Financing EE in housing in
Estonia
Mirja Adler
KredEx
29 November 2011
KredEx Foundation, financing
Enterprises and Housing
• A self-sustaining and nonprofit 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
– Export guarantees
– Housing loan guarantees
EUR 96 million
EUR 64 million
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
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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 multiapartment 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
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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 loan
SF loan
Usual loan
• Interest:
• 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
– 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 far
Loan
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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
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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 endbeneficiaries
Problems during implementation
• End-beneficiaries are still careful with
taking the loan
• No actual opportunity to persuade endbeneficiaries, 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 savings
Paldiski 171 heating consumption *
2005
2010
Heating consumption MWh
392
165
Price EEK MWh
431
989
169 082
163 357
4,48
4,33
234,84
226,88
Heating costs, EEK
Costs EEK/m²/month
Average per apartment monthly, EEK
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 4
10151 Tallinn, Estonia
Tel: +372 6674 100
Fax: +372 6674 101
E-mail: mirja.adler@kredex.ee
www.kredex.ee