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OVERVIEW | Linking financial incentives with the energy savings achieved

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OVERVIEW | Linking financial incentives with the energy savings achieved

Shutterstock / Bildagentur Zoonar GmbH

by Heike Erhorn-Kluttig (Fraunhofer Institute for Building Physics), Francois Durier (CETIAT), Marina Laskari (NKUA)


In the Annex “Accelerating clean energy in buildings” of the European Commission's legislative proposal “Clean Energy for all Europeans”, the Commission presents possibilities for "smart financing for smart buildings". Besides informing on details of the Investment Plan for Europe and the associated funds, the Commission suggests that financial incentives for the renovation of buildings, provided by public funds, should be linked to the energy savings achieved. This is also foreseen in the current legislative proposal on the Energy Performance of Buildings Directive. This overview article gives a brief overview of the information on financial incentives that is available on BUILD UP and also analyses how financial incentives are currently managed in Germany, France and Greece. Is there a clear link to the energy savings planned or realised?  



Financing schemes in BUILD UP


National and regional schemes for renovating non-residential buildings and other facilities


National and regional schemes for municipalities, social housing, companies and enterprises


National and regional schemes for renovating residential buildings


National and regional schemes for individuals (homeowners and tenants)



Germany: KfW Promotional programmes for energy efficient refurbishments


The key promotion programmes for energy efficient buildings in Germany are managed by the state-owned bank KfW. In relation to energy efficient building renovation, private customers can receive grants or loans at favourable conditions. Loan programmes for investments in energy efficient refurbishment of buildings or even energy efficient city quarters are offered for municipalities, businesses and non-profit organisations. The highly popular programmes do not however compare the energy use before and after the renovation measures in order to define the financial support, but instead use target levels for the energy efficiency of the buildings after the renovations. These target levels are related to the energy performance requirements for new buildings as defined in the German energy ordinance (EnEV). Promotion programmes exist for achieving energy efficiency levels of 115% down to 55% of the EnEV primary energy requirements for private customers, and 100% or 70% of the EnEV primary energy requirements for non-residential buildings. The levels of performance are defined by the terms KfW efficiency house115/100/85/70/55. For example, a "KfW efficiency house 70" is calculated to achieve a reduction of 30% in primary energy use compared with the maximum primary energy use allowed for a corresponding new building. Alternative financing is available for combinations of measures such as insulation, replacement of windows, heating and/or ventilation systems, etc. For listed buildings the target value is a maximum of 160% of the EnEV.




France: Financial incentives and subsidies


In France, financial incentives provided by public funds for the energy renovation of residential buildings (i.e. tax credits, interest free loans, reduced VAT) are all linked to requirements on the energy efficiency of the construction products and systems used, as well as a requirement that the works are carried out by a qualified company carrying the label RGE – Reconnu Garant de l'Environnement. The energy efficiency requirements depend on products and systems. The RGE label covers different types of construction and installation works and is mandatory for the specific works carried out by a company. Subsidies for renovating homes with low-income occupants (managed by the Anah agency) are linked to the energy savings that will be achieved. Subsidies are conditional on the energy savings exceeding 25%, which is determined by comparing energy performance certificates before and after the renovation. Finally, financial incentives by energy suppliers in the framework of the White Certificates scheme must rely on the energy efficiency of the installed products and systems, as well as works carried out by an RGE labelled company.




Greece: Green loans and other incentives


The major financial incentives programmes in Greece only consider target levels for the energy efficiency of the buildings after the renovations, rather than actual energy savings. "Energy Efficiency at Household Buildings" is a joint grant/loan programme co-financed by the European Union, which aims to provide financial incentives to citizens for the improvement of the energy efficiency of their homes if these are classified according to the Energy Performance Certificate (EPC), as lower than or equal to class D. There is also a series of other green loans offered by private banks on building energy efficiency that include refurbishment works, installation of renewables and the purchase of energy efficient appliances and systems. Finally, the “Building the Future” programme is a partnership between the public and private sector, aiming to provide citizens who wish to refurbish their buildings, with certified, high-standard products at better prices than current market prices. New incentive programmes co-financed by the European Union are announced on the Greek National Strategic Reference Framework website when available.






A whole range of financial incentives for energy efficient building renovation is available in most European countries. The financial incentives currently in place in Germany, France and Greece suggest that the majority of the offered programmes have little direct relation to the energy savings achieved due to the renovation. A renovation project that saves 60% of energy will not necessarily receive more money than one that saves 50%. France has a programme of subsidies that can only be used when a minimum ratio of energy savings is achieved. However most of the aforementioned financial programmes are based on target values of the energy used after renovation, and they are in many cases related to the energy performance requirements of new buildings.


Although it might sounds logical that the achieved energy savings determine the amount of financial support since it aligns with the target of reducing buildings' energy use and corresponding CO2 emissions, there are several issues that need to be noted. First, if a building with very poor energy performance saves 50% of its energy use due to a renovation, it would proportionately receive a rather high level of financial support. However, it would most probably still not have used all reasonable opportunities for improving the energy performance and, in all likelihood, it would need to undergo a further deep renovation for a number of years. Target values of energy performance after renovation might be helpful to prompt building owners towards even better levels of energy performance. A combination of both approaches might be a possibility, but it has to be ensured that the programmes are kept simple to understand and to follow through.