How to finance the deep renovation of buildings is a key topic for social housing sector. In some countries (such as Italy) it’s not even possible to have a proper “payback time” evaluation due to the problem of split benefits: renovation costs are on the building owner, while benefits are for the tenants.
To overcome this barrier several EU projects have been developed and some of them have been presented during Eurhonet meetings.
The funding scheme is based on the addition of an extra floor on the building top. This allows to have some more flats to be rented.
This horizon 2020 project aimed to focus on non-technological barriers for deep renovation. It’s considered that payback time for deep renovation can be quite long (about 30-35 years) and for NZEB renovations can get up to 40 years.
The project focusses on the renovation of building from the 60’s with a strategy of additional volumes to balance the cost of energy efficiency. This strategy also has the benefit to help solving the soil sealing problem and avoid urban sprawl thanks to densification.
The main barrier to volume addition is the legislation (condominium, urban regulation, seismic problems). The project started with a specific focus on private sector, but it could work also for social housing.
The Lemon Project is founded by Horizon 2020 program (call EE-20-2015: present a form of innovation in the investment schemes for public sector).The project proposed the renovation of 622 dwellings in Reggio Emilia and Parma. The idea is that social housing companies are not used to work at a stock level, but at single building scale. The project aims to test the EPC contract in Social Housing sector aiming to reduce of 40% the building energy consumption. The project comprises a little rent increase. ACER, the social housing company involved, is behaving as a public ESCo and is sharing the risk with a private ESCo.
The funding was supposed to be 70% ACER + 30% ESCo but than it was understood that ACER is not bankable as a public body, so the interest rate is very high. That’s why they’re trying to move the investment toward ESCo.
The project is divided in 4 main phases:
- PHASE 1: preliminary audits and feasibility study. It results that only the 30% of the analyzed housing stock has centralized heating system. At the moment the majority of the dwellings are in energy efficiency class G (the worse).
- PHASE 2: identification of financial instruments to cover the 70% of ACER investment. Different possibilities were evaluated. It resulted that local banks prefer investment fragmentation while large banks prefer large investments. Furthermore, most banks are using variable interest rate, that’s not suitable for municipalities and public bodies. Three different financier are at the moment under evaluation: EEEF, PF4EE-BPER,Cassadepositi e prestiti.
- PHASE 3 and PHASE 4: tender and development.
Dreeam Project in Padiham
Most of the houses (38%) in UK were built between 1975 and 1989, there is a big lack of data. The Re:New Project helps to define which kind of data it’s useful to collect.
The Dreeam Project in Padiham take in account the building performance before and after interventions, the tenants perspective (comfort, health, energy bills) and the social housing perspective (maintenance, management, voids, rent areas, customer satisfaction, financial results). Some insurance companies are starting to invest in energy efficiency since it’s a benefit for health and so for them. Know how much you can save thanks to energy efficiency interventions is a key data to introduce in the investment calculation.
It’s not possible to invest in the whole housing stock, so it’s very important to decide where to invest. The investment prioritizations are high quality data, local knowledge and strategic drivers.