004• Ca 885 497 m²• Total 31 mln €• Average 102 915 €• Saving 36,18%
Refurbishment grant• Start 30.09.2010 • By 20.11.2011:• 282 applications/252
buildings– 7 mln €
• 243 pos decisions– 6,4 mln €/Investment 29,3– 15% 2,1 mln €– 25% 2,6 mln €– 35% 1,6 mln €
• Ca 648 804 m²• Average 26 192 €
Lessons learned• Preparation takes long time – for Estonia 2
years• Many different partners to negotiate –
parallel negotiations • Economical situation in the country can
change dramatically• Legal framework to support the measure• Combine different measures• Information to market participants and end-
beneficiaries
Problems during implementation • End-beneficiaries are still careful with
taking the loan
• No actual opportunity to persuade end-beneficiaries, only raise awareness and motivate
• Many documents to prepare before loan application can be finalized
• Loan conditions are rather difficult
• Reporting is burdensome
Information to market participants• Press-conference in public media
• Infodays/seminars/workshops - to end beneficiaries, builders, energy auditors, project designers, local municipalities
• Advertisements in newspapers/magazines
• Internet (website, banners,
news, articles)
• Direct mails
• Leaflets/booklets
• Cooperation with banks
10 campaigns since 2006
Technical studies by Tallinn University of Technology
Studies for 4 different building types, including social studies about residents attitude and expectations
•Brick
•Concrete large panel
•Wooden apartment buildings
•Newly constructed buildings
BEEN-PPP: energy savingsPaldiski 171 heating consumption * 2005 2010Heating consumption MWh 392 165Price EEK MWh 431 989Heating costs, EEK 169 082 163 357Costs EEK/m²/month 4,48 4,33Average per apartment monthly, EEK 234,84 226,88
Comparison 2005-2010:
Heating consumption has decreased ca 58% Heating price has risen ca 129% The costs for heating per month have decreased ca 3% * Heating consumption is corrected with degree days
Conclusions• Building reconstruction is unavoidable
• 2 years for preparations – long period
• Economical conditions have changed drastically during preparation, are getting better again
• Scheme has great future (low interest, high energy efficiency) – combined with grants in Estonia now best financial terms over history
• All-round approach - awareness raising, promotion, state and local support, legal and financial framework – is the key for success
Contact:
KredEx
Mirja Adler
Hobujaama 410151 Tallinn, Estonia
Tel: +372 6674 100Fax: +372 6674 101
E-mail: [email protected]