PSEE ALSACE Public Service for Energy Efficiency

Workshop on innovative financing mechanisms for dwelling renovations Bruxelles, 26/05/2016

» ALSACE REGION CONTEXT

• Energivie.info program since 2003 on renewable energy and energy efficiency (thanks to european subsidies)

• Largest number of low energy standard renovated houses in France (500 since 2009) thanks to « je renove BBC » program with energy providers

• 200 building built or renovated at low energy standard level • All regional subsidies conditioned to low energy standard

criterion • 3700 homes renovated with various energy level in 2013 • Call for proposal with banks to get customised loans for deep

renovation (good mean to negociate shareholding with banks) • 15 energy advisors ready to help any householder in

renovation project

» PSEE OBJECTIVES

• Generalization of the global renovation by proposing packaged service to householders

• Objectives related to MLEI PDA project : 40 million € of investment in renovation by 2017 1000 houses renovated 500 building companies trained 15 GWh energy saved 200 jobs maintained or created

» STEPS IN THE PSEE PROVISION OF SERVICES

Information

House visit 1st contact

Energy advice

6 à 9 mois 0 à 2 mois 1 à 3 mois 1 à 3 mois

PSEE contract Householder decision

Contract signature

Financial approval

Blower door test

How to use renovated house

Quality control

Deep renovation works Financing optimization

Technical design of the

refurbishment project

Regional level Local plateform local platform

Cost of service : 1900 € VAT incl.

» PSEE FUNCTIONAL SCHEME

• Renovation works financing (loans, advance on tax breaks ) • Facilitation of regional partners

• Building work quality assesment…

Regional level

Regional SPV

• Building companies training program and pool creation • One stop shop for householders

• Householders mobilisation

PSEE

Coordination (Région Alsace, ADEME, municipalities)

Building trade unions Banks

Chamber of commerce

Public institutions

Building companies Estate agencies

householders Material suppliers solicitor

municipalities

Local level Local renovation

platform

» PSEE PROGRESS AT LOCAL LEVEL • The platform are hosted by

municipalities which allows independance, confidence and adaptability

• 9 communities of communes among 11 involved in PSEE project so far

• 26 construction craftmen consortium created (183 companies)

• 10 renovation projects begun

(911 k€ income incl. 565 k€ for saving energy renovation)

» PSEE PROGRESS AT LOCAL LEVEL

• Specific software is being designed with end users

• Communication toward householders and building companies

• Monthly meeting with platforms network

Bruche Mossig Piémont area House built on 1962 – 135 m² Works : insulation (walls, roof, floor), windows, ventilation with heat recovery, gas, electrical and wood heating, other works Overall cost : 110 549 € Energy works cost : 67 833€

Kaysersberg valley 18th century house – 162 m² Works : insulation (walls, roof, floor), windows, ventilation with heat recovery, heating, extension Overall cost : 217 079 € Energy works cost : 64 745 €

Northern Alsace area House built on 1956 - 90 m² Works : insulation (walls, roof, floor), windows, ventilation with heat recovery, Overall cost : 70 000 € Energy works cost : 58 000 € Third party financing : 45 000 € / 120 month

Kaysersberg valley House built on 1968 – 95 m² Works : insulation (walls, roof, floor), windows, ventilation with heat recovery, wood energy Overall cost : 69 672 € Energy works cost : 53 111 € Third party financing : 12 500 € / 324 months

Thur Doller area House built on 1956 – 153 m² Works : insulation (walls, roof, floor), windows, ventilation with heat recovery, water boiler, heating, electrical works, roof retrofit Overall cost : 144 000 € Energy works cost : 90 786 €

» ENERGY SAVING WORKS COSTS (BASED ON 10 PROJECTS)

• Average cost : 62 770 € / project

• Cost Ratio : 357 €/m² to 699 €/m²

50.000 €

60.000 €

70.000 €

80.000 €

90.000 €

100.000 €

80 100 120 140 160 180

Saving energy works cost / house surface

300 €/m²

400 €/m²

500 €/m²

600 €/m²

700 €/m²

800 €/m²

80 100 120 140 160 180

Cost ratio /m²

» PSEE CONSTRUCTION COMPANIES TRAINING PROGRAM

• Based on DOREMI method (developed by NéGAWATT institute) • Method avoiding energy audit and using pre-defined packages

of measures to reach low energy standard (10 different scenarios)

• Program aim at creating building companies consortiums • Training program based on real cases with 2 houses renovated

for each consortium at the end of the pathway • Building companies pool are trained to optimize their prices • Experience in Rhone Alpes Region lead to cost before training

program prices optimization at 600 €/m² • Above 450 € VAT included /m², the project is not bankable

» PSEE CONSTRUCTION COMPANIES TRAINING PROGRAM

• Training program pathway with 3 steps : Step 1: craftmen consortium creation and pre-defined sets of

works explanation (3 days) Step 2 : commercial and technical offer done on 4 real cases

houses to be renovated (2 days) Step 3 : 2 real cases renovation houses with invoicing for

consortium (2 days) • One referent instructor assistance throughout all steps • Each referent instructor trained during 40 days on

technical and educational aspects • Referent instructor must know well every construction

speciality and have great construction site practicing

» THIRD PARTY FINANCING HYPOTHESIS

• Average cost of renovation project : 450€/m2, overall 50 - 70 K€

• Number of project assistance from year 5: 1500 / year (750 among them subject to third party financing)

• Average sum lent through third party financing : 23 k€ • Third party financing : 15 years • Ratio between debt and equity : 90/10 • Interest rate for householders : 2,2% • Return on investment : 4,3 %

PARAMETERS VALUE

Return on investment 4,3 %

Provision for risk 5 705 k€

Refinancing from EIB 51 897 k€

Equity capital on year #6 8 633 k€

Assistance cost 1993 €

Interest rate for householder 2,2 %

» BUSINESS MODEL MAIN PARAMETERS HYPOTHESIS

» EQUITY CAPITAL NEEDS : 8,6 MILLIONS € FOR 6 FIRST YEARS

Proposed equity capital repartition

% Amount (millions €)

Region 45 2,8

Local authiorities 22 3,9

Private companies 33 1,9

Local authorities contribution Represents 0,4 €/habitant

» PSEE NEXT STEPS • April 2016 : decision on company creation by region director

• April 2016 – june 2016 :

– Negociations with local authorities for investment on regional company

– Negocaition with private investor and EIB (refinancing)

• June 2016 : - first official validation

- EIB evaluation of the refinancing application

• June-july 2016 : regional operator status writing

• Septembre 2016 : formal vote by local authorities

• Septembre 2016 : status signature by investors

• Fin 2016: - application for third party financing autorisation from ACPR

- refinancing demand among EIB

» POINTS OF ATTENTION / LESSONS LEARNED • Good reactions from building companies • Where to detect householders who need assistance (banks,

sollicitors, building companies, local authorities…) ? • Renovation financing habits is not to subscribe a loan • « Caisse des depots et consignations » position concerning third

party financing experimentation still not clear • Some banks ready to invest and collaborate • Training cost financed by fund collectors organism at 40% only • Good reaction from householders for global assistance made by

public company but difficult to sell it • Which responsabilites of the regional operator towards energy

savings after renovation works ?

ANY QUESTIONS ?