KfW Development BankPromoting Energy Efficiency in Buildings

Claudia Loy

Asia Pacific Union for Housing Finance

New Delhi, 31 January 2012

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Agenda

3 The International Perspective

Southeast Europe – Promoting EE in SME and Housing

India – Energy Efficiency in New Residential Housing

China – Energy Efficient Refurbishment of Residential Housing

The German Way2

KfW at a Glance1

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Promotion ofdeveloping and

transition countries

International Business

Promotion ofhousing and

education

Promotion of SMEs,

business start-ups and

environ-mental &climate

protection

Financing of municipal

infrastructure projects and promotion in

Europe

Domestic Promotion

We promote Germany

International project and

export finance

We ensure inter-nationalisation

We promote development

Promotion of Environmental and Climate Protection

KfWPublic Promotional Bank with Wide Array of Functions

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Commitments in 2010:

EUR 25,3 billionfor environmental and climate protection

EUR 23 billion for energy efficiency (EUR 11.5 bn)and renewable energies (EUR 11.3 bn)

► KfW is the no. 1 Environmental Bank in Germany and one of the world’s leading

financing institutions for EE and RE

KfWA Strong Environmental and Climate Protection Bank

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Agenda

KfW at a Glance 1

3

The German Way2

Southeast Europe – Promoting EE in SME and Housing

India – Energy Efficiency in New Residential Housing

The International Perspective

China – Energy Efficient Refurbishment of Residential Housing

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Legislation, Rules and Regulations, Technical Standards

► German Energy Conservation Ordinance (EnEV)

 

System of Energy Efficiency Promotion

Promotional Programmes

Information andConsulting

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"KfW-Efficiency House" –

the performance standard for buildings

in Germany!

Making energy demand transparent!

One of the essential elements for promoting EE in Housing

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Primary Energy Demand (kWh/m2/a)*

e.g. 108-63

e.g. 94-55

e.g. 80-47

= 100% of NL

= 85 % of NL

= 115 % of NL**

= 55 % of NL

= 70 % of NL

e.g. 52-30

e.g. 66-39

KfW-55

KfW-100

KfW-115

KfW-85

KfW-70

= 40 % of NLe.g. 38-22

KfW-40

*Acctual values vary, depending on the reference building according to the German Energy Conservation Ordinance (EnCO)**NL = New Building Level according EnCO

NEW BUILDINGS

BUILDING

STOCK

KfW Efficiency House Standard

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Loan (maturity e.g. 30 years)

Loan (maturity e.g. 30 years)

Interest rate depending on

efficiency standard

BankIndividual

homeowner

Re-financing

Margin for credit risk and handling 0.75%

German Government

Capital market

Interestsubsidy

Funding

+ addl. repayment bonus (5% or 12.5%

of principal)

+ addl. repayment bonus (5% or 12.5%

of principal)

+ addl. bonus for

construct. supervision

(max. EUR 1,000)

Promoting EE in housing – KfW in GermanyFunding and On-lending system

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YearBudget Subsidies(million €)

Loan Commitments(million €)

CO2-reduction(1000 tons p.a.)

Housing Units(in 1000)

Investments(million €)

2007 850 3,336 568 204 5,127

2008 1,300 5,127 767 280 8,552

2009 2,035 8,677 1,452 617 17,724

2010 1,337 8,746 1,049 953 21,330

Promoting EE in housing – KfW in GermanyResults

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●Financial incentives based on energy performance of building - not individual measures

●Performance Assessment Tool robust and easy to handle

●Accepted Performance Standards or Label - more important than legal building codes

●Training of auditors

●High energy prices

Key Elements of Success

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THANK YOU!For more information, please contact:

Claudia Loy,Head of Energy Sector and Policy Division

Silke Hermes,Senior Project Manager

KfW Development Bank, Energy - Asia, silke.hermes@kfw.de +49 69 7431 9786

KfW Office Building “Westarkade”, Electricity Consumption: 98 kWh/p.sqm/p.a.

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Agenda

KfW at a Glance 1

3

The German Way2

India – Energy Efficiency in New Residential Housing

The International Perspective

China – Energy Efficient Refurbishment of Residential Housing

Southeast Europe – Promoting EE in SME and Housing

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Joint Assessment Tool developed by Fraunhofer Institute and TERI, India

- Based on the whole-building-approach (Flexibility)

- Robust energy performance assessment (Comparability)

- Easy to use by architects and auditors (Scalability)

- Easy to compare different EE design, material and technology combinations (Optimization)

- Basis for Energy Efficiency Label (Communication)

Promoting EE Buildings in IndiaResults-based Tool and Label

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Agenda

KfW at a Glance1

3

The German Way2

India – Energy Efficiency in New Residential Housing

The International Perspective

China – Energy Efficient Refurbishment of Residential Housing

Southeast Europe – Promoting EE in SME and Housing

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Key Features:

EE loan programmes for SMEs & Housing via various partner banksAverage loan size: EUR 115,000 (SME), EUR 2,200 (Housing) No/ only slightly reduced interest ratesTotal loan volume: EUR 215 million (2010)Additional TA for Capacity Building & co-finance of energy audits

target: minimum of 20% savings on energy

Typical Measures for Energy Efficiency in Residential Buildings: ● High-performance windows;● Installation of thermostatic valves; etc.● Insulation of walls, roof and basement ceilings and pipe● Modernization of hot water boilers and meters, heat systems;

South East EuropePromotion of EE in SME and Housing

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Agenda

KfW at a Glance 1

3

The German Way2

Southeast Europe – Promoting EE in SME and Housing

India – Energy Efficiency in New Residential Housing

The International Perspective

China – Energy Efficient Refurbishment of Residential Housing

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ChinaEnergy Efficient Refurbishment of Housing Blocks

Starting Point: GiZ Pilot Scheme 3 pilot buildings in Tangshan (2006 – 2009)

● 30-50% reduction of energy demand for heating by thermal insulation of walls and roofs, double-glazed windows, refurbishment of heating systems

Current stage: KfW Program Climate Protection in Urban Areas 2010-2012

Tangshan: Volume: € 23.64 m, refurbishment of 800,000 m²Tonghua: Volume: € 36.36 m, refurbishment of 1,100,000 m²

● Aim: 50-60% reduction of energy demand for heating ● CO2 Reduction of 0,32 m tons per year

● agreement on high efficiency standards● Choice of most cost-effective measures

Know-how transfer & quality control during planning and implementation

Before refurbishment

After refurbishment

355 kWh/m²y

144 kWh/m²yGER: 220-260 kWh/m²y

Germany: 90-120 kWh/m²y

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Housing Public Buildings Commercial Buildings

Southeast EuropeEUR 30 million

India EUR 50 million

China EUR 60 million

(in planning)

Mexico EUR 85 million (in planning)

South AfricaEUR 50 million

India EUR 50 million

Jordan EUR 34 million

Albania

Turkey(in planning)

ChinaEUR 20 million

Turkey EUR 30 million

Southeast Europe EUR 35 million

CroatiaEUR 25 million

Global: EUR 290 million Global: EUR 150 million Global: 150 million

KfW Development Bank Promoting EE in Buildings Worldwide - Examples

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Back-up

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● Founded in 1948 as promotional bank of the Federal Republic of Germany

● Shareholders: 80% Federal Republic,20% federal states

● Headquarter: Frankfurt am MainBranches: Berlin and Bonn

● Representative offices: around 70 offices and representations worldwide

● Balance sheet total at the end of 2010: EUR 450 billion

● About 4,530 employees (2010)● Top rating: AAA/Aaa/AAA● Zero-weight under Basel II

KfWFinancing with a public mission

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Total Commitments in the Energy Sector (cumulative 2006-2010): EUR 3,739 millionof which renewable energy: EUR 2,281 million

Biomass 1%

Hydro-electric power plants

8%

Other renewable (CTF): 12%

Gas distribution 3%

Electrical transmission/ distribution

23%Other renewable generation 30%

Power non-renewable 2%

Wind power 9%

Energy policy/Energy efficiency 8% Solar energy 1%

Coal-fired power plants 3%

CRS categorisation

Commitments for Demand-Side Energy Efficiency since 2006: Asia 31 %Europe/Caucasus 27 %Latin America 23 %

KfW Development Bank Global Energy Sector Commitments 2006 - 2010

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Loan (Eur 50 million) and Technical Assistance (EUR 1.5 million) to the National Housing Bank (NHB) as apex bank to refinance sub-loans for buyers of energy efficient new urban apartments

● Highest energy savings potential in new apartment blocks for middle income residents: 46-51% depending on climate zone - out of which

► 20-36% Building Envelope► 16-22% Appliances

● Investments to achieve up to 40% savings financially attractive at 5 yr. payback (Average FIRR 25%)

● Preconditions for feasibility: - optimization of whole building design at planning stage- early contact to advise architects/developers - robust energy performance assessment tool - training of auditors and energy advisors

Promoting EE Buildings in IndiaEnergy Efficient New Housing Programme

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● Early stage of implementation: Agreements signed 12/2010, first disbursement 07/2011, TA tender ongoing

● Five residential housing developments located in the composite climate zone being evaluated:

● 23 individual buildings assessed and optimized with the Fraunhofer/TERI assessment tool

● Energy efficiency certificates under preparation by TERI:● Covering 17,000 apartment units to be built in the next 5 yrs with● Savings of up to 2000 kwh p.a. per apartment; and

● Expected total savings of 22,000 tCO2 p.a.

● Fraunhofer/TERI tool is being amended for the hot-dry and warm-humid climate zones (by November 2011)

Promoting EE Buildings in IndiaPromotional Programme Status

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Next steps under the Programme TA:● Establish the „Energy Efficient Housing“ brand and label in the Indian

market ● Train energy auditors and architects in the energy assessment of new

residential buildings with the Fraunhofer/TERI tool● Achieve EE assessment and certification endorsement by public and

private institutions

Continuous Challenges to the Promotional Programme: ● No mandatory minimum EE standard for residential buildings● Multiple ministries and public agencies dealing with the residential

building sector ● Lack of sustainable financial incentives to promote EE residential

buildings

Promoting EE Buildings in India Promotional Programme – Next Steps & Challenges

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Apartment Developer Website

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Pre-Constructed Housing Company Website

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Construction Material & Pre-Constructed Housing Company Advertisement

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Real Estate Agent Advertisement

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Energy Efficiency House Label